Adjustment of amount paid under IDS 2016 on failure to pay third instalment – Supreme Court issues notice to CBDT
ABCAUS Case Law Citation
ABCAUS 3534 (2021) (07) SC
Important case law relied referred:
Sangeeta Agarwal vs. Principal Commissioner of Income Tax
Shankarlal vs. Income Tax Officer & Ors
Patchala Seethramaiah vs. Commissioner of Income Tax
Hemalatha Gargya vs. Commissioner of Income Tax
Clause183 of the Income Declaration Scheme 2016 (IDS 2016) envisages declaration of undisclosed income to be chargeable to tax at the rate of thirty percent.
In terms of clause 187 of the said Scheme, the Government of India notified the last dates for depositing the tax and penalty in three installments.
Adjustment of amount paid under IDS 2016 on failure to pay 3rd instalment
The assessee made a declaration under IDS 2016 and was required to make payment towards tax, surcharge and penalty in three installments by the dates specified by the Commissioner of Income Tax.
The assessee deposited the amount towards the first and second installments before the due dates.
However, the assessee could not deposit the third instalment as he was arrested in a criminal case and remanded to judicial custody.
The assessee as soon as he was granted bail, applied to the Jurisdictional Commissioner and CBDT for extension of time for payment of the last third installment of tax, surcharge and penalty under the IDS 2016.
Though the Commissioner replied that he has no authority to grant any such extension of time, the CBDT did not replied to the assessee.
On the direction of the Hon’ble High Court, the CBDT passed an order u/s 119 of the Income Tax Act, 1961 (the Act). As per the order, before the arrest, the assessee had sufficient time to pay the third installment. After the assessee was granted bail, he could very well had arranged the funds even though he had to present in the Court daily. Thus, CBDT rejected the grant of further relaxation or time for payment of the third installment for personal reasons which were solely attributable to the assessee.
Against the order of the CBDT, the assessee filed a writ application before the Hon’ble High Court challenging the order passed by the CBDT.
Before the Hon’ble High Court, the assessee confined its case only to the extent of adjusting the amount already deposited by the writ applicant for the relevant assessment year.
As stated by the CBDT, the Hon’ble High Court opined that prayer of the assessee for refund of penalty paid under the first and second installment of IDS could not be entertained in view of subsection (3) of section187 of Chapter IX of the Finance Act, 2016 which clearly provides that if the declarant fails to pay the tax, surcharge and penalty in respect of declaration made under section 183 on or before the date so notified by the Central Government in the Official Gazette, the declaration filed by him shall be deemed never to have been made under the IDS Scheme. Further, as per section 191 of the Chapter IX of Finance Act, 2016, 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.
As a result, the writ application was rejected.
Aggrieved by the order of the High Court, the assessee filed Petition for Special Leave to Appeal(SLP) before the Hon’ble Supreme Court. The limited relief sought was with respect to adjustment of the amounts deposited towards first two instalments so that in the tax liability computed by the Department after revised assessment, appropriate relief can be afforded to the petitioner.
The Hon’ble Supreme Court admitted the Petition and issued notice to the CBDT.
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