Court directs processing of declarations under Tax Amnesty Scheme, quashing penalties imposed under Income Tax Act

The court quashed the intimations refusing to process the petitioners' declarations under the Direct Tax Dispute Resolution Scheme, 2016 for penalties imposed under the Income Tax Act. It directed the authority to process the declarations in accordance with the Amnesty Scheme, requiring the declarants to pay the tax and interest liability under the Income Tax Act for the relevant assessment year. The court emphasized that penalties determined under the Act without assessment proceedings should be covered by the Scheme, disagreeing with the restrictive interpretation provided by the CBDT circulars.

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Issues Involved:
Refusal to process application under Direct Tax Dispute Resolution Scheme, 2016 for penalties imposed under Income Tax Act.

Detailed Analysis:

Issue 1: Refusal to process application under Amnesty Scheme
The petitioners, engaged in film production, sought benefits under the Direct Tax Dispute Resolution Scheme, 2016 for penalties imposed under Sections 271D, 271E, and 272A(2)(C) of the Income Tax Act. The penalties were related to violations of tax provisions noticed by the Joint Commissioner of Income Tax. The petitioners filed declarations under the Amnesty Scheme but were informed that their declarations could not be processed as the penalties were not linked to any assessment proceedings determining total income. The respondents justified this based on Circulars issued by the Central Board of Direct Taxes (CBDT) clarifying the scope of the Amnesty Scheme.

Issue 2: Interpretation of Amnesty Scheme
The court analyzed the provisions of the Amnesty Scheme, which required a declaration of tax arrears pending appeal before the appellate authority. The Scheme allowed for settlement of disputed penalties by paying 25% of the minimum penalty levied along with tax and interest on total income finally determined. The CBDT's clarification suggested penalties not linked to assessment proceedings would not be covered. However, the court disagreed with this restrictive interpretation, emphasizing that the Scheme did not exclude penalties determined under the Income Tax Act without assessment proceedings. It concluded that the petitioners should be granted the benefit of the Amnesty Scheme as they had offered to pay the mandatory penalties imposed on them.

Judgment:
The court quashed the intimations refusing to process the petitioners' declarations and directed the designated authority to process the declarations in accordance with the Amnesty Scheme. The court clarified that the declarants must also pay the tax and interest liability under the Income Tax Act for the relevant assessment year. The authority was instructed to process the declarations within six weeks from the date of the judgment, disregarding any circulars issued by the CBDT.

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