Madhya Pradesh High Court
Subhash Chandra vs Commissioner Of Income Tax on 16 March, 2022
Author: Vivek Rusia
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IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE AMAR NATH (KESHARWANI)
ON THE 4th OF MARCH, 2022
WRIT PETITION No. 2271 of 2001
Between:-
SUBHASH CHANDRA S/O RAMESH CHANDRA
ASAWA, AGE 44, OCCUPATION SERVICE,
RESIDING AT 50, SHRADDANAND MARG INDORE
(M.P.)
.....PETITIONER
AND
COMMISSIONER OF INCOME TAX INDORE
1
REGION, OPP. WHITE CHURCH, A.B. ROAD,
.
INDORE
INCOME TAX OFFICER, WARD-02 (6) AYKAR
2
BHAWAN, OPP. WHITE CHURCH, A.B. ROAD,
.
INDORE (M.P.)
3 UNION OF INDIA, THRU. SECRETARY, MINISTRY
. OF FINANCE, NEW DELHI
....RESPONDENTS
ORDER
Shri Kaustubh Fadnis learned counsel for the petitioner.
Ms. Veena Mandlik learned counsel for the respondents.
******
Petitioner has filed this petition being aggrieved by the order
dated 29.03.2021 passed by Commissioner of Income Tax, whereby
revision filed under section 264 of Income Tax Act in respect of
assessment of the year 1996-97 and 1997-98 has been disposed of
against the petitioner.
The facts of the case in short are as under: -
- : 2 :-
1. Petitioner became the assessee of the income tax department in
the year 1997-98. At the relevant time, he was an employee of United
India Insurance Company. He did not file an income tax return from
1993-94, 1994-95, 1995-96,1996-97 and 1997-98 within the
prescribed time as per provision of 139 (1) of Income Tax Act. He filed
his IT returns for the above 4 assessment years only on 23.01.1998.
According to the petitioner, he could not file the above IT returns
within the prescribed time because certificates under Section 203 of
Income Tax Act vide form No.16 which were issued by the employer
only on 24.06.1993, 31.05.1994, 03.05.1995, 13.05.1996 and
11.07.1997 for the assessment year 1993-94, 1994-95, 1995-96, 1996-
97 and 1997-98 respectively. According to the petitioner the advance
tax had already been paid for the aforesaid assessment year well before
the prescribed due dates by the employer. In these returns, the
petitioner has shown his regular income from salary, interest,
dividends and capital gains.
2. The Central Government introduced the Voluntary Disclosure
of Income Scheme, 1997 (hereinafter referred to as "VDIS") by
introducing CHAPTER IV comprising sections 62 to 78 in the
Finance Act, 1997. Under the VDIS all persons were permitted to
submit income tax return between the period the date of
commencement of scheme till 31st day of December 1997 in respect of
any income chargeable to tax under the Income-tax for any assessment
year, firstly- for which he has failed to furnish a return, secondly-
which he has failed to disclose in a return of income tax furnished by
him, thirdly, 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. Under Section 65 of Finance Act, 1997, a declaration under
subsection 64 shall be made to the Commissioner of IT in the
prescribed form. The tax payable under this scheme shall be paid by
the declarant and shall submit proof of payment of such tax. Section 68
of Finance Act, 1997 provides that income so voluntarily disclosed
shall not be included in the total income of the declarant for any
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assessment year under the Income-tax Act on two conditions namely
the declarant credits such amount in the books of account, if any,
maintained by him and the income-tax in respect of voluntarily
disclosed income tax is paid by the declarant within the time specified
in section 66 or section 67. After fulfilling aforesaid requirements, the
Commissioner shall grant a certificate to the declarant. Section 70 says
that any amount of tax paid under this VDIS scheme shall not be
refundable under any circumstances.
3. The petitioner took the advantage of aforesaid VDIS scheme and
filed an application under Section 65 (1) of the said act on 19.12.1997
disclosing the income to the tune of Rs.1,57,410/-, Rs. 1,81,823/-, Rs.
2,54,955/-, Rs.3,34,234/- and Rs. 4,46,525/- for the assessment year
1993-94, 1994-95, 1995-96, 1996-97 and 1997 -98. The petitioner has
shown the aforesaid income from sources namely cash, debtors, shares
and bank account, which is as under:-
Availability of value of assets as on 31 st each year as per
Balance- Sheet attached with the returns of income for the A.Y.1993-
94;94-95;95-96, 95-97;97-98
Asstt.Yrs 1993-94 1994-95 1995-96 1996-97 1997-98
Particulars 47102 96318 139234 205501 314396
case
Debtors 373459 467752 625577 930577 11,33,6577
Shares 107735 157410 156859 122259 128469
Bank A/c 70917 99357 187884 166149 170286
Value of 599213 820838 1109554 1124486 1746728
total assets
TOTAL
VALUE OF
ASSETS
DISCLSOE 157410 181823 254955 334234 446525
D UNDER
VDIS
4. In the IT returns for the assessment year 1996-97 and 1997-98,
the petitioner has deducted the income disclosed in VDIS in his total
income and assesses the income tax on balance amount Rs.40,000/- i.e.
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and tax liability as 'Nil'. The Income Tax Officer has rejected the
returns of the AY 1996-97and1997-98 under Section 143 (1) (4) of the
Income Tax Act.
5. Being aggrieved by the aforesaid rejection, the petitioner
preferred two revisions for both the assessment years the AY 1996-
97and1997-98 before the Commissioner of Income Tax on two
grounds, firstly; that he could not file the income tax return before the
Income Tax Officer in time due to circumstances beyond his control,
secondly, he is entitled to refund of Rs. 45,000/- as he had paid the
Income-tax under VDIS-1997 and again payment of tax on the said
income does not arise, therefore assessment be revised for the
assessment of the year 1996-97 and 1997-98 for granting the refund of
Rs. 45,000/- and 92,064/- respectively. Vide common order dated
29.03.2001, the Commissioner of Income Tax Indore has dismissed
both the revision on the ground that the petitioner being assessee was
not eligible for basis exemption under query No.25 of VDIS as he is
trying to take benefit under the Income Tax as well as VDIS which is
not permissible. It has also been held that the assessee i.e. petitioner is
an employee of United India Insurance Company, he gave the incorrect
reason that there was a delay in payment of income-tax within the
prescribed limit under Section 139 (1) due to the non-availability of
the TDS certificate. Form 16 has been issued to the petitioner by the
employer for the assessment year 1996-97 and 1997-98 on 13.05.1996
and 11.04.1997 respectively. The Commissioner has dismissed the
revision on the ground that the nature of assets of income disclosed
under VDIS as well as in the regular IT returns is different. The
description of assets shown in the VDIS applications is not at all match
with the source of income shown in the return. No TDS has been
deducted or advance tax has been paid with respect to assets declared
under VDIS and now filing belated return of these to assessment years,
the petitioner is avoiding income-tax by deducting the income
disclosed in the VDIS.
6. Being aggrieved by the aforesaid, the present petition has been
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filed. Although, the petitioner ought to have filed two different
petitions because the petition is about two assessment years.
7. Learned counsel for the petitioner has argued that the petitioner
took advantage of the VDIS by voluntary disclosing his income in
respect of assessment years 1993-94 to 1997-98. He has paid the entire
tax payable under the VDIS which is not in dispute. The said
declaration has duly been accepted by the Commissioner and a
certificate as required under Section 68 (2) of Finance Act, 1997 was
issued. Later on, he filed income tax returns for the assessment year
1996-97 and 1997-98 on 23.01.1998 which was within the period
permissible under sub-section 4 of section 139 and as per 68 of
Finance Act, the amount of the voluntarily disclosed income is not to
be included in the total income of the declarant/assessee for any
particular assessment year as per the VDIS, hence, the petitioner has
rightly excluded the undisclosed from his total income. Hence, in these
two assessment years involved in this case, no tax was payable on the
income of Rs. 40,000/- claimed refund of the amount of Rs. 49,003/-
being the advance tax and TDS, likewise Rs.92,064/- for the
assessment year 1997-98. It is further submitted by the learned counsel
that despite sending intimation under Section 143(1) (a) of Income-tax,
the refund has wrongly declined by Commissioner.
8. Learned counsel for the petitioner further submitted that the
learned Commissioner of IT has wrongly relied on the answer to query
No.25 while dismissing the revision. Section 237 of the Income Tax
Act clearly provides that where the advance tax paid by the assessee
exceeds the amount with which he is chargeable for that year shall be
entitled to refund, therefore by deducting the income disclosed in the
VDIS from his total income, no liability to pay the income tax would
come on the petitioner, hence, tax paid as advance tax is liable to be
refunded.
9. Learned counsel for the petitioner further submitted that the tax
paid under VDIS is not a tax paid under I.T. Act, therefore, tax
deducted at source and/ or any other mode of payment of Tax under
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Section IT Act cannot be used to disclose the obligation to pay the tax
under VDIS on the disclosure of undisclosed income. In support of his
contention, he has placed reliance on the judgment passed by the High
Court of Bombay in the case of Earnest Business Services (P) Ltd.
And another Vs. The Commissioner of Income Tax and other
reported (2017) 294 CTR (Bombay) 80.
10. Learned counsel for the Income-tax/respondent has contended
that the petitioner initially did not file the IT returns for the assessment
year 1993-94, 1994-95, 1995-96, 1996-97 and 1997 -98 well within
time. The VDIS scheme was introduced and he disclosed his income
from sources other than regular income and paid the income tax.
Thereafter he filed the return on the basis of different sources and
assets and deducted the income disclosed in VDIS and claimed the
refund, which is reprobate to the scheme. The VDIS was launched to
enable those assessees who had failed to disclose their income to the
Department earlier and disclose the same and pay due taxes thereon.
The scheme was announced an only purpose to mop up additional
revenue as a specific provision was inserted in section 70 of the VDIS
1997 as any amount of tax paid pursuant to the declaration in this
scheme shall not be refundable under any circumstances and the
petitioner is trying to do the same thing. The credit can be claimed
only in assessment in the regular course of income in respect of which
the tax has been deducted. As per provision of section 237 of Income
Tax Act, the assessee did not satisfy the Assessing Officer that the
amount of tax paid by him for the two assessment years under subject
exceeded the amount of tax chargeable in him under the income tax
Act. It is evident from the certificate under section 203 of I.T. Act
issued by the employer each assessment year 1993-94 to 1997-98, the
assessee did not report any income to the employer, therefore, no tax
has been deducted from the source of income shown in VDIS. Query
No.25 has rightly been applied in the case of the petitioner while
dismissing the revision. In support of her contention, learned counsel
for the Income Tax has also placed reliance on judgment Earnest
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Business Services (P) Ltd (supra )on the point the adjustment as
sought of the tax paid as TDS under the 1961 Act to reduce the tax
payable under the Scheme of 1997 Act is not permissible. Finally
learned counsel has concluded by submitting that there is no substance
in the writ petition and the same is liable to be dismissed.
We have heard learned counsel for the parties and perused the
record as well as judgment cited by the learned counsels.
11. The Voluntary Disclosure of Income Scheme, 1997 (VDIS)
was introduced by way of the Finance Act, 1997. Section (a) defines
''declarant'' and according to which a person making the declaration
under sub-section (1) of section 64of Finance Act, 1997 which enables
any person to make the declaration in accordance with the provision of
section 65 in respect of any income chargeable to tax under the
Income-tax Act for any assessment year between the date of
commencement of scheme till 31 December 1997, firstly, for which he
has failed to furnish a return under section 139 of the Income Tax Act,
secondly, which he has failed to disclose in a return of income
furnished by him under the Income Tax Act before the date of
commencement of this scheme and Thirdly, which has escaped
assessment by reason of the omission or failure on the part of such
person to make a return. When the petitioner submitted a declaration
under the VDIS, there was no income disclosure by way of IT returns
filed under Section 139 of the Income Tax Act. Despite anything
contained in the Income Tax Act, income tax shall be charged @ 30%
in respect of income so disclosed and income shall be called as
voluntary disclose income and if declarant being a person other than
company. According to the petitioner, he disclosed his income for the
assessment year 1996-97 and 1997-98 and paid the income tax @ 30%
within time.
12. Section 68 of the Finance Act, 1997 provides that the amount of
the voluntarily disclosed income shall not be included in the total
income of the declarant for the assessment year under the Income-tax
Act if he fulfills the two conditions:
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(i). the declarant credits such amount in the books of account,
if any maintained by him for any source of income or in any other
record, intimates the credit to the Assessing Officer
(ii) the income tax in respect of voluntarily disclosed income
paid by the declarant.
13. Section 69 of the Finance Act, provides that the voluntarily
disclosed income shall not affect the finality of the completed
assessment. It means the declarant shall not be entitled to reopen any
assessment or reassessment made under the Income-tax Act or claim
any set-off or relief in any appeal, reference in respect of voluntarily
disclosed income. Section 70 of Finance Act, 1997 disentitles the
declarant to claim a refund of the amount of tax paid in pursuance of a
declaration made under sub-section (1) of section 64. Therefore, co-
joint reading of Sections 68, 69 and 70 makes it clear that tax paid
under VDIS is totally different to the income-tax paid under Income-
tax Act. The tax on 'voluntary disclosed income' for which he has not
filed any return under Section 139 or which he has failed to disclose in
the income-tax return or which he has escaped assessment by reason of
the omission or failure and income so voluntarily disclosed shall not
be included in his total income for any assessment of under income-tax
Act and on the basis of Voluntary scheme, he shall not be entitled to
reopen any assessment and the tax paid under VDIS shall not be
refundable in any circumstances.
14. In the present case, the petitioner has first availed the benefit of
VDIS by submitting the return 01.07.1997 and 31.12.1997 for the
assessment year 1993-94 to 1997-98 and paid the income-tax @ 30%.
Thereafter, he filed the belated IT returns under Section 139 on
23.01.1998 and deducted income so disclosed in VDIS i.e. voluntary
disclose income. For the assessment year 1993-94 to 1997-98, he has
declared his income Rs.13,74,947/- with the description of assets i.e.
cash, debtor, share and bank account and paid income tax Rs.
4,12,482/- on 26.12.1997. Thereafter, he submitted return for those two
assessments years 1996-97 and 1997-98 by declaring income from
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salary, NSC, Bank, Unit Trust, Mutual fund etc Rs.3,74,234/- and
deducted the income under VDIS and claimed tax liability 'Nil' to
claim the refund of Rs.49003/-. This is not the intention of the VDIS.
The voluntarily disclosed income is not liable to be included with
regular income declared in the return under section 139 as tax paid
under VDIS is not liable to be refunded at any cost. The income tax
return submitted under Section 139 is not liable to be reopened after
availing of the VDIS. The source of income shown for voluntary
disclose income and income source shown in the return under Section
139 is altogether different. Under Section 64 of the Finance Act only
those persons are entitled to give declaration in respect of income
chargeable under the tax under the Income Tax Act for any assessment
year, firstly for which he has failed to furnish return under Section 139,
secondly, which he has failed to disclose in a return of income
furnished by him under the Income Tax Act before the date of
commencement of the scheme, thirdly, which has escaped assessment
by reason of the omission or failure. As per clause sub-clause (a), in
this case, the petitioner did not furnish any return under Section 139
before 31.12.1997, therefore, in voluntarily disclosed income, he ought
to have disclosed his all income from all the sources because till
31.12.1997, he did not disclose his any of the income by submitting
the return under Section 139. He submitted the return under section
139, after 31.12.1997 i.e. 23.01.1998 to bring his case within clause 64
(1) (b). He submitted belated IT returns under section 139 but as per
the requirement of section 64 (1)(b) that ought to have been filed
before the date of commencement of the scheme. Since he did not
submit any return under section 139 before this scheme, therefore
involuntarily disclosed income, he ought to have disclosed his entire
income. He cannot be permitted to commit mischief with the Act or
VDIS by disclosing part of his income in VDIS and thereafter part of
his income by submitting belated return as the Bombay High Court in
case of Earnest Business Services (P) Ltd (supra) has rightly held that
both the tax altogether different and there cannot be any adjustment
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between them. Section 70 and 71 mandate that the income disclosed in
VDIS shall not be included income under section 139 means income
which had already been disclosed and that assessment is not liable to
be reopened. The petitioner in order to avail the undue benefit of this
scheme has filed the belated return by contending that the filing of
such belated return is permissible and claimed the deduction of income
as well as the refund of the tax.
15. In view of the above, we are not inclined to interfere with the
order dated 29.03.2001 passed by the Commissioner, Income-tax.
Hence, Writ Petition is hereby dismissed.
Certified copy as per Rules.
( VIVEK RUSIA ) ( AMAR NATH (KESHARWANI)
JUDGE JUDGE
praveen/-
Digitally signed by PRAVEEN
NAYAK
Date: 2022.03.16 10:42:04
+05'30'
