2019 (12) TMI 919 - HC - Income Tax

Declaration filed under the Income Declaration Scheme, 2016 (IDS) rejected - payment of advance claimed to be adjusted - failure to pay the tax, surcharge and penalty on the undisclosed income declared by him before the due date, i.e., September 30, 2017 - HELD THAT - Once the tax deducted at source relevant for the period covered by the declaration filed under the Income Declaration Scheme is given credit as per the Central Board of Direct Taxes' clarification itself, there is no logic as to why advance tax paid for the very same period, which has not been given credit to earlier, should not be adjusted against the amount payable under the Income Declaration Scheme. In the case on hand, the declaration of the petitioner pertains to the assessment years 2010-11 to 2015-16. The advance tax of ₹ 1,10,000 was paid by him for the assessment year 2013-14. Admittedly, there was no regular assessment for the said year, whereby the said advance tax could have been adjusted. Therefore, there is no logic or rationale in denying the petitioner credit of this amount while computing the amount payable by him under the Income Declaration Scheme. The writ petition is accordingly allowed setting aside the impugned pro- ceedings dated February 6, 2018 passed by the Principal Commissioner of Income-tax-6, Hyderabad, rejecting the declaration filed by the petitioner under the Income Declaration Scheme, 2016. The said declaration shall be considered afresh by the Principal Commissioner of Income-tax-6, Hyderabad, duly giving credit not only to the tax deducted at source but also to the advance tax paid by the petitioner for the assessment year 2013- 14.

Summary

Issues involved:
Challenge to rejection of declaration under Income Declaration Scheme, 2016 due to non-payment of tax, surcharge, and penalty by the due date.

Detailed Analysis:

Issue 1: Rejection of declaration under Income Declaration Scheme
The petitioner filed a declaration under the Income Declaration Scheme, 2016, disclosing undisclosed income. The scheme allowed payment of tax, surcharge, and penalty in three installments by a specified due date. The petitioner claimed credit for TDS and advance tax paid for a specific assessment year. The first respondent rejected the declaration for not paying the required amount before the due date, citing no provision in the scheme for credit of prepaid taxes.

Issue 2: Credit for advance tax payment
The first respondent argued that the advance tax paid could not be adjusted against tax, surcharge, and penalty under the Income Declaration Scheme. An additional counter-affidavit contended that the petitioner's payment under the wrong head for advance tax could not be credited. However, the court noted that the first respondent raised this new ground belatedly, which cannot be considered. The court also rejected the contention that the payment was under a different head as there was no regular assessment for that year.

Issue 3: Precedent and legal interpretation
The court referred to a Delhi High Court case regarding the same scheme, where it was held that there was no bar on adjusting previously paid amounts related to the scheme. The court agreed with this view, emphasizing that if TDS is credited, advance tax for the same period should also be adjusted. The court dismissed the relevance of a different judgment cited by the respondents, stating it was not applicable to the current case.

Conclusion:
The court allowed the writ petition, setting aside the rejection of the declaration. The Principal Commissioner was directed to reconsider the declaration, giving credit for both TDS and advance tax paid by the petitioner. The court emphasized the need for prompt action on this matter, with a deadline set for the review process.