Court sets aside rejection of Income Declaration Scheme declaration, directs reconsideration with credit for TDS/advance tax.

The court allowed the writ petition, setting aside the rejection of the declaration under the Income Declaration Scheme, 2016. The Principal Commissioner was directed to reconsider the declaration, granting credit for both TDS and advance tax paid by the petitioner. The court emphasized the importance of prompt action, setting a deadline for the review process.

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Issues involved:
Challenge to rejection of declaration under Income Declaration Scheme, 2016 due to non-payment of tax, surcharge, and penalty by the due date.

Detailed Analysis:

Issue 1: Rejection of declaration under Income Declaration Scheme
The petitioner filed a declaration under the Income Declaration Scheme, 2016, disclosing undisclosed income. The scheme allowed payment of tax, surcharge, and penalty in three installments by a specified due date. The petitioner claimed credit for TDS and advance tax paid for a specific assessment year. The first respondent rejected the declaration for not paying the required amount before the due date, citing no provision in the scheme for credit of prepaid taxes.

Issue 2: Credit for advance tax payment
The first respondent argued that the advance tax paid could not be adjusted against tax, surcharge, and penalty under the Income Declaration Scheme. An additional counter-affidavit contended that the petitioner's payment under the wrong head for advance tax could not be credited. However, the court noted that the first respondent raised this new ground belatedly, which cannot be considered. The court also rejected the contention that the payment was under a different head as there was no regular assessment for that year.

Issue 3: Precedent and legal interpretation
The court referred to a Delhi High Court case regarding the same scheme, where it was held that there was no bar on adjusting previously paid amounts related to the scheme. The court agreed with this view, emphasizing that if TDS is credited, advance tax for the same period should also be adjusted. The court dismissed the relevance of a different judgment cited by the respondents, stating it was not applicable to the current case.

Conclusion:
The court allowed the writ petition, setting aside the rejection of the declaration. The Principal Commissioner was directed to reconsider the declaration, giving credit for both TDS and advance tax paid by the petitioner. The court emphasized the need for prompt action on this matter, with a deadline set for the review process.

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