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Issues involved: Refund of tax paid under the Voluntary Disclosure of Income Scheme, 1997 (the scheme) due to delay in payment and the applicability of sections 67(2) and 70 of the scheme.
Summary: The petitioner sought a refund of tax paid under the scheme, which was declined by the respondents citing section 70 of the scheme prohibiting refunds under any circumstances. The petitioner argued that a declaration beyond the prescribed period is void under section 67(2) and thus, the refusal to refund the tax is unsustainable. The respondents relied on section 70 to justify their action. The court considered whether a declarant who paid tax beyond the prescribed period under the scheme is entitled to a refund. The scheme aimed to provide a concessional rate of tax and immunity for concealed income disclosure, with specific procedures outlined. Sections 65, 66, and 67 of the scheme detail the declaration filing, proof of tax payment, and the time limit for tax payment, respectively. It was noted that non-payment of tax within three months renders the declaration void under section 67(2). Section 70 states that no tax amount paid under a declaration is refundable under any circumstances. The court emphasized that the retention of tax paid under a void declaration is against the scheme and unconstitutional under Article 265 of the Constitution of India. Referring to a previous case, the court clarified that section 70 does not prevent adjustments if the declaration is ineligible, but it does not allow for the retention of tax paid under a void declaration. Consequently, the court allowed the writ petition, directing the respondents to refund the tax paid by the petitioner within two months unless adjustments are required for arrears.
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