9911796707
TMI Blog2013 (10) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly stated facts of the case are that the assessee had not filed any return of income for the year under consideration. Thereafter notice under Section 148 was issued on 31-3-2005 after recording reasons. The reasons recorded by the AO has been reproduced in the order of CIT(A) at page 1 & 2. In response to notice issued under Section 148, the assessee filed return on 11-5-2005 declaring a net loss of Rs.10,970/-. Copy of the balance sheet was also enclosed along with the return. Reserves & Surplus shown in the balance sheet has also been reproduced in the order of CIT(A) in para 5.2. After examining the balance sheet the AO noticed that the assessee had made declaration under VDIS at Rs.1,49,12,000/- and had paid tax also. The AO asked the assessee to furnish the declaration under VDIS, proof of payment of tax, source of payment with relevant bank statement and explaining for source in respect of the VDIS declaration. The certificate issued by the CIT accepting the declaration under VDIS was also asked for. The AO ascertained that the Economic Offences Wing, Crime Branch of Mumbai Police registered criminal cases u/s.420,465 and 120b of Indian Penal Code against various persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company. It was further stated that the date of charge sheet filed is 9-6-1998 and hence, it was after the declaration of 31-12-1997 & the VDIS certificate issued by the CIT, dated.19-3-1998. However, the AO was not satisfied with the reply. Accordingly he held that the prosecution has commenced on the date of registration of CR Case No.95/96 on 10-9-1996, and, therefore, the assessee was involved in a relation of offence punishable under Chapter XVII of IPC on the date of declaration. Hence, Section 78(b) of VDIS 97 is clearly attracted. Since the declaration was void, the amount of income under the VDIS amounting to Rs.1,49,12,000/- is to be brought to tax under the normal provisions of the Income Tax Act.. The assessee has also submitted a decision of the Hon'ble Bombay High Court in the case of M/s Uma Corporation, decided in Writ Petition No.531 of 2006, vide dated 14-3-2006. The AO held that the decision is not applicable to the facts of the assessee's case as in that case the declaration was not found to be void ab initio. Accordingly, he did not accept the decision. Finally, he brought the amount of Rs.1,49,12,000/- to tax for the year under consideration. 4. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re placed on record. A copy of charge sheet dated 9-5-98 filed is placed at page 50, whereas the declaration was filed on 31-12-1997. Affidavit of Abu Asim Azmi, one of the director of the assessee company, is placed at page 51, whereby it was stated that no prosecution was launched against the assessee regarding cobbler scam or any other matter. Copy of the decision in the case of M/s Uma Corporation (supra) is placed at pages 52 to 55. Copy of the decision in the case of Rafique A. Mallik (supra) is placed at pages 55 to 57. Copies of relevant provision of VDIS Scheme are placed at pages 82 to 87. Learned counsel of the assessee explained these papers and it was submitted that after going through all these papers, it is amply proved that no prosecution proceeding was started against the assessee company before the declaration under VDIS-97, which was filed on 31-12-1997 and learned CIT has issued certificate under Section 68(2) on 9-3- 1998. Accordingly, it was submitted that the AO has no power to hold that the certificate issued by the CIT was not followed or declaration filed under VDIS Scheme-97 was void ab initio. Therefore, it was submitted that the CIT(A) was correct in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added this amount to compute the assessed income for this year. For doing so he has nullified the VDIS declaration made by the appellant. So whether the sum of Rs.1,49,12,000/-, constituted income for the AY- 1998-99 or not can be decided only with reference to the VDIS declaration. The appellant had made a declaration under VDIS scheme for which a certificate was issued by the Commissioner of Income-tax u/s. 68(2) of the VDIS scheme. Since the appellant has fulfilled the conditions mentioned u/s. 68(1) of the scheme, as per law this voluntary disclosed income shall not be included in is total income for any AY under the Income-tax Act. The certificate issued by the CIT u/s. 68(2) is still in operation and has not been withdrawn or declared void otherwise by any authority. The AO has referred to sec.78(b) of this scheme to deny the appellant the immunity of the VDIS scheme. A correct reading of the relevant provision will be as under: 78. The provisions of this scheme shall not apply- (b) in relation to prosecution for any offence punishable under chapter IX or Chapter XVII of the Indian Penal Code of 1860) the Narcotic Drugs & Psychotropic Substances Act, 1985 (61 of 1985), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt Ltd and others. It is very clear that the FIR registered on 10.9.1996 was not against the appellant or its directors. So it cannot be held that they faced prosecution from this date. 5.17 A chargesheet was filed only on 9.6.1998 against a number of persons including two directors of the appellant company. So the liability for prosecution of the assessee can only be considered with effect from this date. It is ecessary to remember her that the case was registered in respect of the Cobbler's scam which was not specifically against the appellant company but dubious practice done by same shoe manufacturers. The nationalised banks and cooperative banks provided loan at cheaper rates to Cobblers. Some big manufacturers had obtained such cheap loans by floating bogus cooperatives of cobblers. After investigating the complaint the chargesheet has been filed against certain persons including the directors of the appellant company. So the liability for prosecution of the appellant arises only when chargesheet has been filed on 9.6.1998. As against this the appellant filed its VDIS declaration on 31.12.1997 and the declaration has been accepted and the Commissioner has issued his certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said scheme and that section 78 of the said scheme was not attracted, granted the benefit of the said scheme petitioner and a certificate was issued by the Commissioner under sec 68(2) to the petition. That the certificate granted by the commissioner under section 68(2) of the Voluntary Disclosure of Income Scheme, 1997 is still holding the field, is also not disputed by the Ld. counsel for the for the revenue. As a matter of fact, Mr. Chatterjee submitted before us certificate issued by the Commissioner under sec. 6892) of the said scheme cannot be cancelled or revoked. So long as the certificate u/s. 68(2) of the scheme holds the field, the learned counsel for the revenue also admits that the amount of .voluntary disclosed income cannot be included in the total income of the declarant for any assessment year under the Income tax Act. In what, Mr. B.M. Chatterjee, the learned counsel for the revenue submitted before us we fail to understand the jurisdiction of the notice u/s. 148 of the Income tax Act, 1961. Rather, we find that issuance of notice u/s. 148 of the Income tax Act is an abuse of the power by the respondent No.2. 5.20 The order in writ petition no. 869 of 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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