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TMI Blog2012 (3) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1997-98, with which we are concerned in the present writ petition, the taxable income was declared by the petitioner at Rs.7,23,490/-. In accordance with the provisions of the VDIS, the petitioner also paid the tax at the rates prescribed by the scheme on 31.12.1997. The Commissioner of Income Tax, Delhi-III issued a certificate under Section 68(2) of the VDIS on 13.01.1998 and in this certificate mentioned the fact, inter alia, that for the assessment year 1997-98 a sum of Rs.7,23,490/- has been declared as business income under the VDIS. The CIT further certified that the income declared under the VDIS for the assessment years 1989-90 to 1997-98 aggregated to Rs.12,29,320/- on which tax of Rs.4,30,264/- had been paid as per the provisions of VDIS. 3. On 14.12.2000 the Deputy Commissioner of Income Tax who is the respondent No.1, issued notice to the petitioner under Section 148 of the Act calling upon the petitioner to file its return of income for the assessment year 1997-98 on the ground that income chargeable to tax for that year has escaped assessment. In response to the said notice, the petitioner submitted a letter dated 27.12.2000 to the first respondent s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate under Section 68(2) of the VDIS also having been issued to the petitioner, there was a bar on re-opening the assessment for the assessment order 1997-98. (b) There was no bar on the petitioner filing a declaration under the VDIS for the assessment year 1997-98 and this was permitted by the Circular No.753 dated 10.06.1997 issued by the Central Board of Direct Taxes (CBDT). In answer to question No.45 of the frequently asked questions (FAQ) the CBDT has replied that the benefit of VDIS can be availed of even in respect of the assessment year 1997-98, if no return had been filed within the time allowed under Section 139(1) of the Act. (c) The income which is sought to be assessed pursuant to the notice issued under Section 148 of the Act for assessment year 1997-98 has already suffered tax under the VDIS. The relevant balance sheet as on 31.03.1997 has been filed to establish the aforesaid claim and a Division Bench of this Court on 03.08.2009 has directed the respondent No.1 to make a statement as to whether he is satisfied with the explanation or still wants the proceedings to continue. (d) The profit and loss account for the year ended 31.03.1997 disclosed a profit of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001. On this date it has been recorded by the first respondent that the authorised representative of the petitioner has been asked to show cause why difference in the profit before tax and the amount declared in the VDIS should not be treated as income for the assessment year 1997-98 as no return has been filed. 8. The VDIS was formulated by the Finance Act, 1997. Sections 60 to 77 of the said Finance Act contained the relevant provisions of the scheme. The scheme was to remain in force till 31.12.1997. The object of the VDIS, as per the memorandum explaining its provisions, were inter alia, to mobilise resources and channelise funds into priority sector of the economy and to "offer an opportunity to persons who evaded tax in the past, to declare their undisclosed income, pay reasonable tax and in future adopt the path of rectitude and civic responsibility". The scheme covered all persons, corporate and non-corporate. The tax payable on the disclosed income was fixed at 30% in case of individuals, at 35% in the case of firms and corporates. A declarant under the VDIS had to pay the tax before making the declaration and attach proof of payment thereof along with declaration. Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be invoked in respect of an assessment year for which the assessee has availed of the benefits under the VDIS. It appears to us that the validity of the action taken under Section 147 in respect of an assessee for an assessment year for which a declaration under the VDIS had been made must be examined by reference to the provisions of the said section alone. 10. While examining the validity of the action taken under Section 147 by issue of notice under Section 148, we have to be guided only by the reasons recorded for re-opening the assessment under sub-section (2) of Section 148. These reasons are as under: - "OFFICE OF THE DPUTY COMMISSIONER OF INCOME TAX CIRCULE 26(1), 4TH FLOOR, C. R. BUILDING, I. P. ESTATE, NEW DELHI 110002 Name of The Assessee : Northern Exim Pvt. Ltd. 7A, Sagar Apartment 6, Tilak Marg, New Delhi Assessment Year : 1997-98 Reasons Recorded for Reopening the Case U/s 148 On perusal of return for A.Y. 1998-99, it was observed that the assessee, in the previous year figures, has shown a taxable profit of Rs.42,79,340 for the A.Y. 1997-98. However on examination of records, it was found that the assessee has not filed its return for A.Y. 1997-98. Keeping the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.07.1997 as per question No.4 and answer thereto as recorded in the minutes of the said meeting. 13. In the light of this position it cannot be said there was any escapement of income because of the fact that the assessee did not file any return of income for the assessment year 1997-98 in the regular course under Section 139(1) of the Act. 14. The learned Standing Counsel for the Income Tax Department drew our attention to the entry made on 22.01.2001 in the proceedings sheet recorded in the course of the re-assessment proceedings. We have already seen that the said entry records that the authorised representative of the petitioner was asked to show cause why the difference in the amount of profit before tax and the amount declared under the VDIS cannot be treated as its income for the assessment year 1997-98 as no return of income had been filed. The entry made in the proceeding sheet is perhaps more elaborate and informative than the reasons recorded under Section 148(2) in the sense that it also states one more reason for initiating re-assessment proceedings, namely, that there is a difference between the profit before tax (Rs.42,79,340/-) and the amount declared in the VD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in respect of its consultancy income of Rs.71,11,695/- which has been declared in its profit and loss account for the year ended 31.03.1997. Section 80-O as it stood at the relevant time enabled an assessee who was in receipt of any income from a foreign enterprise in consideration for the use outside India of information concerning industrial, commercial or scientific knowledge, experience or skilled or as consideration for technical or professional services rendered outside India, to claim deduction of 50% of such income which was brought into India in convertible foreign exchange within a period of 6 months. Apparently the assessee deducted 50% of Rs.71,11,695/- which comes to Rs.35,55,848/- as deduction under Section 80-O. If this figure is reduced from the profit figure of Rs.42,79,340/-, the balance comes to Rs.7,23,492/-. It was on this basis that the petitioner declared income of Rs.7,23,490/- for the assessment year 1997-98 under the VDIS. This explains the difference between the figure of Rs.42,79,340/- and Rs.7,23,490/-. Thus there has been no escapement of income. We have merely gone by the figures shown by the accounts and the Notes made in the schedule 10 and we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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