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TMI Blog2017 (10) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... Crores, even after the release of 5 Crores, the case of the department is that they left only with a sum of 5 Crores after releasing a sum of 5 Crores, after adjusting the amount payable under all heads for all these years. Therefore, we are of the considered view that the release of 5 Crores will not hamper either any investigation or further proceedings on the part of the department. There is also one more aspect. If the declaration under PMGKY Scheme is accepted by the department, the petitioner will not only get immediate release of 5 Crores, but will get RBI bonds encashable after four years to the total value of 5 Crores together with interest. The amount lying in RBI bonds, if allowed to be retained as security for any eventuality, till the conclusion of all the proceedings, the departments interest will be more safeguarded, even if they release the amount of 5 Crores. Therefore, in fine, the writ petition is disposed of directing the respondents to release an amount of 5 Crores to the petitioner within two weeks. The amount of 5 Crores lying in RBI bonds, shall be kept by the department as security for the release of the amount hereby ordered, until the conclusion of any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm-I could be accepted from a person willing to come under the scheme. These conditions are (i) payment of 30% of the income disclosed under the Act towards tax, payment of 10% of the undisclosed income as penalty and payment of 33% of the tax towards surcharge and (ii) the deposit of 25% of the declared income in RBI Bonds. 5. Section 199M of the Income Tax Act, introduced by the said amendment, made it clear that a declaration filed under the scheme without payment of tax and surcharge under Section 199D or without payment of penalty under Section 199E or without depositing 25% in RBI Bonds as per Section 199F, shall be void. 6. Since the entire amount available to the credit of the petitioner in their current account, totalling to ₹ 36.97 Crores had been seized by the Department and also taken away by them, the petitioner was left with no funds to make payment under Sections 199D, 199E and 199F. Finding themselves in a fix, the petitioner came up with a writ petition in W.P.No.9262 of 2017, challenging one portion of a Circular bearing No.2/2017, dated 18-01-2017, in and by which the Board disabled a person from seeking adjustment of the cash seized by the Department an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same may have to be addressed to the petitioner. 11. Pursuant to the said order, the Department kept in RBI Bonds, a sum of ₹ 5 Crores, from out of the seized amount (representing 25% of the declared income) in terms of Section 199F of the Act. Thereafter, the petitioner filed Form-I Declaration on 28-3-2017, declaring an undisclosed income of ₹ 20 Crores under the PMGKY Scheme. 12. Thereafter, the petitioner gave a letter to the respondents on 06-4-2017 to release the balance amount of ₹ 5 Crores (out of the declared income of ₹ 20 Crores), on the ground that there can be no claim by the Department on the said amount, as whatever had to be done with the declared income of ₹ 20 Crores, had already been done. Since the claim of the petitioner for the release of an amount of ₹ 5 Crores, could be understood much better in terms of numbers than in terms of prose, we shall present their contention as follows: (i) Amount seized from the current account of the petitioner = ₹ 36.97 Crores (ii) Amount that the petitioner wanted to declare under PMGKY Scheme, 2016 = ₹ 20 Crores (iii) The amount of tax, penalty and surcharge pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 20 Crores, which he had declared under the PMGKY Scheme. 17. As we have pointed out earlier, all the pre-conditions to be satisfied by a person to come under the PMGKY Scheme have been satisfied by the petitioner in the following manner: 1. By the department themselves appropriating ₹ 9.98 Crores out of the seized amounts towards tax, surcharge and penalty in terms of Sections 199D and 199E. 2. The department converting a sum of ₹ 5 Crores into RBI bonds as required by Section 199F, pursuant to the interim orders passed in W.P.No.9262 of 2017. 3. The petitioner filing a declaration in Form-I on 28.03.2017 as stipulated by Section 199C. 18. But it must be pointed out that only the first out of the aforesaid three pre-conditions, was fulfilled by the petitioner with the consent of the department as the department had no objection to appropriate out of the seized amount, a sum of ₹ 9.98 Crores towards tax, surcharge and penalty. The other two pre-conditions for accepting the petitioner under the PMGKY Scheme were satisfied by the petitioner pursuant to the interim orders passed by this court in W.P.No.9262 of 2017. Therefore the entitlement of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of ₹ 5 Crores. The first part of the prayer will lose its meaning and significance, if we grant the substantial relief of release of ₹ 5 Crores to the petitioner, since out of the sum of ₹ 20, Crores declared by the petitioner under the PMGKY Scheme, a portion equivalent to 75% has already appropriated by the Government towards tax, surcharge, penalty and investment in RBI Bonds. Therefore, the only significant question that we have to address ourselves in this writ petition is, as to whether the petitioner will be entitled to release of ₹ 5 Crores. 23. Before we find an answer to the above question, we should settle a small area of dispute between the petitioner and the respondents. As we have pointed out earlier, the total amount seized from the current account of the petitioner was ₹ 36.97 Crores, out of which a sum of ₹ 20 Crores is sought to be brought under the PMGKY Scheme. Therefore, the claim of the petitioner is that a sum of ₹ 16.97 Crores is available with the department, over and above the amount of ₹ 5 Crores liable to be refunded to them under the PMGKY Scheme. In other words, the claim of the petitioner is that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibitory order under Section 132(3). It is further claimed by the department that the Director of the petitioner gave a sworn statement under Section 132(4) on 02.01.2017 to disclose an income of ₹ 40 Crores. But after receiving advice from seasoned (?) professionals, the petitioner sought to declare only a sum of ₹ 20 Crores under the Scheme. Therefore, the contention of Mr. J.V. Prasad, learned Senior Standing Counsel for the petitioner is that in view of Section 132B, the petitioner is not entitled to the release of the amount of ₹ 5 Crores, especially when the declaration under the PMGKY Scheme was made after the seizure was effected. The learned Senior Standing Counsel also drew our attention to Section 199-I, under which the amount of undisclosed income declared in accordance with Section 199C shall not be included in the total income of the declarant for any assessment year. According to the respondents, the petitioner did not file returns of income for the assessment years 2014- 2015, 2015-2016 and 2016-2017. Therefore, it is contended by Mr. J.V. Prasad, learned Senior Standing Counsel that the petitioner is not entitled to the release of the aforesaid a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent account of a person, on a particular day, would not constitute an asset. Let us take a hypothetical case where a person is in enjoyment of overdraft facility. The amounts withdrawn by the person under the overdraft facility will surely be shown as a liability by that person. As a corollary the amount standing to his credit in the books of accounts will also be shown as an asset. 31. The reliance placed upon the decision of the Supreme Court in KCC Software does not appeal to us. In that case the contention of the assessee was that the bank accounts, which were disclosed in the regular books of account, were seized by the department and the money lying therein to the credit of the assessee were withdrawn. In other words, the Supreme Court was dealing in KCC Software, an amount which was accounted for in the books of accounts. In this case what was seized by the department from the petitioners current account was unaccounted money. Therefore, the decision in KCC Software would have no application to the case on hand. 32. Apart from the legal arguments, the learned counsel for the petitioner also appealed for mercy on the ground that since the entire account has been dried up, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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