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TMI Blog2017 (3) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The payment could not have been made under protest as the payment had already been made prior to addressing the above letter dated 31st March, 1998. The Petitioners' who seek an equitable relief in Writ, should have been more forthright in its communication to the Revenue. This conduct on the part of the Petitioner is an attempt on the part of the Petitioner to secure the benefit of the Scheme i.e. Protection (insulation) from prosecution and penalty under the 1961 Act, and at the same time challenge the payment made under the Scheme of 1997 Act. Thus, we find no reason to allow the petition also on the above ground. In the above view, on the basic issue of law, we hold that the payment of tax under the Scheme of 1997 Act is not payment of tax under the 1961 Act. Thus, adjustment as sought of the tax paid as TDS under the 1961 Act to reduce the tax payable under the Scheme of 1997 Act is not permissible. Therefore, we have not examined the secondary issue raised viz: appropriate interpretation of the Scheme of 1997 Act, proceeding on the premise that it is the same tax under both the Acts. - WRIT PETITION NO. 616 OF 1998 - - - Dated:- 10-3-2017 - M.S.SANKLECHA, A.K.MENO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d expressions used but not defined in the Scheme will have the meaning assigned to them under the 1961 Act, or the Wealth Tax Act, 1957; (b) Section 64 is the charging section of the Scheme of 1997 Act and it provides that it would apply to any person who makes a declaration of undisclosed income chargeable to tax under the 1961 Act. This declaration is to be made on or after 1st July, 1997 but on or before 31st December, 1997. The declarant would be required to pay tax at the flat rate of 35% in case of a company and/or a firm and at the flat rate of 30% in case of others; (c) The disclosed income chargeable to tax under the Scheme of 1997 Act would be the income on which the tax is payable under the 1961 Act but which income had not been disclosed under the 1961 Act, by reason of any of the following: (i) By failing to furnish a return of income under the 1961 Act; or (ii) By failing to disclose income in its return of income filed under the 1961 Act, before the commencement of the Voluntary Scheme; or (iii) By any income chargeable to tax escaping Assessment by reason of any omission or failure on the part of a declarant to fully and truly disclose nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome in the prescribed form on 31st December, 1997 in terms of Sections 64 and 65 of the above Scheme. This was on the basis that it had not filed its return of income under the Act for Assessment Years 1995 96, 1996 97 and 1997 98. Therefore, the declaration filed by the Petitioner declared an income of ₹ 5,00,63,885/being the undisclosed income in the aggregate for the Assessment Years 1995 96, 1996 97 and 1997 98 and the Income tax payable on it under the Scheme was in the aggregate of ₹ 1,75,22,360/ at the rate of 35%. The Petitioner had also stated in its above declaration that no amount of income tax has been paid on or before the filing of declaration i.e. 31st December, 1997. 6. The Petitioner had in terms of Section 67 of the Scheme of 1997 Act opted to pay the tax within three months of the filing of the declaration along with interest as provided thereon. In the above view, the Petitioner was required to pay the tax under the above Scheme along with interest thereon, aggregating to ₹ 1,85,73,702/ on the declared undisclosed income of ₹ 5,00,63,885/ on or before 31st March, 1998. 7. Just before the last date (31st March, 1998) of making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner was of the view that the impugned communication dated 18th March, 1998 as well as the impugned Circular dated 25th July, 1997 were contrary to the clear provisions of the Scheme of 1997 Act, it moved this Petition. On 23rd March, 1998, this Petition was admitted. However, no interim relief was granted to the Petitioner. 11. This resulted in the Petitioner paying on 31st March, 1998 the entire amount of tax of ₹ 1,75,22,360/ along with interest of ₹ 10,52,342/ aggregating to ₹ 1,85,73,702/ into the treasury. These facts (subsequent to the filing of the Petition) are brought on record by an affidavit dated 17th October, 2016 of Ms. Snehal Mane, on behalf of the Petitioner. The Respondent Revenue has not disputed the contents of the affidavit dated 17th October, 2016, filed by Ms. Mane. It is also pertinent to note that no reply affidavit is filed by the Revenue to the Petition. Submissions: 12. On the aforesaid facts, Mr. Mistri, learned Senior Counsel in support of the Petition, submits as under: (i) The impugned communication dated 18th March, 1998 of the Commissioner of Income Tax has not considered the clear provision under Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is admittedly prejudicial to the Assessee; (vi) The payment of tax on 31st March, 1998 to the extent of ₹ 1,59,74,149/ (being the amount of tax already deducted at source) consequent to the impugned communication is a sum collected beyond the provisions of the Scheme. Thus, being without authority of law, the bar against refund under any circumstances, as provided in Section 70 of the Act, will not apply; and (vii) However in response to our query, Mr. Mistri on behalf of the Petitioner submitted that the tax which is paid under the Scheme is, in fact, income tax under the 1961 Act, and no different. This in view of the definition Sections in Scheme of 1997 Act and alsoon the basis of general law of contract i.e. de hors Sections 198, 199 and 205 of the 1961 Act. Thus, no warrant to hold that the tax payable under the Scheme of 1997 Act is different from the income tax payable under the 1961 Act. In fact, Mr. Mistri, very eloquently put it by calling the tax under the scheme of 1997 Act and of 1961 Act, the 'same animal' and not 'a different animal'. Thus, the benefit of tax deducted at source under the 1961 Act will be available to pay the tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is as under: Charge of Income tax Section 4: (1) Where any Central Act enacts that income tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income tax) of, this Act] in respect of the total income of the previous year or every person: Provided that where by virtue of any provision of this Act income tax is to be charged in respect of the income of a period other than the previous year, income tax shall be charged accordingly. (2) In respect of income chargeable under sub section (1), income tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. (b) While Section 64 is the Scheme of 1997 Act its charging provision, is as under: 64: Charge of tax on voluntarily disclosed income (I) Subject to the provisions of this Scheme, where any person makes, on or after the date of commencement of this Scheme but on or before the 31st day of December, 1977, a declaration in accordance with the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Scheme of 1997 Act and under the 1961 Act. Therefore, even though the tax which is payable under the Scheme of 1997 Act, is a tax on Income, it is not a charge to tax under Section 4 of the 1961 Act, but an Income tax charged to tax under Section 64 of the Scheme of 1997 Act. 18. As held by the Supreme Court in Mathuram Agarwal v./s. State of M. P. 1999 (8) SCC 667, a taxing statute should convey three components of a taxing statute, i.e. person to be taxed, subject matter of tax and rate of tax. Undisputedly, the subject matter and rate of tax in the case of Scheme of 1997 Act is different from that of the 1961 Act. The subject matter of tax in case of the above Scheme as evident from the charge of tax therein is on voluntarily disclosed income, which, though chargeable to tax under the 1961 Act, had not been disclosed earlier thereunder. The charge under the 1961 Act, is on the total income of the previous year and the scope of the total income is income received/ deemed to be received/ accrued/ arisen during the previous year. As against the above, the charge under the Scheme of 1997 Act, is the undisclosed income under the 1961 Act which is voluntarily disclosed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t defined and defined in the Income tax Act or the Wealth tax Act shall have the meanings respectively assigned to them in those Acts. In particular, he relies upon sub section (d) of Section 63 of the Scheme. This, according to him, mandates that the word 'tax' as defined in the Income Tax Act i.e. 1961 Act will have to be given the same meaning even in the Scheme of 1997 Act. Besides, Mr. Mistri places reliance upon the decision of the Apex Court in Hemalatha Gargya (supra), particularly, certain observations therein, which after holding the Assessee therein, is not entitled to the benefit of the Scheme of 1997 Act directed the authorities to refund or adjust the amounts already deposited in pursuance of the Scheme of 1997 Act in accordance with law. This according to the Petitioner is adjustment of tax paid under Scheme of 1997 Act with the tax payable under the 1961 Act. In any event, he submits that in view of the decision of Calcutta High Court in Sushila Devi Mohata (supra), relied upon by the Revenue, the entire issue now stands concluded in favour of the Petitioner. Therefore, it is submitted that the Income tax deducted is adjustable against the tax payable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in purported compliance of the Scheme of 1997 Act will be refunded or adjusted in accordance with law. Therefore, it does not follow as was submitted by the Petitioners that the amount paid under the Scheme of 1997 Act is Income Tax under the 1961 Act, and the refund payable by the Revenue would therefore be adjustable under the 1961 Act. If it was so, then the order would have in terms directed the adjustment in terms of Section 245 of the Act, 1961, which provides for adjustment of refunds of tax against income tax payable. The Apex Court merely directed adjustment of the amount paid under the Scheme of 1997 Act against any demands in accordance with law. Nothing has been shown to us by the Petitioner which in law would permit adjustment of refunds as due on account of excess paid under the Scheme of 1997 Act with the tax payable under the 1961 Act. Therefore, the above decision in our view also does not assist the Petitioner. 23 It cannot be disputed that the decision of the Calcutta High Court is in Sushila Devi Mohata (supra) is completely in favour of the Petitioners even though it is passed in the context of Voluntary Disclosure of Income and Wealth Tax Act, 1976 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the previous year in which such search was made or any earlier previous year. (3) In addition to the amount of income tax to be paid under sub section (I), the declarant shall invest a sum equal to five per cent of the amount of the voluntarily disclosed income in such securities as the Central Government may notify in this behalf in the Official Gazette. It is in the above back ground that, we shall examine the decision of the Calcutta High Court in Sushila Devi Mohata's case (supra) holding that adjustment of tax deducted at source under the 1961 Act, will be allowed against the tax payable under the Voluntary Disclosure of Income and Wealth Tax Act, 1976. However, it appears that difference in the charging provisions as found in Section 4 of the 1961 Act and as found in Section 3 of the Voluntary Disclosure of Income and Wealth Act, 1976 was not pointed out to and/or noticed by Calcutta High Court in Sushila Devi Mohata's case (supra) . The charge of tax under Section 3 of the Voluntary Disclosure of Income Tax and Wealth Tax, 1976 is voluntarily disclosed income which is chargeable to tax which has not been disclosed under the 1961 Act for any Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goes back at least to 1661 when counsel said: An hundred precedents sub silentio are not material ; and Twisden, J. agreed : Precedents sub silentio and without argument are of no moment . 25. Therefore, we do not consider the aforesaid decision of the Calcutta High Court in Sushila Devi Mohata (supra) as conclusively laying down the law and which we should follow for the reasons stated therein. It is a settled position in law that the decisions of another High Court though not binding upon us, would deserve the highest respect and normally be followed for the sake of uniformity and comity of Courts , unless the judgment is rendered, per incurrium or sub silentio. In this case, we note that the decision of the Calcutta High Court in Sushila Devi Mohata (supra) is rendered sub silentio and, therefore, not being followed. Moreover, as held by our Court in CIT v/s. Thane Electricity Supply Co. Ltd., 206 ITR 727 on an issue of law requiring interpretation, we need not follow the decision of another High Court, if our view is different. Therefore, we do not take the route adopted of the Calcutta High Court in Sushila Devi Mohata (supra) in deciding the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the Petitioner's submission have proceeded on the basic premise that tax payable under the Scheme of 1997 Act, is a tax payable under the 1961 Act. This, in our view, is unsustainable. Therefore, even if we accept that there is merit in the submission on the part of the Petitioner that the impugned communication dated 18th March, 1998 is without application of mind, sending it back to Commissioner of Income Tax to reconsider the issue is not warranted. More particularly, as this Petition relates to year 1998 and on consideration of the Scheme per se, it is clear to us that the tax payable thereunder is not the tax payable under the 1961 Act. 30. The decisions of this Court in Vikram Singh S. Vallabhdas (supra), relied upon by the Petitioner does not touch upon the present controversy. It was a case arising under the Indian Income Tax Act, 1922 and the Court held on the basis of Section 18(5) thereof, that the payment of tax by deduction from the amount payable to an Assessee, is a tax paid on behalf of the Assessee. Presently, we are concerned with the Scheme of 1997 Act which does not provide for any credit of tax payable thereunder to the extent of tax paid under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was filed on 31st December, 1997 in terms of Sections 64 and 65 of the Scheme of 1997 Act. The petitioner availed of the option in terms of Section 67 of the Scheme of 1997 Act to pay the tax payable in terms of the declaration within three months of the filing of the declaration with interest at the rate of 2% per annum for every month from the date of the declaration up to the date of payment of the tax payable as declared in the declaration under the Scheme of 1997 Act. In its declaration dated 31st December, 1997 in the prescribed proforma signed and verified by its Director, it had declared undisclosed income for Assessment Years 1995 96, 1996 97 and 1997 98 aggregating to ₹ 5,00,63,885/ on which no tax had been paid. In fact, the relevant extract of the declaration filed on 31st December, 1997 by the petitioner reads as under : 6 Total amount of voluntarily disclosed income (Rs.) ₹ 500,63,885/ 7 Income tax payable thereon (Rs.) (@35% in the case of companies and firms and @ 30% in the case of others) 175,22,360/ 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced for verification and filing as may be advised) Rs.159,74,149/ d) Balance Tax Payable Rs.15,48,211/ e) Interest payable at 6% of the above Rs.92,893/ f) Total tax payable before 31 st March, 1998 Rs.16,41,104/ 35 The above application dated 16th March, 1998 was rejected by the impugned communication dated 18th March, 1998. We note that the entire basis of the Scheme of 1997 Act is that the person seeking to avail of its benefit would file a declaration along with the prescribed particulars to the Commissioner of Income Tax on or before 31st December, 1997. Any declaration filed after 31st December, 1997 cannot be entertained under the Scheme of 1997 Act as provided under Section 64 thereof. Further, the requirement under Section 66 of the above Scheme as referred to herein above is that the declaration shall be accompanied by proof of payment of the tax payable under the scheme. Section 67 of the above Scheme extends a facility to the declarant to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be faulted only on the grounds of being without reason and in placing reliance upon CBDT Circular dated 10th June, 1997. Nevertheless on examination of the scope of the Scheme of 1997 Act, the impugned communication dated 18th March, 1998 rejecting the application dated 16th March, 1998, cannot be faulted. Thus, restoring the issue to the Commissioner of Income Tax would in the present facts, after having heard the parties in detail, would not be justified. 39 Without prejudice to the above, the petitioner has on 18 th October, 2016 filed an affidavit dated 17th October, 2016 of Ms. Snehal Mane, the Authorized Signatory of the Petitioner. With the above affidavit, the petitioners have enclosed a letter dated 31st March, 1998 wherein they have informed the Commissioner of Income Tax that the tax payable under the Scheme along with interest aggregating to ₹ 1,85,73,702/ has been paid on 31st March, 1998. The same reads as under : We have filed the Disclosure under the VDIS on 31st December 1997 vide Receipt No. cited. Under the Scheme, the tax payment was to be made on or before 31st March, 1998. The amount payable was ₹ 1,75,22,360 in our case. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim refund nor does it state that the right to refund is subject to the result of the petition. The payment could not have been made under protest as the payment had already been made prior to addressing the above letter dated 31st March, 1998. The Petitioners' who seek an equitable relief in Writ, should have been more forthright in its communication to the Revenue. This conduct on the part of the Petitioner is an attempt on the part of the Petitioner to secure the benefit of the Scheme i.e. Protection (insulation) from prosecution and penalty under the 1961 Act, and at the same time challenge the payment made under the Scheme of 1997 Act. Thus, we find no reason to allow the petition also on the above ground. 41 In the above view, on the basic issue of law, we hold that the payment of tax under the Scheme of 1997 Act is not payment of tax under the 1961 Act. Thus, adjustment as sought of the tax paid as TDS under the 1961 Act to reduce the tax payable under the Scheme of 1997 Act is not permissible. Therefore, we have not examined the secondary issue raised viz: appropriate interpretation of the Scheme of 1997 Act, proceeding on the premise that it is the same tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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