2010 (2) TMI 154 - HC - Income Tax

Voluntary Disclosure of Income Scheme- The assessee filed a declaration under the Voluntary Disclosure of Income Scheme 1997 on December 29 1997 disclosing the total income f Rs. 36 51, 886 for the assessment years 1992-93 to 1996-97. Thereafter the assessee paid the tax on March 31 1998. The Commissioner has rejected the declaration filed by the assessee on the ground that under the Voluntary Disclosure of Income Scheme 1997 the tax payable along with interest must have been paid within three months from the date of the declaration. Pursuant to the said impugned communication the assessee has sent a letter dated July 14 1999 admitting the delay on his part and seeking condonation of delay. The said request was again rejected on July 20 1999. Challenging the order dated June 18 1999 passed by the respondents the assessee filed the writ petition. The learned single judge dismissed the writ petition stating that in the absence of any specific provisions under the scheme extending the period of payment of tax along with interest the court cannot exercise such power. In the light of the decision of Vijay Narayan Thatte v. State of Maharashtra held that- When there is an express pro vision providing for time limit within which the assessee concerned will have to avail of the benefit this court exercising power under article 226 of the Constitution of India cannot extend the same. Thus the appeal is dismissed.

Summary

Issues:
Extension of Scheme period for tax payment under Voluntary Disclosure of Income Scheme, 1997; Validity of rejection of declaration by Commissioner; Authority to extend payment period under the scheme; Conflict between law and equity in decision-making process.

Extension of Scheme period for tax payment under Voluntary Disclosure of Income Scheme, 1997:
The case involved the appellant challenging the rejection of their declaration under the Voluntary Disclosure of Income Scheme, 1997, due to delayed tax payment. The court referred to a previous apex court judgment emphasizing the mandatory nature of the scheme's provisions regarding tax payment within a specified period. The court highlighted that failure to comply with the payment conditions within the stipulated time would render the declaration invalid. It was emphasized that strict compliance with the scheme's conditions is necessary to avail of its benefits, with no room for equitable considerations.

Validity of rejection of declaration by Commissioner:
The appellant filed a writ petition challenging the rejection of their declaration by the Commissioner under the scheme. The court observed that the Commissioner, being the competent authority under the Scheme, had the power to make decisions within the scheme's framework. The court emphasized the distinction between the decision itself and its communication, affirming that the order was passed by the Commissioner's office. The court held that the decision-making process was proper, and the contention of the appellant that the order was without jurisdiction was rejected.

Authority to extend payment period under the scheme:
The court discussed the conflict between law and equity, emphasizing that when there is a specific time limit provided in a scheme, courts cannot extend the same under Article 226 of the Constitution of India. The court reiterated that the assessee must adhere to the terms of the scheme and cannot seek an extension beyond the specified period. It was emphasized that courts should lean towards law rather than equity in such matters.

Conflict between law and equity in decision-making process:
The judgment highlighted the principle that in conflicts between law and equity, the law must prevail. The court cited a Supreme Court judgment to support the precedence of law over equity. It was noted that in a writ of certiorari, the court's role is to assess the decision-making process's propriety rather than the decision itself. The court emphasized the importance of upholding the law and respecting the specific provisions of a scheme.

In conclusion, the court dismissed the writ appeal filed by the appellant after considering the factual and legal aspects of the case. The judgment underscored the importance of strict compliance with the provisions of the Voluntary Disclosure of Income Scheme, 1997, and the limited scope for courts to extend timelines or deviate from the scheme's terms.