Assessee's Income Declaration Scheme-2016 compliance validated after retrospective deadline extension with interest payment

The ITAT Mumbai held in favor of the assessee regarding Income Declaration Scheme-2016 compliance. The assessee declared undisclosed income for multiple assessment years but defaulted on the third installment payment by the original deadline of 30.09.2017. However, a subsequent government notification dated 13.02.2019 retrospectively extended the payment deadline to 31.01.2020 with 1% monthly interest. Since the assessee paid the balance amount with interest as per this extended timeline, the ITAT ruled that the default was rectified retrospectively, overturning the CIT(A)'s decision against the assessee.

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Issues:
Reopening of assessment for A.Y. 2012-13 based on undisclosed income declaration made under Income Declaration Scheme-2016 and subsequent non-payment of the declared amount within the stipulated period.

Detailed Analysis:

1. Background and Assessment Reopening:
The appeal was against an order passed by the Ld. Commissioner of Income-tax(Appeals) partially allowing the assessee's appeal against the assessment order for A.Y. 2012-13. The assessee had declared undisclosed income under the Income Declaration Scheme-2016 but failed to pay the full tax liability within the specified period. Consequently, the assessment for A.Y. 2012-13 was reopened under section 147(b) of the Income-tax Act.

2. Non-Payment and Assessment Proceedings:
The assessee failed to pay the full tax liability within the stipulated time frame, leading to the cancellation of the declaration under IDS-2016. The assessing officer added the undisclosed income amount to the assessee's total income, resulting in a dispute and subsequent appeal before the CIT(A).

3. CIT(A) Decision and Appellate Tribunal's Analysis:
The CIT(A) partly allowed the assessee's appeal, granting credit for taxes paid under IDS-2016 but upholding the addition of the undisclosed income amount. The Tribunal analyzed the case, considering the retrospective effect of a notification extending the payment deadline and interest provisions for the undisclosed income. The Tribunal found that the assessee had rectified the default by paying the balance tax along with interest within the extended period.

4. Legal Interpretation and Precedents:
The Tribunal referred to the Income Declaration Scheme-2016 and relevant notifications, emphasizing the non-reopening clause for tax paid under the scheme. It highlighted a Supreme Court judgment regarding adjustments in tax liability post-revised assessment, distinguishing it from the current issue of payment deadline extension.

5. Tribunal's Decision and Conclusion:
The Tribunal held that the assessee had validly deposited the tax, surcharge, interest, and penalty as required under IDS-2016 in compliance with the retrospective notification extending the payment deadline. Consequently, the Tribunal allowed the appeal, quashing the reopening of assessment and the assessment order based on the undisclosed income addition.

6. Final Verdict:
The Tribunal set aside the impugned order, ruling in favor of the assessee and against the revenue. The reopening of the assessment and the subsequent assessment order were deemed bad in law and were therefore quashed.

This detailed analysis outlines the key legal issues, procedural steps, judicial interpretations, and the final decision of the Appellate Tribunal in the case concerning the undisclosed income declaration and payment compliance under the Income Declaration Scheme-2016 for A.Y. 2012-13.

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