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2024 (2) TMI 118 - HC - Income TaxBenefit of the Income Tax and Income Declaration Scheme - payment made by the assessee prior to the IDS scheme (i.e. 1st June 2016) rejected - request of the assessee for adjustment of the tax of 1.25 crores towards IDS 2016 rejected as per the IDS Scheme tax paid in the form of Advance tax, Self Assessment tax prior to IDS Scheme (i.e. 1st June 2016) are not allowed to claim under IDS except the TDS payments - HELD THAT - Income Declaration Scheme, 2016, is a beneficial piece of legislation intended to encourage defaulters to settle their income tax dispute by paying the tax due together with surcharge and penalty. As per Section 183(4), no deduction of any expenditure or allowance shall be allowed against the income in respect of which declaration has been filed. As per Section 193 of the Finance Act, 2016, a declaration made by misrepresentation or suppression of facts is void and shall be deemed never to have been made under the Income Declaration Scheme, 2016 under Finance Act, 2016. If the amount paid by the petitioner during the assessment year 2012-2013 towards Advance Tax and Self Assessment Tax after due date for filing of the Return u/s 139 was Rs. 1.25,00,00,000/-, it remains to be unexplained as to how the tax liability of the petitioner for the said Assessment Year was reduced to Rs. 94,15,230/- by the petitioner in the declaration filed under the Income Declaration Scheme, 2016 to Rs. 94,15,230/- as detailed in Table-1. But for the aforesaid issue regarding the tax liability of the petitioner for the Assessment Year 2012-13 in the Declaration filed by the petitioner under Income Declaration Scheme, 2016, we see no impediment in allowing the petitioner to adjust the amount paid as Advance Tax and Self Assessment Tax towards tax liability of the petitioner under Income Declaration Scheme, 2016. Therefore, the impugned order is set aside for limited purpose. The case is remitted back to the respondent along with the Assessing Officer for redo the exercise after examining the accounts of the petitioner for Assessment Year 2012-13 and ascertain whether the petitioner has indeed made a correct declaration of Income for the Assessment Year 2012-13 in the Declarations. If so, the Declaration filed by the petitioner may be accepted and closed under the provisions of the Income Tax and Income Declaration Scheme, 2016. As pointed out in Table-2, there are also certain arithmetical error in so far as the amounts to be paid by the petitioner under the Income Declaration Scheme, 2016. This aspect also may be examined by the respondent along with the Assessing Officer.
Issues Involved:
1. Adjustment of Advance Tax and Self-Assessment Tax under the Income Declaration Scheme, 2016. 2. Consideration of rectification petition under Section 154 of the Income Tax Act, 1961. Summary: Issue 1: Adjustment of Advance Tax and Self-Assessment Tax under the Income Declaration Scheme, 2016 The petitioner sought a Writ of Certiorarified Mandamus to quash the order dated 25.04.2019, which rejected the adjustment of Rs. 1.25 crores paid as Advance Tax and Self-Assessment Tax towards the tax liability under the Income Declaration Scheme, 2016 (IDS). The respondent argued that taxes paid prior to the IDS commencement date (1st June 2016) could not be claimed under the IDS, except for TDS payments. The court noted that the petitioner had declared an undisclosed income of Rs. 4,78,68,595/- for the Assessment Years 2012-13 to 2015-16 and agreed to pay Rs. 2,10,35,871/- as tax, surcharge, and penalty. The court found that the petitioner had paid Rs. 1.25 crores without filing a return under Section 139 of the Income Tax Act, 1961, and sought to adjust this amount under the IDS, which was denied. The court observed that the IDS, 2016 is a beneficial legislation intended to encourage defaulters to settle their income tax disputes. The court found no impediment in allowing the petitioner to adjust the amount paid as Advance Tax and Self-Assessment Tax towards the tax liability under the IDS, 2016, provided the petitioner had made a correct declaration of income for the Assessment Year 2012-13. The impugned order was set aside for the limited purpose of re-examining the petitioner's accounts for the Assessment Year 2012-13. If the declaration was found correct, it would be accepted and closed under the IDS, 2016. Any discrepancies would result in denying the benefit of the IDS, 2016 to the petitioner. W.P. No. 10735 of 2022 was disposed of with these observations. Issue 2: Consideration of rectification petition under Section 154 of the Income Tax Act, 1961 The petitioner sought a Writ of Mandamus directing the respondent to consider the rectification petition dated 09.03.2022 under Section 154 of the Income Tax Act, 1961. The respondent argued that the IDS, 2016 is a complete code in itself, and the provisions of the Income Tax Act, 1961 are not applicable to the IDS, 2016, except for specific sections mentioned in Section 195 of the Finance Act, 2016. The court agreed with the respondent that Section 154 of the Income Tax Act, 1961 was not applicable to the IDS, 2016, and therefore, no direction could be given to the respondent to pass orders under Section 154 in respect of a dispute under the IDS, 2016. In view of the order in W.P. No. 10735 of 2022, no further order was required in W.P. No. 10741 of 2022, which was closed along with the connected miscellaneous petitions. No costs were imposed.
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