TaxTMI 
TaxTMI 
2019 (8) TMI 1069
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....ef are that, the IDS became operational in terms of Chapter-IX of the FA, 2016 with effect from 1st June, 2016. The object of the IDS was to encourage disclosure of hitherto undisclosed income and payment of surcharge and penalty on such undisclosed income. This was provided for in terms of Sections 183, 184, 185 of the FA, 2016. Section 183 (1) of the FA, 2016 reads as under: "Declaration of undisclosed income. 183. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of commencement of this Scheme but before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on the 1st day of April, 2017- (a) for which he has failed to furnish a return under section 139 of the Income-tax Act; (b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Scheme; (c) which has escaped assessment by reason of the omission or failure on the part of such person to furnish a return under the Income-tax Act or to discl....
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....f Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the form in the manner specified in sub-rule(2). Explanation. For the purposes of this rule "electronic verification code" means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems)." 5. Section 193 of the FA, 2016 begins with a non-obstante clause and reads as under: "Declaration by misrepresentation of facts to be void. 193. Notwithstanding anything contained in this Scheme, where a declaration has been made by misrepresentation or suppression of facts, such declaration shall be void and shall be deemed never to have been made under this Scheme." Background facts 6. Each of the Petitioners availed of the IDS by filing a declaration under Section 183 of the FA, 2016 in Form-1 on 27th September, 2016. Each of th....
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....l companies. Subsequently, on the basis of further investigation, the Assessing officer issued notices u/s 148 for A.Y: 2011-12 and 2012-13 to Shri Satyendar Kumar Jain (AAMPJ5555B) after recording reasons. 7. The information regarding accommodation entries was also received by the Initiating officer for further examination and necessary action under the Prohibition of Benami property Transaction Act, 1988. The Initiating officer, after making necessary inquiry and considering evidence issued provisional attachment orders u/s 24(4) of the Prohibition of Benami property Transaction Act, 1988 on 24.05.2017 by holding Shri Satyendar Kumar Jain as the beneficial owner of the bogus share capital introduced in the companies mentioned earlier. The details of the orders passed by the Initiating Officer are as under: S.No. Name of Benamidar Name of Beneficial Owner Amount 1. Akinchan Developers P. Ltd. Shri Satyender Kumar Jain 4,85,83,200/- 2. Indo Metal Impex p. Ltd. Shri Satyender Kumar Jain 7,14,00,000/- 3. Paryas Inforsolutions P. Ltd. Shri Satyender Kumar Jain 2,49,00,300/- 4. Goodview Tradecom P. Ltd. Shri Satyender Kumar Jain 42,00,000/- 5.....
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....hat each of the Petitioners had both misrepresented as well as suppressed facts. 15. This Court has heard the submissions of Mr. Rakesh Tikku, learned senior counsel appearing on behalf of the Petitioners and Ms. Maninder Acharya, the learned ASG of India appearing on behalf of the Respondent, PCIT. Submissions on behalf of the Petitioners 16. One of the grounds of challenge raised by the Petitioners is that the impugned order was passed in violation of the principles of natural justice, since no prior notice was issued to either of the Petitioners before passing the impugned order rejecting the declarations of undisclosed income under the IDA scheme. It is also contended that the order passed under Section 183 of the Act was a quasi-judicial one and could not have been passed without prior notice to each of the Petitioners. In support of this proposition, reliance is placed on the decisions in East India Commercial Communication Company Ltd. Calcutta v. The Collector of Customs, Calcutta AIR 1962 SC 1893, Union of India v. Madhumilan Syntex Private Limited (1988) 3 SCC 348 and Metal Forgings. v. Union of India (2003) 2 SCC 36, C.B. Gautam v. Union of India (1993) 1 SCC 78. 17....
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....t the consequence of rejection of declaration under the IDS is that the said amount would be assessed under the normal procedure established under the Act, where in any event each of the Petitioners would be heard. Reference is made to the decision in Hemlatha Gargya v. CIT (2003) 259 ITR 1 (SC). There was sufficient material available with the Respondents, which indicated that the amount declared in the IDS was that of Mr. Satyender Kumar Jain. In other words, the undisclosed income sought to be declared under the IDS by each of the Petitioners actually belonged to Mr. Satyender Kumar Jain and therefore this was a clear suppression of a material facts which justified the rejection of the declarations. Analysis and reasons 21. The above submissions have been considered. The purpose underlying the enactment of the IDS, which was introduced under the FA, 2016, has been set out in the Notes on Clauses to the FA, 2016, which read as under: "An opportunity is proposed to be provided to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totalling in all to forty-five per cent of such undisclosed inco....
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....d that Assessees who seek the benefit by the VDIS are bound to comply strictly with the conditions under which such benefit is granted. The following observations in the said judgment are relevant to this context: "Besides the scheme has conferred a benefit on those who had not disclosed their income earlier by affording them protection against the possible legal consequences of such non-disclosure under the provisions of the Income-tax Act. Where the assessees seek to claim the benefit under the statutory scheme they are bound to comply strictly with the conditions under which the benefit is granted. There is no scope for the application of any equitable consideration when the statutory provisions of the scheme are stated in such plain language. Seen from the angle of the designated authority, which is created under the Scheme, it is clear that the authority cannot act beyond the provisions of the Scheme itself. The power to accept payment under the Scheme has been prescribed by the statute. There is no scope for the Revenue authorities to imply a provision not specifically provided for which would in any way modify the explicit terms of the Scheme." 25. In the present case, ....
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....persuaded by the submission of the Petitioners that each of them ought to have been issued a notice prior to the impugned order being passed. Even now, neither of the Petitioners has any explanation to offer for not specifying the complete details of the persons in whose names the shares in which investments had been made were actually held. 30. There are eight companies whose shares were purchased by the two Petitioners, whose names have been included in the list. Admittedly, in respect of the shares in ADPL, proceedings under Section 24 (4) of the PBPT Act, 1988 have been initiated. The Petitioners have themselves enclosed a copy of the order dated 24th May, 2017 passed in respect of the 'Benamidar' i.e. ADPL, which inter-alia notes that the cash that was routed through accommodation entries in the garb of share capital/premium in fact belonged to Mr. Satyender Kumar Jain and that it was at his direction that the entire transaction was orchestrated. It was noted that neither of these two Petitioners was either a Director or Shareholder in the said company. It was noted that the declarants had not provided the name of the 'Benamidar' through whom the investment had been routed an....