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TMI Blog2013 (10) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the assessee, the AO has brought the amount to tax under normal provision of law, which was declared under VDIS Scheme - The AO has no power to hold that the declaration made by the assessee is void ab initio or liable to be cancelled. The certificate granted by the Commissioner under section 68(2) of the Voluntary Disclosure of Income Scheme, 1997 is still holding the field - Revenue also admits that the amount of voluntarily disclosed income cannot be included in the total income of the declarant for any assessment year – there was no justification for the notice under section 148 - issuance of notice under section 148 of the Income-tax Act, 1961 is an abuse of the power by Department – Decided against Revenue. - ITA No. 4113/Mum/2008 - - - Dated:- 4-10-2013 - Shri R. K. Gupta, JM And Shri Rajendra Singh, AM,JJ. For the Petitioner : Ms. C. Tripura Sundari For the Respondent : Shri P. J. Pardiwala Shri Haresh P. Shah ORDER Per Shri R.K.Gupta, JM: The department has preferred this appeal against the order of learned CIT(A), Mumbai for assessment year 1998-99. 2. Initially, at the time of filing appeal before the Tribunal, the department had ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons covered under Clause (a) and (c) but not on the persons covered under clause (b) of VDIS Scheme. The certificate issued under Section 68(2) cannot be invalidated and income of Rs.1,49,12,000/- cannot be brought under the tax under the guise of reassessment proceedings for assessment year 1998-99 as the amount is quantified and offered under VDIS pertaining to assessment year 1990-91 to 1996-97. However, the AO did not agree with the interpretation of sec.78 made by the assessee. He informed the assessee that the benefit of VDIS-97 is not available in certain circumstances as given in section 78 to those persons, who are covered under this section. He further mentioned that the letter and spirit of VDIS-97 categorically wants to deny the benefits of the scheme to certain type of persons covered in relation to prosecution for any offence punishable under Chapter IX or Chapter VII of Indian Penal Code. The AO also made enquiry from Economic Offences Wing as to whether any FIR has been registered against the assessee i.e. City Walk Shoes Pvt. Ltd.. It was informed that the charge sheet has been filed against Abu Shahid Azmi, Nasir Jamal Shaikh Abu Asim Azmi under various sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled. After considering the submission and perusing the material on record, learned CIT(A) found that the AO was not justified in reopening of the assessment as well as making addition in the hands of the assessee. Accordingly, the ground of the assessee was allowed. Aggrieved thereby, the department is in appeal here before the Tribunal. 5. Learned DR, firstly, placed reliance on the order of AO. It was further submitted that it was the duty of the assessee to inform the AO that he has filed declaration, however, it was not informed to the AO as no return was filed for the year under consideration. After examining the balance sheet filed in response to the notice under Section 148, the AO found that the declaration is void ab initio and, therefore, the AO was correct in bringing the amount of declaration to tax while completing the assessment. Part of the order of the AO was read by the learned DR also. 6. Per Contra, learned counsel of the assessee stated that learned CIT(A) has passed a very reasonable order. It was submitted that the issue is squarely covered by the decision of the Hon'ble High Court. Part of the order of the Hon'ble jurisdictional High Court was read also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges 8 to 12, which are as under :- "5.13 I have carefully considered the submissions of the Ld.AR and gone through the assessment order and other documents and court decisions brought on record. The appellant had not filed the return of income. At the time of initiating proceedings u/s. 148 the Assessing Officer did not have the information from the police regarding the steps taken in respect of the Cobblers scam. The reasons recorded for issue of notice u/s. 148 was that the appellant has not filed a return of income for the AY:1998-98. The AO further referred to the income returned for AY:1991-92 to 1997-98 and further to the income returned for the AY:2002-03. On the basis of this returned income for earlier years the AO believed that the company is having income chargeable to tax which has escaped assessment and he presumed that this may amount to Rs. 1 lac or more for AY-199899 within the meaning of Explanation 2 to section 147. The AO had no specific item of escaped income in his mind. Only because there was income ranging Rs.30,880/- to Rs.81,360/- in 1990-91 1995-96 and also that the declared income for 2002-03 was Rs.9,69,280/-, the AO presumed that there may be taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Acts. To my mind this will not be applicable to the immunity against re assessment of the income declared in one year, again in another assessment year, which is granted by sec. 68(1) of the VDIS scheme. 5.15 Even if it is accepted that prosecution under IPC and the other Acts mentioned u/s. 78(b) will deny the declarant the benefits of this scheme, the issue for consideration is whether this is a prohibition from filing a declaration or a condition for disqualification of the declaration already made. If it is a prohibition from accepting a declaration then the Commissioner would have ascertained the issue before accepting the declaration. Since he has accepted the declaration , it is to be presumed that the appellant was not prohibited from making a declaration and that the Commissioner was fully satisfied regarding the declaration so made. On the other hand if it is interpreted, as the AO has done, that any prosecution under IPC and the other Acts nullifies the declaration made under VDIS, then the facts have to be verified to find out whether at the time of making the declaration the appellant was facing any such prosecution. 5.16 Now coming to the facts relating to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have decided the validity of issue of notice u/s. 148. The following extract of the operating portion of the High Court's order makes the issue clear. 1. Inter alia contention of Mr. Percy Pardiwale, the learned council for the petition is that on the application made by the assessee, the Commissioner granted certificate to the assessee setting forth the voluntary disclosure of income and the income tax paid for the same. He states that the said certificate hold the field and has not been cancelled as yet. His submission is that as per section 68 of the Voluntary Disclosure of Income Scheme, 1997 (Finance Act, 1997) the amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any AY under the Income-tax Act and, therefore, the notice under sec.148 of the Income tax Act, 1961 impugned in the present writ petition is without jurisdiction. 2. Mr Chatterjee, the id. Counsel for the revenue does not dispute that the certificate granted by the Commissioner under sec. 68(2) of the Voluntary Disclosure of Income Scheme, 1997 still holds the field and that the said certificate has not been cancelled. If that, be so, we wanted to know fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 148 in the light of this order of the High Court. In view of this order of the Jurisdictional High Court which is directly on this issue and in a similar case, the notice issued by the A.O u/s. 148 of the I.T.Act cannot be supported. Similarly as there is no disqualification u/s. 78(b) of the VDIS scheme and the certificate issued under sec. 68(2) is in operation the sum of Rs.1,49,12,000/- remains the income for AY: 1990-91 to 1996-97 as declared. So there is no question of assessing the same income as the income of AY-1998-99 presently under consideration. Accordingly the assessment of this amount as the income of the appellant for this year also cannot be supported. In view of this, both the grounds of the appellant are allowed." The above findings of the learned CIT(A), in our view, are findings of fact, which are supported by the decision of the Hon'ble jurisdictional High Court. 8. Similar issue was involved before the Hon'ble Bombay High Court in the cases of M/s Uma Corporation (supra) and Rafique A. Mallik (supra). In these cases also, assessees availed benefit of VDIS Scheme, however, the AO reopened the assessment and made addition of the amount declared under ..... 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