2019 (2) TMI 240 - HC - Income Tax

Delay in payment to Income Declaration Scheme - Condonation of delay in making payment of first installment by the defaulters who have not paid any amount will now or further extending the date beyond the due date for regularising/ facilitating the payment of liabilities under IDS - power of the board u/s 119(2) - Held that - The IDS itself did not make any provisions for relaxation. The Scheme did retain the power of the board under Section 119(2) of the Act. In exercise of such powers, the board laid down the areas where relaxation would be granted and consciously decided not to grant extension or condone delay in cases where reasons were attributable to the declarants. Under Section 119(2) of the Act, the board can exercise power either in individual case or in case of the Assesses as a class. Once the board decided the entire issue by taking into account declaratory as a class, while applying such decision to individual cases, no further flexibility was left open. CBDT Circular dated 28th March, 2017, therefore, cannot be treated as the decision of the board abdicating its power under Section 119(2). It is, in fact, in exercise of such powers that the board took certain conscious decisions. It was not argued before us that the decision of the board was arbitrary or unreasonable so as to be struck down in as opposed to Article 14 of the Constitution of India. In any case, when the legislature frames a special Scheme such as the present one, giving certain concession to the Assesses who had till then not declared their incomes truly and fully, legislature can always lay down its limits of the concession to be granted. As correctly considered by the CBDT in its impugned order dated 16th October, 2017, such concession and excess indulgence in such cases, could have demotivating effect on honest tax payers making regular and prompt tax deposit. This Court in SADHANA RAJENDRA JAIN VERSUS THE CENTRAL BOARD OF DIRECT TAXES & ANOTHER 2017 (9) TMI 666 - BOMBAY HIGH COURT has given any directions to the board to decide the matter in a particular fashion. The Court merely required the board to decide the Petitioner s application for condonation of delay, particularly, bearing in mind the Circular dated 28th March, 2017. The observations of the Court in this respect, were not meant to be final or conclusive. This has been so specifically stated in the concluding portion of order itself. We, therefore, find that the board was correct in holding that the application of the Petitioner for condonation of delay was not supported by CBDT Circular dated 27th March, 2018. In the result, we do find any reason to interfere in the Petition.

Summary

Issues:
1. Challenge to orders dated 28th March, 2017 and 16th October, 2017 under the Income Declaration Scheme of 2016.
2. Request for condonation of delay due to personal reasons.
3. Challenge to the validity of CBDT Circular dated 28th March, 2017.

Analysis:
Issue 1:
The Petitioner challenged the orders dated 28th March, 2017 and 16th October, 2017 under the Income Declaration Scheme of 2016. The Petitioner failed to deposit the required amounts by the specified deadline due to personal reasons, leading to the rejection of the application for condonation of delay by the CBDT. The Court upheld the decision of the board, emphasizing the importance of maintaining the integrity of the Scheme and not granting further relaxations that could demotivate honest taxpayers.

Issue 2:
The Petitioner sought condonation of delay citing personal reasons for the inability to make the payments within the specified timeframe. The CBDT Circular dated 28th March, 2017 outlined specific circumstances where delay in payment could be condoned, such as issues with banking transactions. However, the board consciously decided not to extend the time limit for cases involving personal or emergency reasons, lack of liquidity, or other reasons attributable to the declarants. The Court supported the board's decision, highlighting that the Scheme did not provide for relaxation and the board acted within its powers under Section 119(2) of the Income Tax Act, 1961.

Issue 3:
The Petitioner also challenged the validity of the CBDT Circular dated 28th March, 2017, arguing that it restricted the board's power to condone delay even in cases of genuine hardship. The Court determined that the Circular was not ultra vires and was issued to address specific difficulties faced by declarants in making timely payments. The Circular provided limited relaxation in certain cases but maintained strict guidelines for condonation of delay, ensuring consistency and fairness in the application of the Scheme.

In conclusion, the Court dismissed the Petition, upholding the decisions of the board and emphasizing the importance of adhering to the provisions of the Income Declaration Scheme to promote tax compliance and discourage non-compliance.