TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 956
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.... was under the belief that the Tax Returns are regularly filed. The Petitioner, therefore, did not file Income Tax Returns for the Assessment Years 2011-2012 to 2016-2017 and thereafter, he engaged a new Tax Consultant who advised him that as the time limit to file the Returns for the previous years had expired, he should avail the opportunity to make disclosure under the Income Disclosure Scheme, 2016 (IDS, 2016). Accordingly, the Petitioner offered his income from his real estate business under the said Scheme and as per Section 5(A) of the Act, half of the income was offered to tax by the wife of the Petitioner, namely, Mrs Madhuri Prabhakar Nerulkar, and the couple adopted for presumptive taxation under Section 44AD of the Income Tax Act, which gave an option to the Assessee to offer his income from business @8% of the gross receipt or higher sum to tax, this option being available, subject to conditions subscribed in the Scheme including upper threshold of turnover. 3. Being eligible under Section 44AD, a special provision for computing profits and gains of business on presumptive basis, the Petitioner along with his wife offered their income from real estate business....
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.... The Petitioner was granted five days' time to file reply, but he failed to file the response, which resulted in passing of final assessment order by Respondent no.2 on 16.03.2022 where a sum of Rs. 1,43,61,000/- was added to the total income and the income of the Petitioner was assessed at Rs. 1,45,66,080/-. The Respondent No. 1 also issued a Notice of Demand under Section 156 of the Act, in Form VII raising a demand of Rs. 1,40,59,664/- for the year under consideration. Similarly, Notices were issued under Section 274 read with Section 271(F) and 271(1)(C) of the Act on 16.03.2022 directing the Petitioner to show cause as to why penalty should not be imposed. 6. Being aggrieved, the Petitioner filed an application under Section 264 to the Principal Commissioner of Income Tax, Panaji where he specifically raised objection by stating that the sale transaction mentioned had taken place in the earlier year and therefore it cannot be taxed and the cash deposit is out of business income and is already being offered to tax under the IDS. Apart from this, as far as purchase of the property is concerned, it was stated that the property worth Rs. 80 lakh which is shown to be purch....
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....tory notes governing the IDS, which has offered clarifications, Mr Gandhi would submit that it is clarified that information contained in the Declaration under the IDS Rules, 2016 shall not be shared with any law enforcement agency or with the Income Tax Department for any investigations in respect of the valid Declaration. According to him, it is clarified in the Circular No.25/2016 that there is no need to disclose the source of income at all and if a declaration relating to undisclosed income in form of investment in any asset is made under the Scheme, no investigation shall be initiated against the seller in respect of such declaration. Apart from this, he has also relied upon the relevant clause of Circular No. 32/2016 which reads thus: "It is clarified that wherever in the course of search under section 132 or survey operation under section 133A of Income- tax Act, 1961, any document is found as a proof for having already filed a declaration under the Scheme, including acknowledgement issued by the Income-tax Department for having filed a declaration, no enquiry would be made by the Income-tax Department in respect of sources of undisclosed income or investment in mo....
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...., Mr Chatterjee submitted before us that the certificate issued by the Commissioner under Section 68(2) of the said Scheme cannot be cancelled or revoked. So long as the certificate under Section 68(2) of the Scheme holds the field, learned Counsel for the Revenue also admits that the amount of voluntarily disclosed income cannot be included in the total income of the declarant for any assessment year under the Income Tax Act. In what, Mr B. M. Chatterjee, learned Counsel for the Revenue submitted before us, we fail to understand the justification for the notice under Section 148 of the Income Tax Act, 1961. Rather, we find that issuance of notice under Section 148 of the Income-tax Act, 1961 is an abuse of the power by respondent No.2. Consequently, we quash and set aside the notice dated March 31,2005." In conclusion, Mr Gandhi has urged before us that it is a well-settled position in law that the notice of re-opening can be supported only on the basis of reasons recorded by the Assessing Officer and he cannot supplement such reasons and, apart from this, reopening of assessment will not be permitted on a fishing and roving inquiry, which would not satisfy the requirement. ....
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....to the declaration under the Scheme. . No enquiry/investigation shall be made in respect of the undisclosed income and assets declared under the Scheme even if the evidence of same is found subsequently during course of search or survey proceedings (circular No. 32 dated 01.09.2016)." 14. In the Circulars, addressing the doubts and concerns raised by the stakeholders, the Board gave the following clarifications on the following questions: "Question No. 5: Under what provision can a declarant be sure that the information contained in a valid declaration shall not be shared with any other law enforcement agency and also shall not be shared within the income-tax department for investigation? Answer: Section 195 of the Act provides that provision of section 138 the Income-tax Act shall apply in relation to the proceedings under the Scheme. Vide notification S.O. 2322(E) dated 06.07.2016, an order has been passed by the Central Government directing that no public servant shall produce before any person or authority any such document or record or any information or computerized data or part thereof as comes into his possession during the discharge of officia....
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....notices? Answer: As clarified vide Explanatory Circular No. 17 dated 20.5.2016, a person shall not be eligible for the Scheme in respect of the assessment year for which a notice under section 142, 143(2) or 148 has been received by him on or before 31.5.2016. In a case where notice has been received after the said date, the assessee shall be eligible to make a declaration under the Scheme for the said assessment year. Such declaration shall be valid if it has not been made by suppression of facts or misrepresentation and the amount payable under the Scheme has been duly paid within the specified time. On furnishing by the declarant the certificate issued by the Pr. Commissioner/Commissioner in Form-4 to the Assessing Officer, the proceedings initiated vide notice under section 142, 143(2) or 148 shall be deemed to have been closed." 16. Taking into consideration the peculiar nature of the Scheme which provided an opportunity to the persons who had 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 45% of such income declared, the Petitioner availed the said benefit. The Scheme made i....
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....or set off or relief in any appeal or proceedings under the Income-tax Act in respect of declared undisclosed income or any tax, surcharge or penalty paid thereon." 17. Since the IDS, 2016 assured confidentiality and made it clear that upon declaration being filed, it shall be duly assessed and certificate shall be issued in Form No.4, by taking into consideration the details of the declaration, the amount of undisclosed income declared and accepted and by computing the tax payable on the undisclosed income declared and accepted along with surcharge and penalty. The Petitioner, upon following the due procedure, received a certificate of declaration under Section 183 of the Finance Act, 2016 and paid a tax of Rs. 6,16,224/- as computed from the Assessment Years 2011 to the Assessment Year 2015. Despite the aforesaid, the notice was issued to the Petitioner under sub-Section (1) of Section 142 for Assessment Year 2014-15 under the National Faceless Scheme, 2019. The Petitioner inadvertently furnished his Return of Income and what is important to note is the notice issued to him under Section 143(2) read with Section 147 for the same Assessment Year 2014-15. The notice indicated....
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....on 147 read with Explanation 2(b) of the Income Tax Act 1961 which needs to be brought to tax. Hence, it is a fit case to invoke the provisions of Section 147 of the Income Tax Act, 1961. 5. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 has been obtained separately from Pr. Commissioner of Income Tax, Panaji, as per the provision of section 151 of the Income Tax Act 1961." 18. A Show Cause Notice was also issued to the Petitioner along with a draft Assessment Order referring to the three items as indicated in the notice stating that the assessee was to furnish Return of Income for Assessment Year 2014-15 and he filed his Return but did not make compliance and therefore the provisions of Section 144(1) along with Section 69A of the Income Tax Act, 1961, is liable to be invoked. The draft Order indicated thus: "In light of the above facts and circumstances, the A.O. has no option left but to invoke the provisions of section 144 of the Act and these deposits of Rs.1,43,61,000/- in the Bank Account treated as income of the assessee as per the provisions of sec....
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....ty and the information contained in the declaration, is not be shared with any law enforcement agency and not even the Income Tax Department for any investigation in respect of a valid declaration provided, the declaration is not made by suppression of facts or misrepresentation. It is not the case of the Revenue that the Petitioner had submitted a declaration by suppressing some facts and therefore we fail to find justification for invoking the normal proceedings against the Petitioner on the pretext that the assessee is liable to pay income tax as proceedings were initiated under Section 147 on the basis of information available with the Department about huge tax deposits being made and the property being purchased. The Assessment Order which is the basis of the Demand Notice, refer to the information available giving rise to a belief that the income chargeable to tax has escaped assessment by reason of failure on part of the assesse to make Return under sub-Section (1) of Section 139 of the Income Tax Act, 1961. Admittedly, the Petitioner did not file a Return and that is why he availed the IDS Scheme, but despite this, the Revenue Department is referring to a purchase of ....