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TMI Blog2023 (3) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... y Disclosure of Income Scheme, 1997 is pari materia to Section 191 of the Income Declaration Scheme, 2016. This Court, on consideration of the judgment rendered by Hon ble Apex Court in the case of Hemalatha Gargya [ 2002 (11) TMI 6 - SUPREME COURT] where the consideration has been given on the issue of refund on the basis of the amount having not been deposited in entirety by way of declaration made under Section 67 and even when the specific bar is there not to refund in view of provision of Section 70, the direction has been passed for refund of the amount in favour of the assessee. The ground which has been taken that the amount since has been deposited by way of declaration made under Section 183 contained in the Finance Act, 2016, which contains a provision under Section 191 for not refunding the amount so deposited in any circumstances will be applicable over and above the return filed and accepted by the respondent Income Tax Department. But the said argument is not acceptable to this Court for two reasons, first, on the similar provision as was contained in Section 70 of the Scheme 1997 when the Hon ble Apex Court has been pleased to direct for refund of amount then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court has directed for adjustment of the amount so deposited. - W.P.(T) No. 4910 of 2018 - - - Dated:- 27-2-2023 - HON BLE MR. JUSTICE SUJIT NARAYAN PRASAD AND HON BLE MR. JUSTICE SUBHASH CHAND For the Appellant : Mr. Sumeet Gadodia, Advocate. Mrs. Shilpi Sandil, Advocate For the Respondents : Mr. Kumar Vaibhav, Advocate. PER SUJIT NARAYAN PRASAD, J. The instant writ petition has been listed before this Court by virtue of assignment to the Division Bench No.3 vide order passed in this regard in the administrative side by the Hon ble the Chief Justice on 14.09.2022 and, thereby the case is before this Court. 2. The instant writ petition is under Article 226 of the Constitution of India praying therein for following reliefs :- (i) For issuance of an appropriate writ/order/direction including Writ of Mandamus, directing the Respondents, particularly Respondent No.2 to permit the Petitioner to adjust the amount of Rs.90.00 lacs deposited pursuant to The Income Declaration Scheme, 2016 against his tax liabilities under the Income Tax Act, 1961. (ii) For issuance of an appropriate writ/order/direction including Writ of Declaration, declaring tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited a sum of Rs.45 lacs on or before 30th November, 2016 and, thereafter, deposited further sum of Rs.45 lacs on or before 31st March, 2017 and to that effect e-receipts were issued to the writ petitioner. The writ petitioner although was further required to pay the balance amount of tax, surcharge and penalty of Rs.90 lacs on or before 30th September, 2017 but due to the reasons beyond control of the petitioner, the aforesaid amount could not be deposited on or before 30th September, 2017. The writ petitioner contended that in terms of the provision of Section 187(3) of the Finance Act, 2016, declaration made by the petitioner will be deemed to have never made as the petitioner failed to deposit the total amount of tax, surcharge and penalty within the time schedule under the Scheme. The writ petitioner, therefore, has further contended that the natural corollary of non-deposit of the amount in entirety, in view of the provision of Sub-Section 3 of Section 187 of the Finance Act, 2016 will be that such declaration made under Section 183 became non est in the eye of law and, therefore, he is entitled for the refund of the aforesaid amount having been deposited up to tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been conducted in the premises of the writ petitioner and in pursuance thereto the petitioner was issued notice under Section 153A of the Income Tax Act for filing true and correct returns for the preceding six assessment years. Separate notices were issued for each assessment years including the assessment year 2015-16 and 2016-17. The petitioner, in pursuance thereto, has filed its revised return and in the said revised return, undisclosed income under Income Declaration Scheme, 2016, was duly reflected i.e. for the assessment year 2015-16, an additional income of Rs.1.5 Crores was reflected and further for the year 2016-17, an additional income of Rs.2.50 Crores was declared by the petitioner. It has further been submitted that for the Assessment Year 2015-16 and 2016-17, assessment proceeding under Section 143(3) read with Section 153A of the Income Tax Act was duly completed by the Assessing Authority and revised returns filed by the petitioner disclosing further income of Rs.1.5 Crores and 2.5 Crores respectively were accepted and computation of tax was made on the basis of said further income disclosed by the petitioner in its revised return. The petitioner, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered by Hon ble Apex Court in the case of Hemalatha Gargya v. Commissioner of Income Tax, A.P. and Another reported in (2003) 9 SCC 510 , the judgment rendered by the High Court of Andhra Pradesh passed in Writ Petition No.13506 of 1999 dated 8th September, 1999 in the case of Patchala Seethramaiah v. Commissioner of Income Tax, Vijayawada and Ors. and the judgment rendered by the High Court of Madhya Pradesh in the case of Smt. Sangeeta Agarwal v. Principal Commissioner of Income Tax (W.P. No.16028 of 2018) reported in (2018) 96 taxmann.com 171 (Madhya Pradesh). It has been contended that the Hon ble Apex Court in the case of Hemalatha Gargya v. Commissioner of Income Tax, A.P. and Another (Supra) while considering Section 67 of Voluntary Disclosure of Income Scheme, 1997 which provides the time for payment fixed can be extended, however, the Hon ble Apex Court has been pleased to hold that the time cannot be extended and thereby held the assessee not entitled to the benefit of the Scheme since the payments made by them were not in terms of the Scheme. However, direction has been passed upon the Revenue authorities to refund or adjust the amount already deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by taking recourse of the provision of Section 183 of the Finance Act, 2016 and in pursuance thereto, he was to deposit the amount in entirety in three instalments within the due date. But, he has deposited two instalments and third instalment has not been deposited. It has been submitted by referring to the provision of Section 191 of the Finance Act, 2016 wherein specific provision has been made that any amount of tax and surcharge paid under Section 184 or penalty paid under Section 185 in pursuance of a declaration made under Section 183 shall not be refundable. Therefore, submission has been made that in view of specific provision as contained under Section 191 barring the refund of the amount deposited in pursuance to the declaration made under Section 183, the petitioner cannot be held entitled for the refund. The further submission has been made in response to the argument that the entire amount which has been assessed by taking recourse of Section 132 read with Section 153A of the Income Tax Act, 1961 even then the amount so deposited in view of declaration made under Section 183 of the Finance Act, 2016 is not to be refunded in view of the provision as contained u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this Court is proceeding to answer the same after considering the statutory provisions and the judgments upon which reliance has been placed. The Income Tax Act, 1961 contains a provision as under Chapter XIV Procedure for Assessment wherein Section 139 provides the process of return of income. By virtue of the aforesaid provision, every person being a company or firm or being a person, is required to furnish return of his income in respect of which he is assessable under this Act. The other provisions are there as contained under Sub-Section 4 thereof which provides that any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Section 143 provides that where a return has been made under section 139, or in response to a notice under Sub-section (1) of Section 142, such return shall be processed in the manner as contained in the aforesaid Section and where a return has been furnished under section 139, or in response to a notice under Sub-section (1) of Section 142, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thstanding anything contained in section 66, the declarant may file a declaration without paying the tax under that section and the declarant may file the declaration and the declarant may pay the tax within three months from the date of filing of the declaration with simple interest at the rate of two per cent for every month or part of a month comprised in the period beginning from the date of filing the declaration and ending on the date of payment of such tax and file the proof of such payment within the said period of three months. (2) If the declarant fails to pay the tax in respect of the voluntarily disclosed income before the expiry of three months from the date of filing of the declaration, the declaration filed by him shall be deemed never to have been made under this Scheme. Section 70 thereof provides that any amount of tax paid in pursuance of a declaration made under Sub-section(1) of Section 64 shall not be refundable under any circumstances. In the year 2016, The Income Declaration Scheme, 2016 has been brought in force which contains a provision under Section 183 for giving a declaration by the assessee who has failed to furnish a return under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 183 within the time specified therein shall be chargeable to tax at the rate of thirty per cent of such undisclosed income. (2) The amount of tax chargeable under sub-section (1) shall be increased by a surcharge, for the purposes of the Union, to be called the Krishi Kalyan Cess on tax calculated at the rate of twenty-five per cent of such tax so as to fulfil the commitment of the Government for the welfare of the farmers. Section 187 provides time for payment of tax under which provision has been inserted as under Sub-section 3 thereof that if the declarant fails to pay the tax, surcharge and penalty in respect of the declaration made under Section 183 on or before the date specified under Sub-section (1), the declaration filed by him shall be deemed never to have been made under this Scheme, for ready reference, the provision of Section 187 is being referred hereunder as :- Time for payment of tax. 187. (1) The tax and surcharge payable under section 184 and penalty payable under section 185 in respect of the undisclosed income, shall be paid on or before a date to be notified1 by the Central Government in the Official Gazette. 2[Provided that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not entitled to the benefit of the Scheme since the payments made by them were not in terms of the Scheme, we direct the Revenue Authorities to refund or adjust the amounts already deposited by the assessees in purported compliance with the provisions of the Scheme to the assessees concerned in accordance with law. All the appeals are accordingly disposed of without any order as to costs. The same principle has been adopted by the Andhra Pradesh High Court in the case of Patchala Seethramaiah v. Commissioner of Income Tax, Vijayawada and Ors. (Supra) and Madhya Pradesh High Court in Smt. Sangeeta Agarwal v. Principal Commissioner of Income Tax (Supra) by putting reliance upon the judgment rendered by Hon ble Apex Court in the case of Hemalatha Gargya v. Commissioner of Income Tax, A.P. and Another (Supra). The Gujarat High Court, in the case of Yogesh Roshanlal Gupta v. Central Board of Direct Taxes (Supra), however, has taken a contrary view by distinguishing the judgment passed by Andhra Pradesh High Court wherein the view has been expressed that in absence of any such authority of law, the retention of amount contrary to the very Scheme was in the teet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven though the fact about the acceptance of return is not available in these cases which is the fact of the given case. Herein, it is the admitted fact that the Revenue has taken recourse of Section 132 and 153A and issued notices to the assessee for the assessment year 2015-16 and 2016-17, assessing the income of the assessee to the tune of Rs.1.5 crore and Rs.2.5 crore respectively which is the subject matter of the declaration given by the writ petitioner and thereafter the return has been filed and same has been accepted, as would appear from the stand taken by the writ petitioner in the supplementary affidavit dated 21.08.2020 as under paragraphs 4, 5 and 6 thereof. The aforesaid aspect of the matter has not been disputed, rather, the learned counsel for the Income Tax Department, in course of argument, has admitted the fact that the assessment was made for the assessment years 2015-16 and 2016-17 basis upon which the return filed by the assessee, has been accepted. Therefore, the return which ought to have been filed by the assessee although has not been filed at the time when it was filed i.e., at the stage of filing return in view of the provision of Section 139 but s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to act contrary to its action after accepting the return filed for the assessment year 2015-16 and 2016-17, meaning thereby, that the liability of the writ petitioner of filing return for the aforesaid assessment year is no more and once it is no more, there is no authority of the Income Tax Department to retain the amount and retaining the said amount will be said to be in the teeth of provision of Article 265 of the Constitution of India. 15. Accordingly and in the facts and circumstances of the case, this Court is of the view that the writ petition deserves to be allowed. 16. Accordingly, the writ petition stands allowed. The amount so deposited by the writ petitioner under the Scheme, 2016 is directed to be adjusted in the future assessment. 17. Mr. Sumeet Gadodia, learned counsel appearing for the petitioner, has submitted that the petitioner is also entitled for the interest over the amount retained. In this context, Mr. Gadodia has relied upon the judgment passed by Hon ble Apex Court in the case of Union of India through Director of Income Tax v. Tata Chemicals Limited reported in (2014) 16 SCC 335. 18. Serious objection has been made on behalf of learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid under Section 199, during the financial year immediately preceding the assessment year. (ii) Under Section 244A(1)(a) an assessee is entitled to receive interest on refund of any tax collected at source, tax deducted at source or advance tax paid. Clause (b) of Section 244A(1) provides that in case the refund is out of any other amount, interest shall be calculated for the period from the date of payment of tax or penalty to which the refund is granted. (iii) Interest on refund of TDS in view of the provision of Section 244A(1B). (iv) In view of Section 244A (1)(A)/(1)(1B) if any proceeding is going on against the assessee and at the end or conclusion of the proceeding any refund amount is due to the assessee and the proceeding was delayed due to the fault of the assessee, then the period of delay so attributable to the assessee shall be excluded from the period for which the interest is payable. Reference in this context be made to the judgment rendered by Hon ble Apex Court in the case of Union of India through Director of Income Tax v. Tata Chemicals Limited (Supra) . 22. The question of holding the petitioner entitled for the interest will only be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable then there will be refund by the Income Tax Department and in that pretext the refund will be accompanied with the interest. The aforesaid fact does suggest that in case of only bona fide approach of the assessee if the tax so deposited exceeds the tax chargeable for the year then only the question of payment of interest along with refund will arise. The Hon ble Apex Court in Union of India through Director of Income Tax v. Tata Chemicals Limited (Supra) where the issue arose as the quantum of tax deducted consequent to the order passed by the Assessing Officer directing it to deduct tax on amounts being remitted abroad, it was found in appeal that the payments made were in the nature of reimbursement and, therefore, not a part of income of the party to whom it is being remitted for the purpose of deduction of tax at source. Therefore, Tata Chemicals Limited sought refund of amount paid in excess along with interest thereof. The Hon ble Apex Court granted while making the following observations with regard to liability to pay tax; tax refund is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course. Therefore, the refund of tax along with interest in favour of the assessee will be only in a case if the tax paid either as advance tax or on self-assessment, in order to discharge the obligation under the Act. Not complying the obligation under the Act, gives consequences to an assessee just as non-compliance or an order passed by the authority under the Act. Thus, if there is no voluntary payment of tax on self-assessment and in that circumstances, there is no question of making payment of interest to the assessee. The relevant paragraph of the judgment rendered in Union of India through Director of Income Tax v. Tata Chemicals Limited (Supra) is referred and quoted hereunder as :- 30. The refund becomes due when tax deducted at source, advance tax paid, self-assessment tax paid and tax paid on regular assessment exceeds tax chargeable for the year as a result of an order passed in appeal or other proceedings under the Act. When refund is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company. 38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there-being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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