Strict construction of a tax amnesty scheme upheld the statutory exclusion for assessees facing search proceedings.

The Income Declaration Scheme, 2016 was held to be a limited fiscal arrangement that could not be enlarged by interpretation to cover persons expressly excluded by clause 196(e)(ii). Where search, requisition, or survey proceedings had been initiated and the statutory notice regime applied under the Income-tax Act, 1961, the exclusion remained operative, and the scheme could not override the Act's substantive provisions. Strict construction was applied, and no basis was found to create different classes based on whether disqualifying proceedings began before or during the scheme period. The assessee was therefore not entitled to the scheme's benefit, and the exclusion was upheld.

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Issues: Whether the Income Declaration Scheme, 2016 could be invoked by an assessee against whom search proceedings had been initiated under the Income-tax Act, 1961 during the currency of the scheme, and whether clause 196(e)(ii) could be construed to permit such declaration despite the statutory exclusion.

Analysis: The scheme was treated as a limited-purpose fiscal arrangement and was read in the context of the exclusion contained in clause 196(e)(ii). The exclusion covered persons in relation to whom search, requisition, or survey proceedings had been initiated and who fell within the specified notice regime under the Income-tax Act, 1961. The Court held that a taxing scheme of this nature could not be expanded by interpretation to create a class of persons who were otherwise excluded, and that the scheme could not override the substantive provisions of the Income-tax Act. Strict construction was applied, and the Court found no basis to distinguish between disqualifications arising before or during the scheme period in a manner that would create unequal classes.

Conclusion: The assessee was not entitled to the benefit of the Income Declaration Scheme, 2016, and the exclusion under clause 196(e)(ii) was upheld.

Final Conclusion: The appeal failed, the order of the designated authority was sustained, and the writ dismissal was affirmed.

Ratio Decidendi: A limited-period tax scheme cannot be interpreted to override the Income-tax Act, 1961 or to extend its benefit beyond the class expressly excluded by the scheme's terms.

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