Case Note & Summary
The petitioner, Kamla Chandrasingh Kabali, a spinster, could not file income tax returns for assessment years 2011-12 to 2014-15 due to unfavourable familial circumstances. The Parliament introduced the Income Declaration Scheme, 2016 under Section 183 of the Finance Act, 2016, allowing assessees to declare undisclosed income. The petitioner filed a declaration in Form 1 on 30 December 2016, declaring total undisclosed income of Rs.2,39,08,854/- for the four assessment years, which attracted tax, surcharge and penalty of Rs.1,07,58,986/-. The petitioner could not pay the amount within the prescribed time under Section 184 of the Act due to financial constraints. She made payments in installments between 31 March 2017 and 31 July 2017, and the entire amount was paid before the issuance of the certificate. The Principal Commissioner of Income Tax refused to issue the certificate in Form 4 under Rule 4(5) of the Income Declaration Scheme Rules, 2016, on the ground that the payment was not made within the prescribed time. The petitioner filed a writ petition under Article 226 of the Constitution seeking a direction to issue the certificate. The court considered whether the delay in payment could be condoned. The court held that the Scheme is a beneficial legislation intended to provide an opportunity to declare undisclosed income. The petitioner had substantially complied with the scheme by making the declaration and paying the entire amount before the certificate was to be issued. The delay was due to financial constraints and not contumacious conduct. The court directed the respondent to issue the certificate in Form 4 within four weeks, as the purpose of the scheme would be served by accepting the declaration and tax.
Headnote
A) Income Tax - Income Declaration Scheme, 2016 - Condonation of Delay - Section 183, 184 Finance Act, 2016 - Rule 4(5) Income Declaration Scheme Rules, 2016 - The petitioner, a spinster, could not file returns for AYs 2011-12 to 2014-15 due to familial circumstances. She declared undisclosed income under the Scheme and paid tax, surcharge and penalty belatedly due to financial constraints. The court held that the Scheme being a beneficial legislation, the delay in payment should be condoned and the certificate in Form 4 must be issued, as the petitioner had substantially complied with the scheme and the delay was not due to contumacious conduct. (Paras 2-10) B) Income Tax - Income Declaration Scheme, 2016 - Substantial Compliance - Section 183, 184 Finance Act, 2016 - The court observed that the object of the Scheme was to provide an opportunity to declare undisclosed income and pay tax at a prescribed rate. The petitioner had made the declaration and paid the entire amount of tax, surcharge and penalty before the issuance of the certificate. The court directed the respondent to issue the certificate in Form 4, holding that the delay in payment did not defeat the purpose of the scheme. (Paras 8-10)
Issue of Consideration
Whether the Principal Commissioner of Income Tax was justified in refusing to issue the certificate in Form 4 under Rule 4(5) of the Income Declaration Scheme Rules, 2016, on the ground that the tax, surcharge and penalty were not paid within the prescribed time under Section 184 of the Finance Act, 2016, and whether the delay in payment can be condoned.
Final Decision
The court allowed the petition and directed the Principal Commissioner of Income Tax-27 to issue the certificate in Form 4 under Rule 4(5) of the Income Declaration Scheme Rules, 2016 to the petitioner within four weeks from the date of the order.
Law Points
- Income Declaration Scheme
- 2016
- Section 183
- Rule 4(5)
- Form 4
- condonation of delay
- beneficial legislation
- substantial compliance
