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2023 (3) TMI 156 - HC - Income TaxRefund/adjustment of the amount deposited in pursuance to the declaration made under Section 183 of the Finance Act, 2016 The Income Declaration Scheme, 2016 against his tax liabilities under the Income Tax Act, 1961 - Whether in a fact where the amount so assessed for the assessment years 2015-16 and 2016-17 has been paid by the petitioner after taking recourse of the Income Tax Department under Section 132 and 153A of the Income Tax Act, 1961 even then retention of the amount so deposited by virtue of the provision of Section 183 of the Finance Act, 2016 can be allowed to be retained? - HELD THAT - This Court, after going through the Income Declaration Scheme, 2016 and the Voluntary Disclosure of Income Scheme, 1997, has found therefrom that the provision of Section 67(2) of the Voluntary Disclosure of Income Scheme, 1997 is pari materia to Section 187(3) of the Income Declaration Scheme, 2016 and the provision as contained under Section 70 of the Voluntary Disclosure of Income Scheme, 1997 is pari materia to Section 191 of the Income Declaration Scheme, 2016. This Court, on consideration of the judgment rendered by Hon ble Apex Court in the case of Hemalatha Gargya 2002 (11) TMI 6 - SUPREME COURT where the consideration has been given on the issue of refund on the basis of the amount having not been deposited in entirety by way of declaration made under Section 67 and even when the specific bar is there not to refund in view of provision of Section 70, the direction has been passed for refund of the amount in favour of the assessee. The ground which has been taken that the amount since has been deposited by way of declaration made under Section 183 contained in the Finance Act, 2016, which contains a provision under Section 191 for not refunding the amount so deposited in any circumstances will be applicable over and above the return filed and accepted by the respondent Income Tax Department. But the said argument is not acceptable to this Court for two reasons, first, on the similar provision as was contained in Section 70 of the Scheme 1997 when the Hon ble Apex Court has been pleased to direct for refund of amount then it is not available for the Income Tax Department to take this ground negating the claim of assessee/writ petitioner merely on the ground that the provision of Section 191 debars from making refund of the amount. The second reason that the respondent Income Tax Department cannot be said to act contrary to its action after accepting the return filed for the assessment year 2015-16 and 2016-17, meaning thereby, that the liability of the writ petitioner of filing return for the aforesaid assessment year is no more and once it is no more, there is no authority of the Income Tax Department to retain the amount and retaining the said amount will be said to be in the teeth of provision of Article 265 of the Constitution of India. Accordingly and in the facts and circumstances of the case, this Court is of the view that the writ petition deserves to be allowed. The amount so deposited by the writ petitioner under the Scheme, 2016 is directed to be adjusted in the future assessment. Entitlement for interest over the amount retained - Refund of tax along with interest in favour of the assessee will be only in a case if the tax paid either as advance tax or on self-assessment, in order to discharge the obligation under the Act. Not complying the obligation under the Act, gives consequences to an assessee just as non-compliance or an order passed by the authority under the Act. Thus, if there is no voluntary payment of tax on self-assessment and in that circumstances, there is no question of making payment of interest to the assessee. As in the given facts of the case, it is not the case of the petitioner that he has paid the tax at source or paid the tax advance tax. However, the case of the petitioner is that he has paid the tax on self-assessment i.e., under the provision of Section 183 but his conduct of giving declaration itself suggest and shows that the self-assessment shown by the petitioner is not found to be in accordance with law and that is the reason the declaration to that effect has been given and that ultimately led to assessing the assessee by taking recourse of the provision of Section 153A of the Act, 1961. This Court, in view of the facts of the given case, is of the view that the conduct of the petitioner cannot be considered to be proper for issuance of a direction for payment of interest in favour of the writ petitioner even if this Court has directed for adjustment of the amount so deposited.
Issues Involved:
1. Entitlement for refund/adjustment of the amount deposited under Section 183 of the Finance Act, 2016. 2. Retention of the amount by the Income Tax Department after assessment and acceptance of returns for the years 2015-16 and 2016-17. 3. Legality of retaining the amount exceeding the assessed liability of the petitioner. Issue-wise Detailed Analysis: 1. Entitlement for refund/adjustment of the amount deposited under Section 183 of the Finance Act, 2016: The petitioner, a regular assessee under the Income Tax Department, declared undisclosed income under the Income Declaration Scheme, 2016, and deposited two instalments of Rs.45 lacs each but failed to deposit the third instalment of Rs.90 lacs. As per Section 187(3) of the Finance Act, 2016, failure to pay the total tax, surcharge, and penalty within the stipulated time renders the declaration non est. The petitioner argued that the amount deposited should be refunded or adjusted since the declaration is deemed non-existent. The petitioner cited judgments from the Hon'ble Supreme Court and High Courts that supported refund or adjustment of amounts deposited under similar schemes. 2. Retention of the amount by the Income Tax Department after assessment and acceptance of returns for the years 2015-16 and 2016-17: The petitioner's premises were subjected to a search and seizure operation under Section 132 of the Income Tax Act, 1961, leading to revised returns for the assessment years 2015-16 and 2016-17, which were accepted by the Assessing Authority. The petitioner argued that since the returns were accepted and tax liabilities assessed, the Income Tax Department should not retain the amount deposited under the declaration scheme. The petitioner relied on the principle that retaining the amount without legal authority violates Article 265 of the Constitution of India. 3. Legality of retaining the amount exceeding the assessed liability of the petitioner: The Income Tax Department argued that under Section 191 of the Finance Act, 2016, any amount paid under the declaration scheme is non-refundable. However, the court noted that the Hon'ble Supreme Court, in similar cases, directed refunds despite statutory provisions barring refunds. The court emphasized that retaining the amount after accepting the revised returns for the assessment years 2015-16 and 2016-17 would be arbitrary and in violation of Article 265 of the Constitution of India. Conclusion: The court allowed the writ petition, directing the adjustment of the amount deposited by the petitioner under the Scheme, 2016, in future assessments. The court rejected the petitioner's prayer for interest on the retained amount, citing the petitioner's conduct and non-compliance with statutory obligations under Section 139 of the Income Tax Act, 1961. The court concluded that retaining the amount without authority would be arbitrary and unconstitutional. Separate Judgments: Both judges, Sujit Narayan Prasad and Subhash Chand, concurred with the judgment and the directions issued.
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