2018 (2) TMI 1600 - HC - Income Tax

Application for extension of time for payment of last installment of tax under the Income Disclosure Scheme 2016 - Time for payment of Tax - Held 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 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.

Summary

Issues Involved:
1. Extension of time for payment of the last installment of tax under the Income Disclosure Scheme 2016.
2. Applicability of Section 119 of the Income Tax Act to the Scheme.
3. Powers of the Central Board of Direct Taxes (CBDT) to grant extensions.
4. Consideration of genuine hardship cases.

Detailed Analysis:

1. Extension of Time for Payment of Last Installment:
The petitioner requested the Central Board of Direct Taxes (CBDT) to decide on their application for an extension of time to pay the last installment of tax under the Income Disclosure Scheme 2016. The petitioner had declared undisclosed income and was required to pay tax, surcharge, and penalty in three installments. Despite paying the first two installments on time, the petitioner was unable to pay the last installment by the due date due to being arrested and remanded in judicial custody in connection with a criminal case. The petitioner sought an extension from the CBDT and the Jurisdictional Commissioner, but the Commissioner stated he had no authority to grant such an extension, and the CBDT had not replied.

2. Applicability of Section 119 of the Income Tax Act:
Section 195 of the Income Disclosure Scheme 2016 made certain provisions of the Income Tax Act, including Section 119, applicable to the Scheme. Section 119 pertains to the power of the CBDT to issue instructions to subordinate authorities and to admit applications for exemptions, deductions, refunds, or other reliefs after the expiry of the specified period to avoid genuine hardship. The court emphasized that Section 119 has been specifically made applicable to the Scheme, indicating that the powers of the Board to condone delays are not entirely shut out.

3. Powers of the CBDT to Grant Extensions:
The court acknowledged that while the Scheme emphasizes urgency and finality, the powers of the CBDT under Section 119(2) of the Income Tax Act are still applicable. The Board has the authority to grant extensions in rare and exceptional cases to avoid genuine hardship. The court noted that the CBDT had issued a circular on 28.03.2017 addressing complaints from declarants who failed to make timely payments of the first installment. The circular recognized the Board's power to grant extensions in cases where the delay was due to circumstances beyond the declarant's control, such as bank transaction failures.

4. Consideration of Genuine Hardship Cases:
The court did not conclude whether the petitioner had made out sufficient grounds for the exercise of the Board's powers but noted the relevant facts, including the petitioner's incapacity to make the payment due to being in judicial custody. The court directed the Board to consider the petitioner's application and decide whether it is a fit case for exercising powers under Section 119(2) of the Income Tax Act. The Board was requested to make a decision within three months, and the petitioner was given ten days to indicate willingness to deposit the third installment with reasonable interest.

Conclusion:
The petition was disposed of with directions for the CBDT to consider the petitioner's application for an extension of time to pay the last installment under the Income Disclosure Scheme 2016, taking into account the genuine hardship faced by the petitioner. The court emphasized the applicability of Section 119 of the Income Tax Act to the Scheme and the Board's powers to grant extensions in exceptional cases.