Bombay High Court
Navjeevan Dharmi Associates vs Principal Commissioner Of Income Tax ... on 18 November, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-AS:51095-DB
32-AS--WP-13316-24---SANTOSH.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 13316 OF 2024
Navjeevan Dharmi Associates .. Petitioner
Versus
Principal Commissioner of Income Tax
Pune-2 & Ors. .. Respondents
Mr. Sham V. Walve a/w Mr. Bhavik Chheda a/w Ms.
Esha Malik a/w Mr. Swapnil Sangle, Advocates for the
Petitioner.
Mr. Vikas Khanchandani, Advocate for Respondents
/Revenue
CORAM: B. P. COLABAWALLA &
Digitally signed
ANJALI by ANJALI
TUSHAR ASWALE
TUSHAR
AMIT S. JAMSANDEKAR, JJ.
ASWALE Date: 2025.11.26
11:24:42 +0530
DATE: NOVEMBER 18, 2025
P. C.
1. The above Writ Petition has been filed challenging the
Impugned Order dated 29th March 2024 passed by Respondent No. 1
under Section 264 of the Income Tax Act, 1961 (For short the "IT
Act"). The Impugned Order can be found at page 345 of the paper
book.
Page 1 of 18
NOVEMBER 18, 2025
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
2. In this case, for A.Y. 2014-15 and 2015-16, the Petitioner
did not file its Return of Income. On 1st June 2016, Respondent No. 5
introduced the Income Declaration Scheme, 2016 [for short "IDS,
2016"] which provided an opportunity to persons to come forward
and declare their undisclosed income. Under the IDS, 2016, the
Petitioner, on 4th August 2016, applied and filed its Form No. 1 for
A.Ys. 2014-15 and 2015-16. Under this scheme, the Petitioner was
permitted to pay its tax liability in certain installments. The total tax
liability of the Petitioner under the IDS, 2016 was calculated at Rs.
1,87,55,741/- and which was to be paid by 31 st January 2020. It is
undisputed before us that the Petitioner paid the first installment
[under the IDS, 2016] of Rs. 25 Lakhs on 30 th December 2017 and
the second installment of Rs. 25 Lakhs on 15 th February 2018.
Though the Petitioner could have made the entire payment latest by
31st January 2020, no further payment was made by the Petitioner.
Hence, the Petitioner was not entitled to any benefit under the IDS,
2016.
3. For A.Y. 2017-18 (the Assessment Year under
consideration) the Petitioner filed its Return of Income on 15th
February 2018. For this Assessment Year, on 31st March 2021, a
Page 2 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
Notice under Section 148 of the Act came to be issued. The said
Notice inter alia stated that the Assessing Officer had reason to
believe that income chargeable to tax for A.Y. 2017-18 had escaped
assessment within the meaning of Section 147 of the IT Act, 1961. He,
therefore, proposed to re-assess the income for the said Assessment
Year and called upon the Petitioner to file a return in the prescribed
form for the said Assessment Year. The reason given for reopening
the assessment [furnished to the Petitioner] was that the Petitioner
had declared undisclosed income of Rs. 4,16,79,423/- [for A. Y. 2014-
15 and 2015-16] under the IDS, 2016 but had failed to pay the total
tax of Rs. 1,87,55,741/- by 31st January 2020. Since the Petitioner
failed to pay the total tax liability under the IDS, 2016 by 31st
January 2020, the said undisclosed income of Rs.4,16,79,423/- was
to be brought to tax in A. Y. 2017-18.
4. After the Notice was issued under Section 148, a hearing
was given to the Petitioner and an Assessment Order dated 27 th
March 2022 was passed by the Assessing Officer. Being aggrieved by
the said Assessment Order, on 24th March 2023, the Petitioner
preferred a Revision Application under Section 264 before
Respondent No.1. In the Revision Application, there were three basic
Page 3 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
grounds raised to challenge the Assessment Order. They were : (a)
that the income should have been assessed @ 30% as "income from
business" instead of 60% as levied by the Assessing Officer by
invoking the provisions 69A of the Act; (b) the Petitioner should get
credit for the taxes already paid under the IDS, 2016; and (c) the
Petitioner should also get credit for all pre-paid taxes such as advance
tax, TDS, and self-assessment tax, whilst computing the final liability
of the Petitioner.
5. The 1st Respondent, after hearing the Petitioner, on 29th
March 2024, rejected the claim of the Petitioner regarding the
characterization of the income declared under the IDS, 2016, and
also refused to give credit for the taxes paid by the Petitioner under
the IDS, 2016. The application of the Petitioner was only allowed to
the extent of credit sought for pre-paid taxes, in as much as, the
Assessing Officer was directed to carry out a further verification in
this regard, after considering the latest judicial precedents. It is
aggrieved by this Order of the 1st Respondent that the present Petition
is filed.
Page 4 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
6. We have heard the learned Counsel for the parties at
great length. We have also perused the papers and proceedings in the
above Writ Petition. After setting out the facts and the arguments of
the parties, we find that the 1st Respondent has given his due
consideration to the facts as well as to the contentions raised before
him. The discussion by the 1 st Respondent can be found from
paragraph 5 onwards of the impugned order. As far as the
characterization of the income is concerned, the 1 st Respondent came
to the conclusion that the provisions of Section 69A of the Act get
attracted when an Assessee fails to offer a satisfactory explanation
about the nature and source of acquisition of money, bullion, jewelry,
etc. found to be in the Assessee's ownership and not recorded in its
books of account, if maintained by him. The 1 st Respondent, after
analyzing the facts on record, came to the conclusion that no ITR was
filed by the Petitioner for A.Y.2014-15 and 2015-16. Further, no
explanation about the sources of the undeclared income for the said
Assessment Years was given by the Petitioner. The 1 st Respondent
also noted that during the re-assessment proceedings minimal
compliance to the Notices issued under Section 142(1) was made by
the Assessee. It was only at the fag end of the proceedings that an ITR
was filed on 8th March 2022. The 1st Respondent noted that in the
Page 5 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
said ITR filed, the total income of Rs.4,16,85,136/- was declared by it,
but no supporting evidence about the sources of this income were
given by the Assessee during the assessment proceedings or even
during the revisional proceedings. The 1st Respondent also noted that
self-assessment tax of Rs. 54 Lakhs and advance tax of Rs. 2 Lakhs
was paid in respect of A.Y. 2014-15 while no amount was paid as tax
for A.Y.2015-16.
7. After setting out these facts, the 1 st Respondent did not
find merit in the contention of the Petitioner regarding the
characterization of income as pleaded by it. On this aspect of the
matter, we find absolutely nothing wrong with the order passed by
the 1st Respondent under Section 264 of the Act. The view taken by
the 1st Respondent on this aspect, is certainly a plausible and a
possible view which requires no interference by us under Article 226
of the Constitution of India. Consequently, the challenge laid to the
Impugned Order on this aspect, is hereby rejected.
8. This now leaves us to deal with the issue as to whether
the Petitioner was entitled to the credit of the installments paid by it
under the IDS, 2016. The 1 st Respondent was of the opinion that the
Page 6 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
Petitioner was not entitled to these credits as the same were paid
under the IDS, 2016. However, we find that this issue is squarely
covered by a decision of a Division Bench of this Court in the case of
Pinnacle Vastunirman Pvt. Ltd. Vs. Union of India and
Ors [(2021) 438 ITR 27 (Bom) ; (2021) SCC Online Bom
2347]. In this decision, a Division Bench of this Court has clearly
held that if part installments are paid under the IDS, 2016, the
Revenue has no authority to hold on to those amounts as that would
be contrary to Article 265 of the Constitution of India. In the facts of
the case in Pinnacle (supra), this Court in fact gave credit for the
amounts paid under the IDS, 2016 when the Petitioner was availing
of another scheme floated by the Government in the year 2020, being
the Direct Tax Vivad Se Vishwas Scheme, 2020. The relevant portion
of the decision in Pinnacle (supra) read thus:-
"10. Mr. Walve stated that there was no such notification
available but the Government of India issued Circular No.
16 of 2016 dated May 20, 2016 containing Explanatory
notes of provisions of the Income Declaration Scheme,
2016 as provided under Chapter IX of the Finance Act,
2016. Mr. Walve relied on paragraph 8 of the circular which
reads as under ([2016] 384 ITR (St.) 144, 147) :
"8. In the following situations, 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,
i. e., November 30, 2016;
Page 7 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
(b) Where the declaration has been made by
misrepresentation or suppression of facts or
information.
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 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 provisions of sub-section (2) of section 67 and
section 70 are pari materia to section 187(3) and section
191 of the Income Declaration Scheme. In fact, under
section 70 of Voluntary Disclosure of Income Scheme it
says "... under any circumstances", which is not found in
section 191 of the Income Declaration Scheme. The apex
court in Hemlatha Gargya v. CIT [2003] 259 ITR 1 (S.C.);
(2003) 9 SCC 510 considered the provisions of Voluntary
Disclosure of Income Scheme. In that case, the appellants
had paid the amount beyond the time limit prescribed and
the court held that the time prescribed under Voluntary
Disclosure of Income Scheme was mandatory in view of the
language of the provision and that it cannot be extended
by the court on any equitable considerations, but the court
went on to hold that since the payments made beyond the
time limit fixed would not entitle the assessee the benefit
Page 8 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
of the scheme, the Revenue should be directed to refund
or adjust in accordance with law the amounts so deposited.
Paragraphs 5, 6, 7, 9 and 18 reads as under (page 5 of 259
ITR) :
"We are concerned with sections 66 and 67 and the
language used therein, since the answer to the question
framed at the outset would depend on the
interpretation of the provisions of these sections. These
sections provide :
'66. The tax payable under this scheme in respect
of the voluntarily disclosed income shall be paid by
the declarant and the declaration shall be
accompanied by proof of payment of such tax.
67. Interest payable by declarant.--(1)
Notwithstanding anything contained in section 66,
the declarant may file a declaration without paying
the tax under that section and the declarant may file
the declaration and the declarant may pay the tax
within the three months from the date of filing of the
declaration with simple interest at the rate of two per
cent. for every month or part of a month comprised
in the period beginning from the date of filing the
declaration and ending on the date of payment of
such tax and file the proof of such payment within
the said period of three months.
(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.'
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 section 66 or
within the extended time under section 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 section 67(1)
was extendable. According to the assessees, the
Page 9 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
purpose of the scheme was to unearth black money
which was in circulation. The time fixed under section
67(1) is not rigid according to the assessees, not only
because there was express provision for making
payment of interest in case of delayed payment but also
because the Revenue would be benefited by disclosure
of undisclosed income, quick recovery of the same with
payment of interest by March 31, 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 March 31,
1998, therefore, it was open to a person to file a
declaration on the last date, namely, December 31,
1997, and make payment by March 31, 1998, under
section 67(1). It would be discriminatory and entirely
arbitrary if the persons who had submitted their
declarations voluntarily earlier were penalised for doing
so by insisting on payment on an earlier date. The next
submission of the assessees is that even if the
provisions of section 67(1) were mandatory,
nevertheless, the court could under certain
circumstances dilute the severity of its operation,
provided the assessees were acting bona fide.
Reference has been made to the decision of this court in
Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26
(S.C.) in this context. The assessees have also argued
that the first decision in the field was the decision of the
Punjab and Haryana High Court in Smt. Laxmi Mittal v.
CIT [1999] 238 ITR 97 (P & H), where the High Court had
held that the period fixed under section 67(1) was not
immutable and that for sufficient reason the time could
be extended. The Department had not chosen to
challenge that decision and had accepted that
interpretation. It is contended on the basis of the
decisions of this court in Union of India v. Kaumudini
Narayan Dalal [2001] 249 ITR 219 (S.C.) and Union of
India v. Satish Panalal Shah [2001] 249 ITR 221 (S.C.)
that the Revenue cannot pick and choose cases in which
they would challenge a similar decision unless there
was just cause. According to the assessees, there was
no cause shown justifying the Department's decision to
challenge the principle enumerated in Smt. Laxmi
Mittal's case [1999] 238 ITR 97 (P & H), only in the case
of a few assessees. It was submitted that in any case
Page 10 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
this court should not interfere under article 136 in those
matters decided in favour of the assessees by the High
Court. The final submission of the assessees is that the
Revenue authorities could not be permitted to retain the
payments made by the assessees under the scheme
and contend at the same time that the assessees were
not entitled to the benefit of the scheme. The Revenue
could either accept the payment as having been made
under the Scheme, and if not, refund the same to the
assessees.
In some of the appeals, the appellants are the
Revenue authorities. They have contended that the
scheme did not form part of the Income-tax Act, 1961,
but formed a self-contained code in which there was no
provision whatsoever for extension of time in the event
the period under section 67(1) lapsed. According to
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 section 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 two per cent. per month up to 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 section 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 section
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
Page 11 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
procedures available under the Income-tax Act,
1961
(emphasis supplied).
We are of the view that the submissions of the
Revenue must be accepted. A plain reading of the
provisions of the Scheme would show that the tax
payable under the Scheme 'shall be paid' within the
time specified is the general rule provided in section 66,
namely, payment prior to the making of a declaration.
The exception to this general rule has been carved out
by section 67(1) which allows a declarant to file a
declaration without paying the tax. This exception,
however, is subject to two conditions, viz., (1) the
payment of tax within three months from the date of
the filing of the declaration together with, (2) the
payment of simple interest at the rate of two per cent.
for every month or part of a month. The period of
interest is to commence from the date of filing the
declaration and shall end with the date of payment of
tax. It may be noted that under section 67(1) not only
must these two conditions be fulfilled within the period
of three months but proof of such payment must also be
filed within the same period.
The use of the word 'shall' in a statute, ordinarily
speaking, means that the statutory provision is
mandatory. It is construed as such unless there is
something in the context in which the word is used
which would justify a departure from this meaning.
There is nothing in the language of the provisions of the
scheme which would justify such a departure. On the
other hand, the provisions of section 67(2) make it
abundantly clear that if the declarant fails to pay the tax
within the period of three months as specified, the
declaration filed shall be deemed never to have been
made under the scheme. In other words, the
consequences of non-compliance with the provisions of
section 67(1) relating to the payment have been
provided. It is well- settled that when consequences of
the failure to comply with the prescribed requirement is
provided by the statute itself, there can be no manner
of doubt that such statutory requirement must be
Page 12 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
interpreted as mandatory (see Maqbul Ahmad v. Onkar
Pratap Narain Singh, AIR 1935 PC 85, 88).. ..
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 dated June 13,
2005 [Sajan Enterprises Vs. CIT in Writ Petition No.4132 of
1999 [2006] 282 ITR 636], 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 Seetharamaiah v. CIT [1999] SCC
OnLine AP 495; [2000] 241 ITR 287 (AP) dealt with section
67(2) of the Voluntary Disclosure of Income Scheme and
directed the Revenue to refund the amounts deposited.
Paragraphs 7, 8 and 9 reads as under (page 289 of 241
ITR) :
"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 of the benefit
under the scheme, he has to mandatorily comply with
the requirements. It contemplates the payment of tax
along with the declaration itself, but at the same time,
making a provision for payment of tax at a later stage
not beyond three months from the date of filing the
declaration with interest. Further, sub-section (2) of
section 67 stresses upon the mandatory requirement of
payment of tax within the outer limit of time and in the
event of any such non-payment of tax, the declaration
Page 13 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
shall be deemed never to have been made under the
scheme, i. e., it will be non est. Section 70 of the
scheme contemplates that no amount of tax paid in
pursuance of a declaration shall be refundable under
any circumstances. Necessarily, it would only mean that
the expression 'declaration' used in section 70 should
be a declaration as contemplated by section 66 read
with section 67(1) of the scheme. When the very
scheme contemplates that a declaration without
payment of tax is void and non est and the declaration
filed by the assessee was not acted upon, the question
of retention of the tax paid under such declaration will
not arise. The Revenue cannot retain any amounts paid
under a declaration falling within the mischief of section
67(2). There is no provision under the scheme whereby
the Revenue can retain the tax so paid in respect of a
declaration which is void and non est. In the absence of
any such authority of law, the retention of tax contrary
to the very scheme is in the teeth of article 265 of the
Constitution of India. Therefore, the provision under
section 70 of the scheme cannot have any application to
a situation where the tax is paid beyond the prescribed
period and, accordingly, the retention of the said tax by
the Department is illegal and the petitioner is entitled to
refund of the same (emphasis supplied).
This court in Shankarlal v. ITO [1998] 230 ITR 536
(AP), while considering the 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 (page 555) :
'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)'.
(emphasis1 supplied).
Page 14 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
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 v. CIT
[2001] 247 ITR 356 (Karn); [1999] SCC OnLine Karn 640
also while dealing with section 67 of the Voluntary
Disclosure of Income Scheme directed the 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
v. ITO [2004] SCC Ker 612, also directed the Revenue to
refund the amounts paid under the Voluntary Disclosure of
Income Scheme in a similar situation.
16. Sub-section (3) of section 187 of the Income
Declaration Scheme 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 dates specified in sub-
section (1), the declaration filed by him shall be
deemed never to have been made under the
Scheme. This would mean that the declaration will
be non est. When the scheme itself contemplates
that a declaration without payment of tax is void
and non est and the declaration filed by the
assessee would not be acted upon (because section
187(3) says the declaration filed shall be deemed
never to have been made under the Scheme), the
question of retention of the tax paid under such
declaration will not arise. The Revenue cannot
retain any amounts paid under a declaration which
contemplated under the Scheme is deemed never to
have been made. The Scheme does not provide for
the Revenue to retain the tax so paid in respect of a
declaration which is void and non est. Article 265 of
the Constitution of India provides that no tax shall
be levied or collected except by authority of law.
This would mean there must be a law, the law must
authorise the tax and the tax must be levied and
collected according to the law.
Page 15 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
17. In the absence of any such authority of law, a
retention of tax contrary to the very Scheme cannot
be permitted. Therefore, the provisions of section
191 cannot have any application to a situation
where the tax is paid but the entire amount of tax is
not paid and accordingly the retention of the tax by
respondent No. 1 is illegal. At the time of the argument,
counsel for the petitioner stated that the petitioner will be
happy if rectified form 3 is issued by respondent No. 3 after
giving credit to this amount of Rs. 82,33,874. The
petitioner is entitled to an adjustment by giving credit to
the amount of Rs. 82,33,874 paid under Income
Declaration Scheme. Respondent No. 3 is directed to
rectify form 3 issued under the Direct Tax Vivad Se
Vishwas Act read with Direct Tax Vivad se Vishwas Rules,
to give credit to this amount of Rs. 82,33,874 and issue
fresh form 3, within two weeks from the day, an
authenticated copy of this order is served upon respondent
No. 3 by the petitioner. The petitioner to make payment of
disputed tax in accordance with revised/rectified form-3
within a period of two weeks from the issuance of revised
form 3.
(emphasis supplied)
9. In the light of the aforesaid decision in Pinnacle, we are
of the view that the Petitioner would be entitled to credit of the tax
paid by it under the IDS, 2016. As far as this aspect is concerned, we
find that the order of the Commissioner is contrary to the law laid
down by this Court and hence it is hereby set aside. As far as the issue
of giving credit of advance tax, TDS, and self-assessment tax is
concerned, the Assessing Officer has been directed to further verify
and take into account the latest Judicial Precedents on this issue. In
Page 16 of 18
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
::: Uploaded on - 26/11/2025 ::: Downloaded on - 28/11/2025 21:42:36 :::
32-AS--WP-13316-24---SANTOSH.docx
other words, what the order directs is that advance tax, TDS, and self-
assessment tax, paid by the Assessee, has to be verified by the
Assessing Officer and thereafter give credit for the same whilst
calculating the tax. These directions are also in line with the decision
of this Court in the case of Kamla Chandra Singh Kabali Vs.
Principal Commissioner of Income Tax [(2022) 137
taxmann.com, 346 (Bom)].
10. In view of the aforesaid discussion, we pass the following
order :-
:ORDER:
(A) As far as the challenge of the Petitioner to the
characterization of income is concerned, we find no
merit in the same and hence the order of the
Commissioner on this aspect is upheld.
(B) As far as the issue of credit for tax paid under the IDS,
2016 is concerned, the Assessing Officer shall verify the
tax paid under the IDS, 2016 and thereafter give credit
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
32-AS--WP-13316-24---SANTOSH.docx
for the same whilst computing the tax payable by the
Petitioner for A.Y. 2017-18.
(C) Similarly, any advance tax, TDS or self-assessment tax
paid by the Petitioner shall be verified by the Assessing
Officer and thereafter credit of the same shall be given,
if any, whilst computing the tax for A.Y. 2017-18.
11. The above Writ Petition is accordingly disposed of in
terms of the aforesaid directions. However, in the facts and
circumstances of the case there shall be no order as to costs.
12. This order will be digitally signed by the Private
Secretary/ Personal Assistant of this Court. All concerned will act on
production by fax or email of a digitally signed copy of this order.
[AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.]
NOVEMBER 18, 2025
Santosh Chabukswar-Court Steno.
