2023 (5) TMI 282 - HC - Income Tax

Income Declaration Scheme - Declaration of undisclosed income - petitioner had deposited an amount under the IDS but had not deposited the entire amount which was otherwise calculated in terms of the said Scheme - HELD THAT - Failure on the part of the petitioner to pay the tax in its entirety in respect of the declaration made under section 183 would be deemed to have never been made under the IDS. The issue as to whether the partial amount that was deposited by a declarant would get forfeited in almost similar circumstances came up for consideration before the Apex Court in Hemalatha Gargya Vs. Commissioner of Income Tax, A.P. Anr. 2002 (11) TMI 6 - SUPREME COURT held that the time limits prescribed under the VDIS were mandatory and thus could not be extended on any equitable consideration, it nevertheless directed the refund or adjustment of the amount so deposited under the Scheme. The Andhra Pradesh High Court in Patchala Seetharamaiah Vs. Commissioner of Income-tax and Anr. 1999 (9) TMI 62 - ANDHRA PRADESH HIGH COURT while considering the provisions of the VDIS held that retention of any amount paid under the Scheme would be impermissible under Article 265 of the Constitution of India, if the amounts paid under the Scheme in terms of the declaration was held to be non-est as per the Scheme. As it appears that as on the last date specified, i.e., 30th October 2021, the petitioner had admittedly not paid the entire amount in terms of revised Form-3, dated 27th September 2021. However, the entire case of the petitioner is that if an amount of Rs. 3,48,752/- which was deposited and was lying with the respondents in terms of the IDS, were to be adjusted against the revised Form-3 under the Scheme of the DTVSV Act, then the petitioner s claim under the said Scheme could not be rejected. The amount deposited by the petitioner under the IDS could not have been forfeited and have neither been refunded nor adjusted. This is not a case where one would say that the petitioner had failed to make the payment within the time prescribed under the DTVSV Act which would result in denying the benefit of the said Scheme to the petitioner but in our opinion, this is a simple case where the money which was lying in the corpus of the revenue had simply to be adjusted by way of a mathematical exercise and benefit accorded to the petitioner under the DTVSV Act. We allow this petition and direct the respondents to issue a fresh Form-3, after giving to the petitioner credit of the amount paid under the IDS and the balance amount, if any, be refunded

Summary

Issues Involved:
1. Issuance of writ of mandamus for revision of Form-3 under the DTVSV Act.
2. Adjustment of amounts paid under the Income Declaration Scheme (IDS) against the liability under the DTVSV Act.
3. Compliance with timelines and procedural requirements under both IDS and DTVSV Act.

Summary:

Issue 1: Issuance of writ of mandamus for revision of Form-3 under the DTVSV Act.
The petitioner sought a writ of mandamus to revise Form-3 dated 27th September 2021 issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act), to account for amounts already paid under the Income Declaration Scheme, 2016 (IDS). The court noted that the petitioner had deposited Rs. 3,48,752/- under IDS but had not paid the full amount required under the scheme due to personal difficulties.

Issue 2: Adjustment of amounts paid under the Income Declaration Scheme (IDS) against the liability under the DTVSV Act.
The petitioner argued that the amount paid under IDS should be credited against the liability under the DTVSV Act. The revenue contended that the petitioner had not claimed such credit while submitting Forms 1 and 2 under DTVSV Act, and the Act does not envisage considering amounts paid under IDS for determining tax payable. The court referred to various judgments, including Hemalatha Gargya Vs. Commissioner of Income Tax and Smt. Atamjit Singh Vs. Commissioner of Income-tax, which supported the refund or adjustment of amounts deposited under similar schemes when the declarant fails to comply fully with the scheme requirements.

Issue 3: Compliance with timelines and procedural requirements under both IDS and DTVSV Act.
The court observed that the petitioner had not paid the entire amount specified in the revised Form-3 by the last date. However, it was held that the amount deposited under IDS should be adjusted against the liability under DTVSV Act. The court emphasized that the purpose and spirit of the DTVSV Act were to resolve disputes and unlock amounts held up in litigation, and thus, a simple mathematical adjustment should be made to accord the petitioner the benefit under the DTVSV Act.

Conclusion:
The court allowed the petition, directing the respondents to issue a fresh Form-3 after giving credit for the amount paid under IDS and refund any balance amount. This decision was in line with the purpose and spirit of the DTVSV Act, aimed at resolving disputes between the assessee and the revenue. The needful was ordered to be done within four weeks.