2008 (6) TMI 345 - HC - Income Tax

Voluntary disclosure The assessee filed a declaration under the voluntary disclosure of Income Scheme, 1997, disclosing income of Rs. 34,50,000 on which a sum of Rs. 3,35,000 was paid towards tax on December 8, 1997. The balance amount of Rs. 7,00,000 towards tax and Rs. 42,000 towards interest was paid only on March 26, 1998. The Commissioner of Income Tax accepted the declaration only for the amount of Rs. 3,35,000 paid towards tax since the balance payment was made beyond the statutorily prescribed period of three months from the date of declaration. The assessee contested the non-issue of certificate for the full amount disclosed. Held that- the certificate for the full amount disclosed under the voluntary disclosure of Income Scheme, 1997 could not be granted. The assessee was not entitled to the benefit of the Scheme since the payments made by the assessee were not in terms of the scheme. The revenue authorities were directed to refund or adjust the amounts already deposited by the assessee in compliance with the provision of the scheme to the assessee.

Summary

Issues:
Challenge to non-issuance of certificate under Voluntary Disclosure of Income Scheme, 1997 (VDIS) and non-refund of tax and interest paid under VDIS.

Analysis:
The High Court of Gujarat addressed the challenge against the respondent authority's refusal to issue a certificate for the full amount disclosed under the VDIS or to refund the sum of Rs. 7,42,000 paid as tax and interest under the scheme. The petitioner disclosed income of Rs. 34,50,000 and paid Rs. 3,35,000 towards tax on December 8, 1997, with the remaining tax and interest paid on March 26, 1998, beyond the prescribed three-month period. The court noted that as the payment was made after the statutory deadline, the authority accepted the declaration only in relation to the income corresponding to the tax paid initially.

The petitioner sought two principal reliefs: firstly, to compel the authority to issue a certificate for the full disclosed amount, and secondly, to refund or allow adjustment of the Rs. 7,42,000 if not covered under the scheme. The court, considering the Supreme Court's decision in a similar case, held that the petitioner could not succeed in obtaining the certificate for the full amount. However, in line with the apex court's directive to refund or adjust amounts not compliant with the scheme, the respondent authority was directed to refund or adjust the deposited sum of Rs. 7,42,000 in accordance with the law.

Therefore, the High Court partly allowed the petition, directing the respondent authority to refund or adjust the amount deposited by the assessee as per the directions of the apex court. The ruling concluded by making the rule absolute to that extent, with no order as to costs.