2024 (8) TMI 979 - HC - Income Tax

Tax Assessment Quashed Over Incorrect Compliance Assumptions Under Income Declaration Scheme 2016.

The HC ruled in favor of the Petitioner, quashing the assessment order under Section 147 of the Income-tax Act, 1961, due to erroneous assumptions of ... Non compliances with Income Declaration Scheme, 2016 (IDS) compliances - validity of assessment order passed u/s 147 r.w.s. 144 and 144B and also to issue the consequential notice u/s 156 and the penalty notice u/s 274 r/w 271AA (1) - as argued Petitioner had although made a declaration/ in form-1 under Income Declaration Scheme, 2016 (IDS) brought into effect from 1 June 2016, had not deposited the tax amounts which would liable to be deposited - HELD THAT:- We are of the opinion that the contention as urged on behalf of the Respondents in the reply affidavit, that the Petitioner in fact complied with all the requirements under the IDS as also appropriate amount of tax was deposited is sufficient for this Court to accept the case of the Petitioner. Thus, the impugned assessment order cannot be held to be legal. It would be accordingly required to be quashed and set aside on the Respondents own showing that the Petitioner had deposited all the amounts under the IDS. The Petitioner accordingly had become entitled to the benefit under such scheme. We accordingly allow this petition in terms of prayer clause (A) and (B). The Respondents are also directed to issue an appropriate certificate of the deposit of tax under IDS to the Petitioner within a period of four weeks from the date of a copy of this order being presented before the competent officer. Issues:1. Validity of impugned assessment order under Section 147 read with Section 144 and 144B of the Income-tax Act, 1961.2. Compliance with Income Declaration Scheme, 2016 (IDS) by the Petitioner.3. Requirement of issuing Form-4 certificate of declaration by Respondents to the Petitioner.Analysis:Issue 1: Validity of impugned assessment orderThe Petitioner challenged the assessment order dated 22 March, 2022, passed under Section 147 read with Section 144 and 144B of the Income-tax Act, 1961, along with the demand notice under Section 156 and penalty notice under Section 274 read with 271AA (1). The basis for the Assessing Officer's action was the alleged non-payment of tax amounts declared under IDS. The Petitioner contended that tax amounts were indeed deposited on specific dates, supported by challans. The Respondent's affidavit confirmed the payments made by the Petitioner. The Court found the Assessing Officer's assumption of non-compliance erroneous and ruled in favor of the Petitioner, quashing the assessment order.Issue 2: Compliance with Income Declaration Scheme, 2016The Petitioner had made declarations under IDS and deposited the tax amounts on specified dates. The Respondent acknowledged the payments made by the Petitioner, totaling the required sum. The Court held that the Petitioner had fulfilled all requirements under IDS, and the non-issuance of Form-4 certificate was unjustified. Consequently, the Court directed the Respondents to issue the certificate within four weeks of the order.Issue 3: Requirement of issuing Form-4 certificateThe Petitioner contended that despite complying with IDS and depositing the tax amounts, the Respondents failed to issue the Form-4 certificate. The Court agreed with the Petitioner's stance, emphasizing that the Petitioner was entitled to the benefits under IDS. As a result, the Court allowed the petition, directing the Respondents to issue the certificate promptly. The Court also noted the appeal filed by the Petitioner before the CIT-A, which was deemed infructuous due to the Court's order quashing the assessment.In conclusion, the Court ruled in favor of the Petitioner, emphasizing compliance with IDS and the erroneous basis for the impugned assessment order. The Respondents were directed to issue the Form-4 certificate and the appeal before the CIT-A was disposed of accordingly.