1999 (3) TMI 58 - HC - Income Tax

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. ... Voluntary Disclosure Of Income - declaration made by the petitioner has been treated as non-est. - delay of three days occurred on account of reasons totally beyond control - HELD THAT:- It is also not disputed that the deposit of the tax could be made simultaneously with the declaration or within three months thereafter. The Government of India has itself issued a circular dated September 3, 1998. By this circular it has been, inter alia, provided by the Board that the period for calculating interest will be 90 days from the date of declaration. If the 90th day happens to be a bank holiday, payment on the 91st day being the next working day would be valid. Thus, it is clear that section 67 does not embody a totally inflexible rule. When things are beyond the control of the citizen, certain moving space is normally allowed. This is precisely what the petitioner is wanting in the present case. The petitioner was unable to make the deposit on account of reasons beyond her control. The Revenue has suffered no loss as the interest for three months, has been deposited by the petitioner. Still further, it is also clear that a declaration under the scheme could be made on or before December 31, 1997. The tax along with interest could have been deposited on or before March 31, 1998. Any deposit before that should not be considered as being beyond the scheme. In any event, the interest having been paid, the Revenue has suffered no loss. Resultantly, the order passed by the Commissioner on July 27, 1998, a copy of which has been produced as annexure-P-4 with the writ petition, is set aside. 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, 1997The 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 PeriodThe 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.