S. Sudarsanababu V. The Income-Tax Officer, Ward-3, Kollam and The Commissioner of Income-Tax, Ayakar Bhavan, Kowdiar, Trivandrum

OP/22984/2000

AI Insights

The case revolves around S. Sudarsanababu's challenge against the rejection of his application for benefits under the Voluntary Disclosure of Income Scheme (VDIS) introduced by the Finance Act, 1997. The petitioner submitted his application on 30.12.1997 to the Assessing Officer in Kollam, who forwarded it to the Commissioner of Income-Tax in Trivandrum, where it was received on 31.12.1997. The application was not accompanied by the required tax payment, which was later made on 31.3.1998, one day late. The Commissioner rejected the application due to this delay, leading to the issuance of a notice under Section 148 for bringing the escaped income to tax. The court found the rejection valid based on the Supreme Court's precedent, despite the petitioner's argument that the application was timely filed with the Assessing Officer.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 804471 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 31-07-2008
• Assessment Year: misc
• Other Referred Cases: DR. ARJUN D. BHARAD V. INCOME-TAX OFFICER (2003) 259 ITR 1
• Laws Referred To: Finance Act, 1997
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; GEORGE K GEORGE
• Assessee Lawyers: S RAJ
• Keywords: Escaped income; Income Tax; Interest Waiver; Penalty; VDIS; Voluntary Disclosure of Income Scheme
• Section: 148; 64(1); 67; 66

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR THURSDAY, THE 31ST JULY 2008 / 9TH SRAVANA 1930 OP.No. 22984 of 2000(J) ----------------------- PETITIONER: ------------ S.SUDARSANABABU, \"THIRUVATHIRA\", AYATHIL, KOLLAM-691 010. BY ADV. SRI.S.ARUN RAJ RESPONDENTS: ------------- 1. THE INCOME-TAX OFFICER, WARD-3, KOLLAM. 2. THE COMMISSIONER OF INCOME-TAX, AYAKAR BHAVAN, KOWDIAR, TRIVANDRUM-3. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 31/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP NO.38797/2000 IN O.P. NO.22984/2000 DISMISSED: 31.7.2008 SD/-(C.N.RAMACHANDRAN NAIR, JUDGE.) APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF LETTER DT.6.5.1998 SUBMITTED BY THE PETITIONER BEFORE R2. P2: TRUE COPY OF THE COMMUNICATION DT.15.5.98 RECEIVED BY PETITIONER FROM R2. P3: TRUE COPY OF NOTICE U/S.147 OF THE INCOME TAX ACT ISSUED BY R1 TO THE PETITIONER DT.13.3.2000. P4: TRUE COPY OF THE RECEIPT DT.31.12.1997 ISSUED BY ASST. COMMISSIONER OF INCOME-TAX(HEADQUARTERS), TRIVANDRUM FOR THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. P5: TRUE COPY OF THE PROVISIONAL RECEIPT DT.30.12.97 ISSUED BY ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-I, QUILON. P6: TRUE COPY OF FIRST PAGE OF DECLARATION SUBMITTED BY PETITIONER, WHICH IS KEPT IN THE OFFICE OF R2, INITIALLY FURNISHED TO THE PETITIONER BY R2. RESPONDENT'S EXHIBITS: R2(A): TRUE COPY OF DECLARATION BEARING THE SEAL CIT. TRUE COPY PA TO JUDGE C.R. C.N.RAMACHANDRAN NAIR, J. .................................................................... O.P. No.22984 of 2000 .................................................................... Dated this the 31st day of July, 2008. JUDGMENT The petitioner is challenging Ext.P2 whereunder petitioner's application for benefit under the Voluntary Disclosure of Income Scheme introduced by the Finance Act, 1997 was rejected by the Commissioner of Income Tax. I heard counsel for the petitioner and Standing Counsel appearing for the respondents. 2. The petitioner made application under VDIS under Section 64(1) of the Finance Act, 1997 on 30.12.1997. Though the application was to be filed before the Commissioner of Income Tax, petitioner submitted the application before the Assessing Officer at Kollam on 30.12.1997. The officer immediately transmitted the same to the concerned authority namely, the Commissioner of Income Tax at Trivandrum. The application reached the Commissioner on 31.12.1997 and Ext.P4 receipt was also issued from the Commissioner's office. Though VDIS application has to accompany payment of tax in terms of Section 66 of the Act, Section 67 of the Finance Act, 1997 authorises payment of tax along with interest within 90 days of making declaration. The petitioner admittedly did not remit the tax along 2 with the declaration in terms of Section 66 of the Act. However, petitioner remitted the tax along with interest under Section 67 on 31.3.1998. According to the Commissioner of Income-Tax, payment ought to have been made on or before 30.3.1998 and on account of the delay of one day in making payment, petitioner was not entitled to the benefit of VDIS. After declining the benefit under VDI Scheme, notice under Section 148 was issued to the petitioner for bringing to tax the escaped income which again is based on information available in the VDIS declaration. 3. Counsel for the respondent contended that the authority to entertain the application under the VDI Scheme is the Commissioner of Income-Tax and therefore, the date of filing of declaration has to be reckoned with reference to the date on which the application was received by the Commissioner of Income Tax at Trivandrum, which is 31.12.1997. Counsel appearing for the petitioner contended that the respondents' argument is not tenable because the declaration to the Commissioner was received by the Assessing Officer at Kollam on 30.3.1997 and the balance i.e. transmission of the application by the Assessing Officer to the Commissioner, is with the department. I am of the view that the department's contention that date of filing the declaration has to be reckoned from the date on which the Commissioner actually received the application 3 at Trivandrum is not tenable for the simple reason that if the application received by the Assessing Officer at Kollam reaches the Commissioner on 1st January or any later date on account of the delay taken by the Assessing Officer in transmitting the application, it should not lead to denial of benefit of the scheme to the applicant. In this case it so happened that the application reached in one day from the Assessing Officer at Kollam to the Commissioner at Trivandrum. However, even if there was a delay of one or two days in the application reaching the Commissioner, Trivandrum from the Assessing Officer at Kollam, then obviously department cannot reject the application on account of such delay because application should be deemed to have been received by the Commissioner as on the date on which his subordinate officer received it at Kollam. Even though the Assessing Officer is not the authority to entertain the application under VDIS and under Section 64(5) and the Commissioner is the authority to receive the application, when the assessee makes the declaration to the Commissioner, but delivers it to the Assessing Officer and such officer accepts it, then the date of application to the Commissioner should be certainly the date of receipt by the Assessing Officer, no matter how much time he may take to deliver it to the Commissioner. If the department's claim is accepted, then the same will lead to an anomalous situation that 4 applications received in time by the assessing authorities would have to be rejected, if such applications did not reach the Commissioner on the last date. Therefore, I am of the view that the department's case that date of making declaration is 31.12.1997 when the Commissioner's office issued receipt of the same, is not correct and the date of receipt of the application is 30.12.1997 when the petitioner delivered the application before the Assessing Officer. Ext.P4 is only an acknowledgement of receipt of application and the date given therein has no significance because assessee can always plead that the application was filed on 30.12.1997 when it was delivered to the Assessing Officer. 4. Since the declaration is found to have been made by the petitioner on 30.12.1997 without being accompanied by payment of tax under Section 66 of the Finance Act 1997, the tax with interest should have been paid on or before 30.3.1998. Petitioner admittedly delayed payment by one day and the Supreme Court in the decision in DR.ARJUN D.BHARAD V. INCOME-TAX OFFICER (2003) 259 ITR 1 held that any delay in payment under VDIS will be fatal to the claim. Consequently petitioner is rightly held to be not eligible for VDIS benefit and I reject challenge against Ext.P4. However, I make it clear that the intention of the petitioner for settlement under VDIS is very clear and the denial of benefit is only on 5 account of a mis-understanding on his side with regard to last date on which amount was payable. Consequently I direct the respondents to consider sympathetically petitioner's claim pursuant to proceedings initiated under Section 148, particularly in regard to levy of penalty, waiver of interest etc. The O.P. is disposed of as above. C.N.RAMACHANDRAN NAIR Judge pms "