Voluntary tax disclosure scheme: three-day delay in deposit treated as minor, declaration upheld and rejection order set aside

The dominant issue was whether a voluntary disclosure declaration could be treated as non est due to a three-day delay in depositing tax under the scheme. The HC held that s. 67 is not wholly inflexible and must be applied with reasonable latitude where compliance is prevented by circumstances beyond the declarant's control. Relying on the CBDT circular prescribing interest computation for 90 days and validating payment on the next working day if the 90th day is a bank holiday, the Court found that minor delay causing no revenue prejudice cannot defeat the declaration, particularly since statutory interest for the period was paid. Accordingly, the Commissioner's order rejecting the declaration was set aside.

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Issues involved:
The judgment involves the aggrievement of the petitioner by the order treating the declaration under the Voluntary Disclosure of Income Scheme, 1997 as non-est, due to a delay in depositing the tax amount.

Summary:

Issue 1: Declaration under the Voluntary Disclosure of Income Scheme, 1997

The petitioner made a declaration of Rs. 20,42,274 on December 27, 1997, and paid Rs. 2,682 as tax. Due to unforeseen circumstances, the remaining tax amount of Rs. 5,50,000 along with interest was deposited on March 30, 1998, three days after the deadline of March 27, 1998. The respondent argued that the delay rendered the declaration non-est as per section 67 of the scheme.

Issue 2: Discretion to Extend Period

The petitioner contended that the authority had the discretion to extend the period for deposit as per a circular dated September 3, 1998. The failure to exercise this discretion was deemed arbitrary and unfair by the petitioner. The respondent, however, maintained that the deposit had to be made within three months as per the scheme, and the order by the Commissioner was legal and valid.

Judgment:

The High Court noted that the provisions of the scheme allowed for the declaration by December 31, 1997, with the tax deposit to be made within three months thereafter. The court interpreted the taxing statute liberally in favor of the assessee. Considering the petitioner's accident and subsequent inability to deposit the tax on time, the court found that the delay was beyond her control. The court rejected the inflexible interpretation of section 67, citing a circular allowing for flexibility in certain circumstances. As the interest for three months had been paid, the Revenue had not suffered any loss. Consequently, the order treating the declaration as non-est was set aside, and no costs were awarded.

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