1998 (8) TMI 5 - HC - Income Tax

Income Declaration Scheme 1997 inapplicable for 1961-62 income under Income-tax Act 1922

The court held that the Voluntary Disclosure of Income Scheme, 1997, did not apply to income related to the assessment year 1961-62 under the Indian ... Voluntary Disclosure Of Income Issues Involved:1. Interpretation of Sections 62 to 68 of the Finance Act, 1997.2. Interpretation of Section 297 read with Sections 147 to 150 of the Income-tax Act, 1961.3. Validity of declarations under the Voluntary Disclosure of Income Scheme, 1997, for income relating to the assessment year 1961-62.4. Issuance of certificates under Section 68(2) of the Finance Act, 1997.Issue-wise Detailed Analysis:1. Interpretation of Sections 62 to 68 of the Finance Act, 1997:The court examined the specific provisions of Chapter IV of the Finance Act, 1997, which pertains to the Voluntary Disclosure of Income Scheme, 1997. Section 63(b) defines various terms, Section 64 outlines the method for charging tax on voluntarily disclosed income, Section 65 enumerates the particulars to be furnished in the declaration, Section 66 specifies the time for payment of tax, Section 67 requires the payment of interest, and Section 68, which is declaratory in nature, states that voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year, subject to certain conditions. The court emphasized that these provisions only refer to income chargeable under the Income-tax Act, 1961, and do not include income chargeable under the Indian Income-tax Act, 1922.2. Interpretation of Section 297 read with Sections 147 to 150 of the Income-tax Act, 1961:Section 297 of the Income-tax Act, 1961, contains repealing and saving provisions. Subsection (2)(a) states that proceedings for assessment in respect of any income return filed before the 1961 Act were to be continued under the old Act. Subsection (2)(b) deals with returns filed after the commencement of the 1961 Act for the assessment year ending on March 31, 1962, or earlier years, which are to be assessed under the 1961 Act. Subsection (2)(d) pertains to assessment years after March 31, 1940, where proceedings initiated under the old Act are to be continued under the old Act, while new notices under Section 148 of the 1961 Act can be issued for escaped income. The court concluded that the provisions of the 1961 Act apply to proceedings initiated under it, but do not extend to income chargeable under the 1922 Act unless explicitly stated.3. Validity of Declarations under the Voluntary Disclosure of Income Scheme, 1997, for Income Relating to the Assessment Year 1961-62:The court analyzed whether declarations made under the Scheme for income related to the assessment year 1961-62 are valid. The Scheme, as outlined in Sections 64 and 68 of the 1997 Act, applies to income chargeable under the 1961 Act. The court noted that the 1961 Act became effective from April 1, 1962, and thus, the Scheme's applicability is confined to the assessment year 1962-63 and onwards. Consequently, income chargeable under the 1922 Act does not fall within the Scheme's scope, and declarations for the assessment year 1961-62 are not valid under the Scheme.4. Issuance of Certificates under Section 68(2) of the Finance Act, 1997:Section 68(2) of the 1997 Act mandates that the Commissioner shall grant a certificate setting forth the particulars of the voluntarily disclosed income and the amount of income-tax paid. However, the court found that since the Scheme does not apply to income chargeable under the 1922 Act, the petitioners' declarations for the assessment year 1961-62 are invalid. Therefore, the respondent's decision not to issue certificates under Section 68(2) was upheld as legally correct and justified.Conclusion:The court concluded that the benefit of the Voluntary Disclosure of Income Scheme, 1997, cannot be availed by the petitioners for income related to the assessment year 1961-62. The declarations made by the petitioners under the Scheme were invalid, and consequently, the certificates under Section 68(2) of the 1997 Act could not be issued. The writ petitions were dismissed accordingly.