Income Declaration Scheme timing rule controls taxation where declared income is unpaid, making reassessment in the original year unsustainable.

Where income is declared under the Income Declaration Scheme, 2016 but the tax, surcharge and penalty are not paid within the prescribed time, section 197(b) provides that the undisclosed income becomes chargeable under the Income-tax Act in the previous year in which the declaration is made. On the facts stated, the assessee declared income relatable to assessment year 2013-14, but the Assessing Officer brought it to tax in that assessment year after reopening the assessment under sections 147 and 148. The stated view is that taxation had to follow the scheme's timing rule, and not be made in the original assessment year in the manner adopted by the Assessing Officer, making the addition unsustainable.

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Issues: Whether the amount declared under the Income Declaration Scheme, 2016, but not paid within the stipulated time, could be brought to tax in the assessment year in which the declaration was made and whether the reassessment for the year under consideration was sustainable.

Analysis: Section 197(b) of the Income Declaration Scheme, 2016 provides that where a declaration has been made but the tax, surcharge and penalty are not paid within the prescribed time, the undisclosed income becomes chargeable to tax under the Income-tax Act in the previous year in which such declaration is made. The assessee had declared income relatable to assessment year 2013-14 under the scheme, but the Assessing Officer taxed it in assessment year 2013-14 itself after reopening the assessment under sections 147 and 148 of the Income-tax Act, 1961. On the facts recorded, the scheme mandated taxation in the previous year of declaration, and not in the year for which the original return had been filed.

Conclusion: The addition was unsustainable because the declared income could not be assessed in assessment year 2013-14 in the manner adopted by the Assessing Officer. The issue is decided in favour of the assessee.

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