2008 (7) TMI 604 - HC - Income Tax

Application for benefit under the Voluntary Disclosure of Income Scheme, 1997, was rejected by the Commissioner of Income-tax - declaration without being accompanied by payment of tax under section 66 of the Finance Act, 1997, the tax with interest should have been paid on or before March 30, 1998. The petitioner admittedly delayed payment by one day, delay in payment under the Voluntary Disclosure of Income Scheme, 1997, will be fatal to the claim - petitioner is rightly held to be not eligible for the Voluntary Disclosure of Income Scheme, 1997, benefit Held that - intention of the petitioner for settlement under the Voluntary Disclosure of Income Scheme, 1997, is very clear and the denial of the benefit is only on account of a misunderstanding on his side with regard to the last date on which amount was payable, respondents directed to consider sympathetically the petitioner s claim pursuant to the proceedings initiated under section 148, particularly in regard to the levy of penalty, waiver of interest, etc. The O. P. is disposed of as above

Summary

Issues:
Challenge to rejection of application under Voluntary Disclosure of Income Scheme, 1997 based on delay in tax payment.

Analysis:
The petitioner challenged the rejection of their application under the Voluntary Disclosure of Income Scheme, 1997, due to a delay in tax payment. The petitioner submitted the application on December 30, 1997, to the Assessing Officer at Kollam, who then forwarded it to the Commissioner of Income-tax at Trivandrum. The Commissioner received the application on December 31, 1997. Although the tax was not remitted along with the declaration, it was paid with interest on March 31, 1998, one day after the deadline as per the Commissioner. The rejection led to a notice under section 148 for taxing the escaped income based on the scheme's declaration.

The respondent argued that the application's filing date should be based on when the Commissioner received it. However, the petitioner contended that the date should be when the Assessing Officer received the declaration. The court held that the Department's argument was untenable as the application's date should be when the Assessing Officer received it, not when the Commissioner did. Rejecting the application due to a delay in transmission would create an unfair situation for applicants. Therefore, the court concluded that the rejection based on the delay in tax payment was justified but noted the petitioner's clear intention for settlement under the scheme. The court directed the respondents to consider the petitioner's claim sympathetically regarding penalty and interest waivers in the subsequent proceedings initiated under section 148.

In conclusion, the court upheld the rejection of the application under the Voluntary Disclosure of Income Scheme, 1997, due to the delay in tax payment but acknowledged the petitioner's genuine intent for settlement. The court directed the respondents to review the petitioner's claim regarding penalties and interest waivers in the ongoing proceedings.