TaxTMI 
TaxTMI 
2021 (8) TMI 1227
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....e assessment year beginning in 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 Tax furnished by him under the Income Tax Act before the date of commencement of the Scheme; (c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income Tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise. 3. To put it simply, it gives opportunity to a person to voluntary disclose undisclosed income. Under the IDS it also provided a person immunity from interest, penalty and prosecution except as provided under the IDS. 4. The IDS came into force on 1st June 2016 and was in force upto 30th September 2016. The declaration could have been made between these two dates. The petitioner wanted to take advantage of the IDS and therefore filed a declaration on 30th September 2016 disclosing undisclosed income of Rs. 7,31,89,985/- for assessment year 2016-2017. Under the IDS, Section 184 and Section 185 provides for the tax payable at 30% of such undisclosed income plus 25% of ....
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....ame assessment year 2016-17 and submitted it on 16th December 2020. As required under the DTVSV Act, in the Form, petitioner also disclosed the amount paid together with proof of payments and that included the amount of Rs. 82,33,874/- paid under the IDS. In response, the designated authority under the DTVSV Act issued Form No. 3 being a form for certificate under sub-Section (1) of section 5 of the DTVSV Act read with DTVSV Rules, 2020 acknowledging receipt of the declaration by petitioner and indicating therein the balance amount payable by petitioner under the DTVSV Act. While arriving at the amounts payable by petitioner, the designated authority did not give credit to the amount of Rs. 82,33,874/- that petitioner had paid under the IDS. Therefore, by a communication dated 23rd December 2020 addressed to respondent no. 3, petitioner once again brought to the notice of respondent no. 3 that there was an error in computation and sought for rectification in Form No.3 issued by the designated authority. Respondent no. 3, however, did not grant the rectification and by communication dated 6th January 2021 informed petitioner that since petitioner failed to abide by the IDS, the amou....
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....lue of any asset shall be determined in such manner, as may be prescribed. (4) No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made. Charge of tax and surcharge. 184. (1) Notwithstanding anything contained in the Income-tax Act or in any Finance Act, the undisclosed income declared under section 183 within the time specified therein shall be chargeable to tax at the rate of thirty per cent of such undisclosed income. (2) The amount of tax chargeable under subsection (1) shall be increased by a surcharge, for the purposes of the Union, to be called the Krishi Kalyan Cess on tax calculated at the rate of twenty-five per cent of such tax so as to fulfil the commitment of the Government for the welfare of the farmers. Penalty. Penalty. 185. Notwithstanding anything contained in the Income-tax Act or in any Finance Act, the person making a declaration of undisclosed income shall, in addition to tax and surcharge under section 184, be liable to penalty at the rate of twenty-five per cent of such tax. ....... Time for payment of tax. 187. (1) The tax and surcharge payable un....
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....ntained in any declaration made under section 183 shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty, other than the penalty leviable under section 185, or for the purposes of prosecution under the Income-tax Act or the Wealth-tax Act, 1957 (27 of 1957). ....... Removal of doubts. 197. For the removal of doubts, it is hereby declared that- (a) save as otherwise expressly provided in sub-section (1) of section 183, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme; (b) where any declaration has been made under section 183 but no tax, surcharge and penalty referred to in section 184 and section 185 has been paid within the time specified under section 187, the undisclosed income shall be chargeable to tax under the Income-tax Act in the previous year in which such declaration is made; (c) where any income has accrued, arisen or received or any asset has been acquired out of such income prior to commencement of this Scheme, and no declaration in respect of such income is made....
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.... to be void for any of the above reasons, it shall be deemed never to have been made and all the provisions of the Income-tax Act, including penalties and prosecutions, shall apply accordingly. Any tax, surcharge or penalty paid in pursuance of the declaration shall, however, not be refundable under any circumstances." This circular, in effect, only says what is there in the scheme. 11. In the year 1997, the Government of India had announced a voluntary disclosure of income scheme 1997 (VDIS) in which Section 67 (2) and 70 read as under:- "67. (1) ..... (2) If the declarant fails to pay the tax in respect of the voluntarily disclosed income before the expiry of three months from the date of filing of the declaration, the declaration filed by him shall be deemed never to have been made under this Scheme. ......... 70. Any amount of tax paid in pursuance of a declaration made under sub-section (1) of section 64 shall not be refundable under any circumstances." 12. The provision of sub-Section 2 of Section 67 and Section 70 are pari materia to Section 187(3) and Section 191 of IDS. In fact, under Section 70 of VDIS it says "..... under any circumstances", which is not fou....
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.... given in each of the assessees' cases are also different. All of them however, have contended that the reason for non- payment was beyond their control. The assessees have relied upon those decisions referred to earlier which held that the period mentioned in Sec. 67(1) was extendable. According to the assessees the purpose of the Scheme was to unearth black money which was in circulation. The time fixed under Sec. 67(1) is not rigid according to the assesses, not only because there was express provision for making payment of interest in case of delayed payment but also because the Revenue would be benefitted by disclosure of undisclosed income, quick recovery of the same with payment of interest by 31st March, 1998 (since the Scheme was operative till that date) thus fulfilling the object of the Scheme. It is further submitted that because the Scheme was operative until 31st March, 1998, therefore, it was open to a person to file a declaration on the last date, namely, 31st December, 1997 and make payment by 31st March, 1998 under Sec. 67 (1). It would be discriminatory and entirely arbitrary if persons who had submitted their declarations voluntarily earlier were penalised f....
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.... filed with proof of such payment. It is only with a view to dilute the rigidity of this requirement that Sec. 67 allowed the assessee to make payment subsequent to the making of the declaration but subject to making payment of interest at the rate of 2% per month upto a period of three months and not further. Apart from the reasoning adopted by the various High Courts in the decisions in favour of the Revenue, (it has been contended that the language used in Sec. 67(2) makes it amply clear that the period specified was mandatory.) Even if there were any doubt, according to settled principles of interpretation no extension could be granted beyond the period of three months as specified under Sec. 67 (1). It has further been submitted that since there were conflicting decisions of the different High Courts there was sufficient cause for the Department to agitate the issue before this Court. Finally, it is submitted that as far as the payments made by the assessees were concerned if any payment had been made but not in terms of the Scheme, clearly the Department could not retain such payment and would either have to refund it or set it off in accordance with the prescribed procedures....
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....e not entitled to the benefit of the Scheme since the payments made by them were not in terms of the Scheme, we direct the Revenue Authorities to refund or adjust the amounts already deposited by the assessees in purported compliance with the provisions of the Scheme to the concerned assessees in accordance with law. All the appeals are accordingly disposed of without any order as to costs." (emphasis supplied) 13. This Court in an unreported Judgment Sajan Enterprises Miraj Vs The Commissioner of Income-Tax & Ors.in Writ Petition No. 4132 of 1999. dated 13th June 2005, following the judgment of the Apex Court in Hemalatha Gargya (Supra), directed the Revenue authority to adjust the amounts already deposited by the assessees. 14. Similarly, in Patchala Seethramaiah Vs. Commissioner of Income Tax, Vijayawada and Anr 1999 SCC OnLine AP 495.., dealt with the Section 67 (2) of the VDIS scheme and directed the Revenue to refund the amounts deposited. Paragraphs 7, 8 and 9 reads as under:- "7. Thus, from a reading of the aforesaid provisions and the scope and ambit of the Scheme as contemplated, it is quite apparent that if one has to avail the benefit under the Scheme, he has to m....
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....f the declaration made under sub-section (1). It will not, however, stand in the way of adjustment of the amount if the declaration itself is not acceptable as not falling under Section 64(1)". (emphasis supplied). 9. Therefore, in view of the above reasons, it cannot be said that the Revenue can retain the tax paid and the petitioner is not entitled for the refund." 15. The Karnataka High Court in Smt. Atamjit Singh Vs. Commissioner of Income-Tax 1999 SCC OnLine Kar 640, also while dealing with Section 67 of the VDIS Scheme directed Revenue to refund the amounts deposited. The Court held that due to failure of making the payment when the scheme provides that the declaration itself would be void and non-est, the question of retention of tax paid under the declaration will not arise. The Kerala High Court in R. Ranganatha Reddiar Vs. Income Tax Officer and Ors. 2004 SCC OnLine Ker 612, also directed the Revenue to refund the amounts paid under the VDI Scheme in a similar situation. 16. Sub-Section (3) of Section 187 of IDS also categorically provides if the declarant fails to pay the tax, surcharge and penalty in respect of the declaration made under Section 183 on or before the....