Gujarat High Court
Yogesh Roshanlal Gupta vs Central Board Of Direct Texes on 4 February, 2021
Bench: J.B.Pardiwala, Ilesh J. Vora
C/SCA/2148/2019 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2148 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MR. JUSTICE ILESH J. VORA Sd/-
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1 Whether Reporters of Local Papers may be allowed to Yes
see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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YOGESH ROSHANLAL GUPTA
Versus
CENTRAL BOARD OF DIRECT TEXES
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Appearance:
MR. HARDIK V VORA(7123) for the Petitioner(s) No. 1
MRS MAUNA M BHATT(174) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 04/02/2021
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
C/SCA/2148/2019 JUDGMENT
1. By this writ application under Article 226 of the
Constitution of India, the writ applicant has prayed for the
following reliefs;
"(A) A Writ of Certiorari or any other Writ, Order or
direction in the nature of Certiorari quashing the order
dated 28.12.2018 rejecting extension of time for
payment of the last installment of Tax under Income
Disclosure Scheme, 2016 and allow extension of time, for
payment of the last installment of Tax under Income
Disclosure Scheme, 2016;
(B) In alternative and without prejudice, a Writ of
Mandamus or any other Writ, order or direction in the
nature of Mandamus directing the respondent to refund
the tax amount paid in the first and second installment
of IDS, 2016.
(C ) Pass any other order(s) as this Hon'ble Court may
deem fit and more appropriate in order to grant interim
relief to the Petitioner.
(D) Any other and further relief deemed just and proper
be granted in the interest of justice;
(E) To provide for the cost of this petition."
2. The writ applicant is an individual. The Central
Government framed a scheme for declaration of undisclosed
income. Such scheme was framed under the Finance Act of
2016 and was called "The Income Declaration Scheme 2016"
(hereinafter to be referred to as 'the Scheme of 2016'). Clause
183 of the said Scheme envisages declaration of undisclosed
income. Clause 184 of the said Scheme provides inter alia that
notwithstanding anything contained in the Income Tax Act, the
undisclosed income declared under clause 183 would be
chargeable to tax at the rate of thirty percent of such income
and amount of tax so chargeable would be increased by a
surcharge with Krishi Kalyan Cess at the rate of twenty-five
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percent of tax calculated. Under clause 185 of the Scheme, the
person making a declaration of the undisclosed income in
addition to the tax and surcharge provided under clause 184
would have to pay penalty at the rate of twenty-five percent of
the tax. Clause 187 of the Act pertains to time for payment of
tax and reads as under:
"Time for payment of Tax.
187. (1) The tax and surcharge payable under section
184 and penalty payable under section 185 in respect of
the undisclosed income, shall be paid on or before a date
to be notified by the Central Government in the Official
Gazette.
(2) The declarant shall file the proof of payment of tax,
surcharge and penalty on or before the date notified
under subsection (1), with the Principal Commissioner or
the Commissioner, as the case may be, before whom the
declaration under section 183 was made.
(3) If the declarant fails to pay the tax, surcharge and
penalty in respect of the declaration made under section
183 on or before the date specified under sub-section (1),
the declaration filed by him shall be deemed never to
have been made under this Scheme."
3. Clause 188 of the Scheme provides that the amount of
undisclosed income declared in accordance with clause 183
shall not be included in total income of the declarant for any
assessment year, if the declarant pays the tax, surcharge and
penalty by the date specified under sub-clause (1) of Clause
187. Clause 195 of the said Scheme made certain provisions of
the Income Tax Act and the Wealth Tax Act applicable in
relation with the scheme also. Clause 195 reads as under:
"Applicability of certain provisions of Income Tax
Act and of Chapter V of Wealth Tax Act."
195. The provisions of Chapter XV of the Income Tax Act
relating to liability in special cases and of section 119,
section 138 and section 189 of that Act or the provisions
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of Chapter V of the Wealth Tax Act, 1957 (27 of 1957)
relating to liability in respect of assessment in special
cases shall, so far as may be, apply in relation to
proceedings under this Scheme as they apply in relation
to proceedings under the Income Tax Act or as the case
may be the Wealth Tax Act, 1957."
4. Clause 197 of the Scheme contains certain clarifications,
relevant portion of which reads as under:
"Removal of doubts.
197.For the removal of doubts, it is hereby declared that-
(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;"
5. In terms of clause 187 of the said Scheme, the
Government of India published in the Official Gazette a
notification dated 20.07.2016 specifying the last dates for
depositing the tax and penalty in three installments. This shall
in substitution of dates previously prescribed in an earlier
notification dated 19.05.2016. By the said notification of
20.07.2016, the three dates specified were as under:
"(ii) the date on or before which the tax and surcharge is
payable under section 184, and the penalty is payable
under section 185 in respect of undisclosed income shall
be as follows, namely:-
(a) the 30th day of November, 2016, for an amount not
less than twenty-five percent of such tax, surcharge and
penalty;
(b) the 31st day of March 2017 for an amount not less
than fifty percent of such tax, surcharge and penalty as
reduced by the amount paid under clause (a);
C/SCA/2148/2019 JUDGMENT
(c) the 30th day of September, 2017, for the whole
amount payable under section 184 and 185 as reduced
by the amounts paid under clause (a) and (b)"
6. The writ applicant made declaration under the said
Scheme on 16.09.2016 of an undisclosed income of
Rs.5,98,20,219/- divided into three years i.e. the years 2011,
2015 and 2016. The Principal Commissioner of Income Tax
thereupon asked the writ applicant to make payment of a sum
of Rs. 1,79,46,066/- by way of tax, of Rs. 44,86,517/- by way of
surcharge and a equivalent sum of Rs. 44,86,517/- by way of
penalty by way of communication dated 13.10.2016. He
specified the following dates and percentage of such amounts
to be deposited in three installments as under:
"The declarant is hereby directed to make the payment
of sum payable as per column (5) of the above table, as
specified below:
(I) an amount not less than twenty five percent of the
sum payable on or before 30th day of November, 2016
(II) an amount not less than fifty percent of the sum
payable as reduced by the amount paid under clause (I)
above on or before 31st day of March, 2017.
(III) the whole of the sum payable as reduced by the
amount paid under clause (I) and (ii) above on or before
30th day of September, 2017.
In case of non-payment of the amount as specified
above, the declaration under Form-I shall be treated as
void and shall be deemed never to have been made."
7. It is undisputed that the writ applicant deposited the
amount towards the first and second installments before the
due dates. Under a chalan dated 23.11.2016, the writ applicant
paid the first installment of Rs.67,29,775/-. Under the second
chalan dated 31.03.2017, the writ applicant deposited a sum of
Rs. 67,29,777/-. The writ applicant's last installment was to be
C/SCA/2148/2019 JUDGMENT
paid by 30.09.2017. However, according to the writ applicant,
he came to be arrested in a criminal case for the offences
punishable under sections 465, 468, 471, 120 read with
section 34 of IPC filed at Kanchipuram, Tamilnadu. In
connection with the said criminal case, he was arrested and
remanded to judicial custody on 14.07.2017. He was granted
bail by the Judicial Magistrate on 16.08.2017, however, with a
condition that the writ applicant shall execute a bond of Rs. 50
Lac with two sureties and that he shall appear before the Court
every day at 10 AM till further orders. It was only on
30.10.2017 that the Magistrate relaxed the condition of
appearance before the Court. The writ applicant thereupon
immediately reached Gujarat and applied to the departmental
authorities under a letter dated 04.10.2017 for extension of
time for payment of the last installment of the tax and
surcharge and penalty under the said Scheme. Such an
application was filed before the Jurisdictional Commissioner as
well as before the CBDT. The Commissioner, by the impugned
order dated 18.10.2017, conveyed to the petitioner that he
had no authority to grant any such extension of time. The
CBDT has not yet replied to the writ applicant. At this stage,
the present writ application came to be filed.
8. The order dated 18th October, 2017 passed by the
Commissioner, referred to above, came to be challenged by
the writ applicant herein by filing the Special Civil Application
No.22952 of 2017. A Coordinate Bench of this Court disposed
of the petition holding as under;
"8. Having heard learned counsel for the parties and
having perused the documents on record, we may recall,
the said Scheme itself contains a specific provision
making the provision of section 119 of the Income Tax
C/SCA/2148/2019 JUDGMENT
Act applicable to the Scheme. Section 119 of the Act, as
is well known, pertains to the power of the CBDT to issue
instructions to subordinate authorities. In terms of sub-
section (1) of section 119, the Board has the power to
issue such orders, instructions and directions to the
income-tax authorities as it may deem fit for proper
administration of the Act and such authorities would be
required to observe and follow such orders and
instructions of the Board. Sub-section (2) of section
119 starts with an expression "without prejudice to the
generality of the forgoing power". Clause (b) thereof
provides that the Board may, if it considers it desirable
expedient so to do for avoiding genuine hardship in class
of cases by general or special order authorize any
income-tax authority to admit an application or claim for
any exemption, deduction, refund or any other relief
under the Act after the expiry of the period specified
under the Act for making such application or claim and
deal with the same on merits in accordance with law.
9) Under Clause (b) of sub-section (2) of section 119
thus, the Board has ample powers if it considers it
desirable or expedient with a view to avoiding genuine
hardship in any case to admit an application or claim
after the expiry of period specified for such purpose in
the Act. This section 119 has been made specifically
applicable to the Scheme under section 195 of the Act.
10) While recognizing such powers of the Board we do
not mean to convey that such powers could be exercised
lightly. We do not mean to water down the provisions of
the scheme which undoubtedly convey a sense of
urgency and finality to the disclosure scheme framed by
the parliament. Several provisions contained therein give
indication that the provisions of the Scheme, particularly
with respect to declaration of undisclosed income and
payment of tax, surcharge and penalty in terms of such
declaration in the prescribed time limit would brook no
delay. For example, section 187 of the said Act itself
while requiring the declarant to make the payment of
tax, surcharge and penalty under sections 184 and 185
on such dates as may be notified by the Central
Government, contains sub-section (3) which provides
that if the declarant fails to do the same on or before the
specified day, the declaration filed by him shall be
deemed never to have been made under the Scheme.
Thus, nonpayment of any of the installments by the due
C/SCA/2148/2019 JUDGMENT
dates would automatically annul the declaration made by
the declarant. Thereupon, the consequences envisaged
under the Scheme would follow.
11. .Nevertheless, neither the Scheme in general nor
section 195 of the said Act conveys any intention of the
legislature that the powers of the Board for relaxation of
the time limit in terms of sub-section (2) of section 119 of
the Income Tax Act were meant to be taken away. In
fact, section 195 of the Act made the provision of section
119 of the Income Tax Act specifically applicable to the
Scheme. In rare and exceptional cases howsoever few
and far between may be they, that may be the powers of
the Board to condone delay in terms of subsection (2) of
section 119 of the Income Tax Act are not shut out
completely in their applicability to the scheme.
12. Counsel for the Revenue, however, vehemently
contended that the Board has taken a conscious decision
not to make any departure primarily in view of the
finality sought to be attached to the declarations and
payments envisaged under the Scheme and to avoid any
discriminatory application of extensions. Our attention
was invited to a circular dated 28.03.2017 issued by the
Board. This circular was primarily in response to large
number of complaints and representations received by
CBDT by the declarants, who were unable to make the
payment of first installment itself. The Board separated
out certain technical issues and listed five typical
categories of reasons cited for such failure in para 3 as
under:
"3. As far as remaining declarants are concerned, the
reasons for not making timely payments are stated as
under:-
(a) Personal/emergency reasons
(b) Lack of liquidity
(c ) Confusion about the due date
(d) Rush at banks
(e) Any other reasons which are attributable to
declarants"
13. In this context, the Board cited detailed reasons
such as sufficient availability of time to come to a
conclusion that granting relaxation or extension beyond
the due date would not be feasible in case of delays due
C/SCA/2148/2019 JUDGMENT
to circumstances mentioned in para 3. While doing so,
the Board still specified as under:
"4. However, some instances have been brought to the
notice where the declarant effected the full payment
within the due date and same was also acknowledged by
the bank, but it was intimated later by the bank that fund
transfer did not materialize within the prescribed time
frame and the money was either returned back to the
declarant or credited to Govt. A/c after 5th December,
2016. Such instances clearly refer to the circumstances
over which the declarant had absolutely no control. Only,
in such cases, the concerned Pr. CIT/CIT is hereby
authorized to deal with the applications on a case to case
basis after verifying the claim of the declarant through
the relevant bank statements/certificates etc. and
consider on merits the condonation in appropriate cases
provided the amount payable as per the first installment
as well as second installment is paid by 31st March, 2017
by the concerned declarant."
14.Two things emerge from this circular of the Board.
One is that it related to the failure of large number of
declarants to make payment of first installment. The
Board was of the view that such difficulties cannot be
obviated and extension, as prayed for, cannot be
granted. This was conveyed to the concerned authorities.
While doing so in the above quoted para 4 of the circular,
Board still recognized its power for extension and
specified that in cases, where because of bank
transactions failing though the amount was already
deposited before the bank before the due date, the
amount was not received by the department, time would
be suitably extended subject to conditions contained
therein..
15.We are not concluding in this order whether the
petitioner has made out sufficient grounds for exercise of
the powers of the Board. Nevertheless, we have noted
that the relevant facts which include the circumstances
under which the petitioner claims incapacity to make the
payment of the last installment. It would be for the Board
to judge the facts on record and come to the conclusion
whether this is a fit case for exercise of powers under
sub-section (2) of section 119 of the Act. We request the
Board to do so preferably within three months from the
date of receipt of copy of this order. If the petitioner is
C/SCA/2148/2019 JUDGMENT
willing to deposit such amount of third installment with
reasonable interest as may be directed by the Board, he
may indicate so in writing to the Board within 10 days
from today.
16.With these observations and directions, the petition is
disposed."
9. Pursuant to the aforesaid order passed by this Court, the
issue with regard to extension of time for the payment of the
third/last installment of tax under the scheme was considered.
An order came to be passed dated 28th December, 2018 by the
Under Secretary (ITA-II) CBDT as under;
"4.5 Section 119 of the Act which grants power to the
Board is to condone delays in the context of the IDS
Scheme can only be applied in very exceptional
situation. In the case under consideration the declarant
had paid the first and third installment within the due
dates. The due date for making second installment
under the scheme was 31.09.2017 and the declarant was
having six months' time to pay third installment under
IDS. From the perusal of submission, it has been
ascertained that the declarant was confined to jail from
14.07.2017 and was granted bail on 16.08.2017 with the
condition that the declarant should remain present in
the court every day at 10:00 A.M. It has been stated that
as per the bail condition, he could not move out of
Tamilnadu from 14.07.2017 to 03.10.2017. It is to be
noted that the declarant was granted bail on 16.08.2017
and he could very well had arranged the funds even
though he was away from Ahmedabad. Even before
14.07.2017, when he was not taken into custody
between 11.04.2017 to 13.07.2017 he has almost three
and half months time to effect payment of the third
installment. The claim of the declarant that he could not
arrange funds as he was out of Gujarat is not
acceptable as the declarant was free to interact with
anyone with use of advanced communication facilities
during the period when he was on bail even though he
was in Tamilnadu. It is also to be noted that the
declarant did not make any genuine attempt to pay the
third installment under IDS. Therefore, it is treated as a
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lapse on the part of the declarant as he was well aware
of the payment schedule and it cannot be stated that the
situation was completely beyond the control of the
declarant. It is relevant to mention that the request for
further extension of time for making payment under first
and second installment of IDS on personal reasons had
been rejected by CBDT vide a general order dated
28.03.2017 in F.No.215/86/2012, ITA-II.
5. For the reasons mentioned in para above, there is
no merit in granting further relaxation or time for
effecting payment of the third installment for personal
reasons which are found to be solely attributable to the
declarant. In view of the above, I am directed to state
that it is not case for exercise of powers u/s.119 of the
Act by the Board and therefore, request for granting
further time, in case of the Petitioner, for effecting
payment of third installment under iDS is hereby
rejected."
10. Mr. Hardik Vora, the learned counsel appearing for the
writ applicant would submit that he does not intend to
raise the issue with respect to extension of the time for
the payment of the third/last installment, more
particularly, in view of the order dated 28 th December,
2018, referred to above. Mr. Vora submits that he would
like to confine his case only to the extent of adjusting
the amount already deposited by the writ applicant for
the relevant assessment year. In the aforesaid context,
Mr. Vora seeks to rely upon the following judgments;
"(i) Sangeeta Agarwal vs. Principal Commissioner of
Income Tax-I, (2018) 409 ITR 254 (MP); This decision of the
Madhya Pradesh High Court was challenged by the Revenue
before the Supreme Court. The Revenue lost before the
Supreme Court. The order of the Supreme Court is reported in
2019 103 Taxmann.com 420 (SC).
C/SCA/2148/2019 JUDGMENT
(ii) Shankarlal vs. Income Tax Officer & Ors., reported in
(1998) 230 ITR 536 (AP);
(iii) Patchala Seethramaiah vs. Commissioner of
Income Tax, Vijayawada & Ors., (2000) 241 ITR 287
(AP;
11. We take notice of the fact that the decision of the
Madhya Pradesh High Court in the case of Sangeeta Agrawal
(supra) is in context with the Income Declaration Scheme,
2016, with which, we are concerned. The other judgments are
in context with the Voluntary Disclosure of Income Scheme,
1997.
12. In such circumstances, referred to above, Mr. Vora prays
that the respondents be directed to adjust the amount for the
relevant assessment year, i.e, the amount already deposited
under the Scheme of 2016.
13. On the other hand, this writ application has been
vehemently opposed by Mr. M.R. Bhatt, the learned senior
counsel appearing for the Revenue. Mr. Bhatt would submit
that the claim put forward by the writ applicant as regards
adjusting the deposited amount is not tenable in law. Mr.
Bhatt first invited the attention of this Court to certain
provisions of the Scheme. Clause 187 of the Scheme reads
thus;
"Time for payment of tax.
187.(1) The tax and surcharge payable under section 14
and penalty payable under section 185 in respect of the
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undisclosed income, shall be paid on or before a date to
be notified by the Central Government in the Official
Gazette.
(2) The declarant shall file the proof of payment of tax,
surcharge and penalty on or before the date notified
under sub-section (1), with the Principal Commissioner or
the Commissioner, as the case may be, before whom the
declaration under section 183 was made.
(3) If the declarant fails to pay the tax, surcharge and
panalty in respect of the declaration made under
section 183 on or before the date specified under sub-
section (1), the declaration filed by him shall be deemed
never to have been made under this Scheme."
14. Clause 191 of the Scheme reads thus;
"Any amount of tax and surcharge paid under section
184 or penalty paid under section 185 in pursuance of a
declaration made under section 183 shall not be
refundable."
15. Clause 195 of the Scheme reads thus;
"The provisions of Chapter XV of the Income-tax Act
relating to liability in special cases and of section 119,
section 138 and section 189 of that Act or the provisions
of Chapter V of the Wealth-tax Act, 1957 (27 of 1957)
relating to liability in respect of assessment in special
cases shall, so far as may be, apply in relation to
proceedings under this Scheme as they apply in relation
to proceedings under the Scheme not to apply to certain
persons."
16. According to Mr. Bhatt, Clause 191 of the Scheme makes
it abundantly clear that any amount of tax paid under clause
184 or penalty under clause 185 in pursuance of a declaration
made under the clause 183 is not refundable. Mr. Bhatt would
submit that the sub-clause (3) of clause 187 provides for a
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deeming fiction. If the declarant fails to pay the tax in respect
of the declaration made under clause 183 on or before the
dates specified under sub-section (1) , the declaration filed by
the declarant would be deemed never to have been made
under the Scheme. Mr. Bhatt, thereafter, invited the attention
of this Court to Article 265 of the Constitution. According to Mr.
Bhatt, a Writ Court can order refund of tax or adjustment of
the tax only if the same has been paid under mistake of law.
He would submit that tax, if illegally levied, can also be
ordered to be refunded. He would submit that the doctrine of
"unjust enrichment" cannot be applied in all cases by a
straight-jacket formula. This doctrine has to be applied having
regard to the facts of each case. According to Mr. Bhatt, the
writ applicant cannot claim adjustment of the deposited
amount on the strength of Article 265 of the Constitution.
ANALYSIS
17. Having heard the learned counsel appearing for the
parties and having gone through the materials on record, the
only question that falls for our consideration is whether the
writ applicant is entitled to get the amount already deposited
by him under the scheme adjusted in any manner so far as his
tax liability is concerned.
18. It is settled law that an application under Art. 226 of the
Constitution would lie for enforcing the obligation of the State
to refund and/or return the money-collected towards an illegal
tax or duty. Ever since the decision in the case of Sales Tax
Officer v. Kanhaiya Lal, AIR 1959 SC 135, it has been
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consistently held that the payment towards tax or duty which
is without authority of law is a payment made under mistake
within the meaning of S. 72 of the Indian Contract Act. Section
72 is based on equitable principles. Therefore, by claiming to
retain the tax which has been collected without the authority
of law, the Government cannot enrich itself and it is liable to
make restitution to the person who had made payment under
any mistake or under coercion vide (1) Patel India (Pvt.) Ltd. v.
Union of India, ; (2) D. Cawasji and Co. v. State of Mysore,
(supra): (3) Shri Vallabh Glass Works Ltd. v. Union of India, (4)
Salonath Tea Co. v. Supdt. of Taxes, ; (5) Ayurveda Pharmacy
v. State of Tamil Nadu, .
19. Another basic proposition which is beyond controversy is
that the Court's jurisdiction under Art. 226 of the Constitution
is discretionary. The powers under Art. 226 cannot be taken
away or curtailed by any legislation short of amendment of the
Constitution (vide In re The Kerala Education Bill, 1957, AIR
1958 SC 956. But the Writ Court does not act arbitrarily and
guides itself according to certain well settled principles for
doing justice. Therefore, the Court's powers under Art. 226 are
subject to certain self-imposed limitations.
20. We shall first look into the decision of the Madhya
Pradesh High Court in the case of Sangeeta Agrawal (supra), as
significant reliance has been placed by the learned counsel
appearing for the writ applicant. In the said case, the writ
applicant, being an assessee, applied under the Scheme of
Income Declaration Scheme, 2016 as declared by the
Government of India, which came into force from 1st June,
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2016. The writ applicant disclosed an undisclosed income of a
particular amount for the A.Y.2014-15. The case of the writ
applicant was selected for scrutiny for the relevant assessment
year, and notice under Section 143(2) of the Act was issued.
His application, therefore, under the scheme came to be
rejected. The writ applicant claimed that the first installment
paid by him should be refunded. As the request was declined,
the writ applicant approached the High Court of Madhya
Pradesh. The Madhya Pradesh High Court allowed the writ
application holding as under;
"5. Learned counsel for the petitioner has submitted that
he has paid the first installment amounting to Rs.
3,28,068 on 19-11-2016 and after coming to know about
the aforesaid, he prayed for refund of the amount.
6. As per Clause No. 191 of the Finance Act, 2016, any
amount paid under Scheme is not refundable and,
therefore, he prayed for adjustment of the aforesaid
amount.
7. To support his argument he has drawn our attention to
the decision of the Hon'ble Apex Court in the case of
Hemalatha Gargya v. CIT [2003] 128 Taxman 190/259
ITR 1 in respect of similar Scheme which was issued in
the Year 1997 and submitted that in view of the law laid
by the Apex Court, his application cannot be rejected and
submitted that in the aforesaid matter the issue relates
to Scheme VDIS, 1997 in which, it was held that the
assessees were not entitled to the benefits of the scheme
since the payments made by them were not in terms of
the scheme, the revenue authorities were directed 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. He further submitted that similar direction has
been made by the Andhra Pradesh High Court in the case
of Patchala Seethramaiah v. CIT [1999] 107 Taxman 305/
[2000] 241 ITR 287 as well as Bombay High Court in the
case of Sajan Enterprises v. CIT[2006] 151 Taxman
164/282 ITR 636. With the aforesaid, he prays that the
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impugned order be quashed and respondent be directed
to adjust the amount of tax already paid under the
Income Declaration Scheme - 2016 against the demand
which is outstanding in relation to the pending
Assessment Year specifically Assessment Year 2014-15.
8. In the case of Patchala Seethramaiah (supra) the Apex
Court has held that when Commissioner declined to grant
certificate under Section 67(2) of the Finance Act, 1997
(Voluntary Disclosure of Income Scheme 1997) on the
ground that declarant paid tax beyond prescribed period,
such declaration was non est, and consequently, revenue
was not entitled to retain amount of tax paid under such
declaration. It was also held that the retention of tax
contrary to the very scheme was in teeth of Article 265 of
the Constitution of India, therefore, the provision under
Section 70 could not 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 was illegal and the petitioner was entitled to
refund the same.
9. In the case of Sajan Enterprises (supra), wherein the
assessee filed a declaration under Voluntary Disclosure
Scheme, 1997, but did not pay the entire tax liability
within stipulated period of 3 months from date of filing of
declaration. It was held by the Apex Court that any
amount paid after 90 days cannot be accepted under the
scheme, hence, the balance amount will have to be
refunded back to the assessee.
10. Learned counsel for the respondent opposed the
prayer and submitted that the Scheme of 2016 is very
clear and there is no provision to adjust the amount and,
therefore, no such direction can be issued and prays for
dismissal to the writ petition.
11. Para 14 of the decision of the Hon'ble Supreme Court
in the case of Hemalatha Gargya (supra) is relevant
which reads as under:--
"14. 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
C/SCA/2148/2019 JUDGMENT
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."
12. Considering the aforesaid, so also the law laid by
the Bombay High Court in the case of Hemalatha Gargya
(supra) as well as in Sajan Enterprises (supra), we quash
the impugned order and direct the respondent - Revenue
to adjust the amount of Rs. 3,28,068 which has been
deposited by the petitioner in relevant Assessment Year
2014-15. In the result, the writ petition stands allowed
and disposed of, but without any order as to costs."
21. Thus, the High Court directed the Revenue to adjust the
amount which had been deposited by the writ applicant in the
relevant assessment year. The Revenue, being aggrieved by
the order passed by the Madhya Pradesh High Court, went in
appeal before the Supreme Court. The Supreme Court declined
to interfere and rejected the special leave petition.
22. It appears that the Madhya Pradesh High Court relied
upon the decision of the Supreme Court in the case of
Hamalatha Gargya (supra). Para-14 of the judgment of the
Supreme Court in the case of Hemalatha Gargya (supra) has
been quoted by the Madhya Pradesh High Court in Para-11 of
its judgment. If we read para-14 of the Supreme Court
judgment in the case of Hemalatha, it reveals that the
assessees were not entitled to the benefit of the scheme, and
the payments made by those assessees under the scheme
were found to be not in terms of the scheme. In such
circumstances, the Supreme Court directed the Revenue
Authorities to refund or adjust the amount already deposited
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by the assessees. This, according to us, is a relevant
distinguishing feature so far as the case on hand is concerned.
In the case on hand, the payment with respect to the first two
installments were made in accordance with the scheme of
2016. It is the failure on the part of the writ applicant to
deposit the amount of the third installment in time that
created the trouble for him. The scheme, more particularly,
the Clause 191 thereof specifically provides that any amount of
tax paid under clause 184 in pursuance of a declaration made
under clause 183 shall not be refundable. The case on hand is
not one of illegal recovery of tax by the Revenue, or in other
words, any tax paid by the assessee under mistake of law.
This is a case of default on the part of the writ applicant as an
assessee, and the consequences of the default are itself
provided under the scheme in the form of Clause 191. We
find it difficult to accept the view of the Madhya Pradesh High
Court. It is true that the decision of the Madhya Pradesh High
Court has not been interfered with by the Supreme Court, but
at the same time, we should not ignore the fact that the
Supreme Court declined to dismiss the SLP summarily. The
judgment of the Andhra Pradesh High Court in the case of
Parchala Seethramaiah (supra) also, in our opinion, is of no
avail to the writ applicant. It was a case under the Voluntary
Disclosure of Income Scheme, 1997. The Andhra Pradesh High
Court, while allowing the writ petition and directing the
respondents to refund the tax paid under the declaration, held
as under;
"6. 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
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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
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. lit 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. "
23. The important distinguishing feature in the case of
Andhra Pradesh High Court is that in the Scheme of 1997,
there was no provision whereby the Revenue could retain the
tax so paid in respect of a declaration which was void and non-
est. Keeping this aspect in mind, the Andhra Pradesh High
Court took the view that in the absence of any such authority
of law, the retention of tax contrary to the very scheme was in
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the teeth of Article 265 of the Constitution.
24. The decision of the Andhra Pradesh High Court in the
case of Shankarlal (supra) also, in our opinion, is of no avail to
the writ applicant.
25. In the overall view of the matter, we are not convinced
with the case put up by the writ applicant for adjusting the
amount already deposited. At this stage, we may refer to few
relevant averments made in the reply filed on behalf of the
respondents. The same reads thus;
8. I submit that it is pertinent to make reference to the
relevant extracts of the Budget speech of the Hon'ble
Finance Minister in 2016 while introducing the IDS
scheme is reproduced below;
"159. We are moving towards a lower tax regime with
non-litigious approach. Thus, while compliant taxpayers
can expect a supportive interface with the department,
tax evasion will be countered strongly. Capability of the
tax department to detect tax evasion has improved
because of enhance. access to information and
availability of technology driven analytical tools to
process such information. ] want to give an opportunity
to the earlier non-compliant to move to the category of
compliant.
160. I propose a limited period Compliance Window for
domestic taxpayers to declare undisclosed income or
income represented in the form of any asset and clear up
their past tax transgressions by paying tax at 30%, and
surcharge at 7.5% and penalty at 7.5%, which is a total
of 45% of the undisclosed income. There will be no
scrutiny or enquiry regarding income declared in these
declarations under the Income Tax Act or the Wealth Tax
Act and the declarants will have immunity from
prosecution. Immunity from Benami Transaction
C/SCA/2148/2019 JUDGMENT
(Prohibition) Act, 1988 is also proposed subject to certain
conditions. The surcharge levied at 7.5% of undisclosed
income will be called Krishi Kalyan surcharge to be used
for agriculture and rural economy. We plan to open the
window under this Income Disclosure Scheme from 1st
June to 30th September, 2016 with an option to pay
amount due within two months of declaration.
161. Our Government is fully committed to remove black
money from the economy. Having given one opportunity
for evaded income to be declared once, we would then
like to focus all our resources for bringing people with
black money to books."
In view of the above, it is clear that after making a
declaration under the IDS, the petitioner is duty bound to
effect timely payment of liability under IDS and therefore,
the impugned order is legal and valid.
Furthermore, it is pertinent to mention that earlier, under
the Voluntary Disclosure Scheme, 1997, the issue of
granting general relaxation in prescribed schedule for the
payment of taxes was considered by the Hon'ble
Supreme Court in Appeal (civil) 6266 of 2000 dated
28.11.02 in the case of Hemalatha Gargya vs.
Commissioner of Income Tax. The Hon'ble Supreme
Court, on consideration of relevant provisions of the VDIS
Scheme, held that since the VDIS was a beneficial
scheme, the declarants seeking to claim the benefit
under the statutory scheme are bound to comply strictly
with the conditions under which benefit was granted
Thus, the Hon'ble Court upheld the action of Income-tax
Department in invalidating the declarations for non-
payment of taxes within the prescribed time frame under
the VDIS Scheme. Relying upon this judgement, the
Hon'ble Karnataka High Court in W.P. No. 5740/2018
dated 20.02.18 in the case of M/s Suman vs. The
Principal Commissioner, upheld action of the
jurisdictional Pr. CIT in not condoning the delay in
payment of the third installment.
In the present case, the reason for not making payment
of the last installment was clearly attributable to the
Petitioner, and therefore, impugned order is legal.
9. I submit that the petitioner under letter dated
24.02.2018 had expressed his willingness to pay interest
as the rate of 12% p.a. for the delayed last installment. I
submit that the IDS do not contain any provision for
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payment of interest for any delay in discharging the
liability towards tax, penalty and surcharge. There is no
provision for interest under IDS, as the declarants under
the IDS were expected to adhere to the prescribed time
limits. Any relaxation to the declarants who defaulted in
timely payment of any of the installment as per the
prescribed schedule without imposing any condition upon
those defaulters, would in factt be discriminatory against
those declarants who managed to adhere to the
prescribed time schedule. It is not within the ambit of
CBDT to impose additional conditions of payment of
interest for late payment as there is no such provision
under the IDS. Therefore, it is reiterated that the
Respondent-CBDT was right in rejecting delay
condonation application. Moreover, as mentioned in
earlier paras, IDS contains provisions for taxation of
income so declared under IDS as per the provisions of
Income-tax Act if the declaration becomes void.
10. I submit that the Petitioner has prayed in the
alternative that the taxes, surcharge and penalty paid
under the first and second installment of IDS be refunded
to the Petitioner. I humbly submit that such prayer may
not be entertained in view of subsection (3) of section
187 of Chapter IX of the Finance Act, 2016 which clearly
provides that if the declarant fails to pay the tax,
surcharge and penalty in respect of declaration made
under section 183 on or before the date so notified by
the Central Government in the Official Gazette, the
declaration filed by him shall be deemed never to have
been made under the IDS Scheme. Further, as per
section 191 of the Chapter IX of Finance Act,2016, any
amount of tax and surcharge paid under section 184 or
penalty paid under section 185 in pursuance of a
declaration made under section 183 shall not be
refundable. Therefore, the Petitioner at the time of
making a declaration under the IDS would have been
aware of the adverse consequences which might become
applicable in case he failed to adhere to the time
schedule for effecting payment. Therefore, the
petitioner's prayer with regard to refund of taxes,
surcharge and penalty paid under the first installment
and second installment of IDS does not merit
acceptance."
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26. In the overall view of the matter, we are convinced that
no case is made out by the writ applicant for interference.
27. In the result, this writ application fails and is hereby
rejected.
(J. B. PARDIWALA, J)
(ILESH J. VORA,J)
Vahid
