TaxTMI 
TaxTMI 
2021 (8) TMI 1227
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tax Act for any assessment year prior to the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioner accordingly filled the requisite form being form No. 1 for the same 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... date of commencement of this Scheme shall be deemed to be the undisclosed income for the purposes of subsection (1). (3) The fair market value 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amount of tax, surcharge and penalty, paid in excess of the amount payable under this Scheme shall be refundable] Declaration not admissible in evidence against declarant. 192. Notwithstanding anything contained in any other law for the time being in force, nothing contained 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e following situation, a declaration shall be void and shall be deemed never to have been made:- (a) If the declarant fails to pay the entire amount of tax, surcharge and penalty within the specified date, 30.11.2016; (b) Where the declaration has been made by misrepresentation or suppression of facts or information. (c) Where the declaration is held 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 u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to have been made under this Scheme." 68. Voluntarily disclosed income not to be included in the total income." 6. In the several appeals which have been filed before us, some of the appellants are the assessees. In each: of their cases it is not in dispute that they had not paid the tax within the time prescribed either under Sec, 66 or within the extended time under Sec. 67(1). The period of default is varied and the explanations 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 Schem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are the Revenue Authorities. They have contended that the Scheme did not form part of the Income Tax Act, 1961, but formed self-contained Code in which there was no provision whatsoever for extension of time in the event the period under Sec. 67(1) lapsed. According to the learned counsel appearing on behalf of the Revenue, the provisions of the Scheme make it clear that the Scheme envisaged the payment to be made first whereafter the declaration was to be 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 submit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provided by the statute itself, there can be no manner of doubt that such statutory requirement must be interpreted as mandatory (See : Maqbool Ahmad and Ors. v. Onkar Pratap Narayan Singh. AIR (1935) Privy Council, 85, 88.) ....... 18. As a consequence, in our view, the appeals preferred by the assessees must be and are hereby dismissed whereas the appeals preferred by the Revenue Authorities must be and are hereby allowed. However, having held that the assessees are 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 deposite....
X X X X Extracts X X X X
X X X X Extracts X X X X
....scope and effect of the Scheme, has, on a consideration of Section 70 and the limitations on the tax refund contemplated thereunder, held that if this is understood as forfeiting the tax paid in cases where the declarations are ineligible under Section 64(2), such a forfeiture would be confiscatory and unconstitutional, unless it is properly qualified. It was further held: "It appears to us that the intention of this section was only to state that there will be no cash refund of the tax paid in pursuance of 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 ....