1999 (9) TMI 66 - HC - Income Tax

Summary

Issues involved:
The judgment deals with the issue of compliance with the Voluntary Disclosure of Income Scheme, 1997, specifically focusing on the time limit for payment of tax as per sections 66 and 67 of the Finance Act, 1997.

Details of the Judgment:

The petitioner submitted a declaration under the Voluntary Disclosure of Income Scheme, 1997, which required payment of tax along with the declaration within a specified time frame. The petitioner failed to pay the tax within the stipulated time but paid it three days late. Consequently, the respondent rejected the declaration, leading to the filing of a writ petition challenging this decision.

The petitioner argued that they had applied for a loan to pay the tax, which was sanctioned on the last day, and the tax was paid immediately thereafter. They contended that the benefit of the scheme should not be denied due to a minor delay in payment, especially considering the non-refundable nature of the tax paid.

The respondent's counsel emphasized the strict compliance required by the Act, stating that failure to adhere to the conditions specified could render the declaration invalid, as per section 67(2) of the Act.

The judge examined the purpose of the scheme, which aimed to bring undisclosed income to light by allowing individuals to declare and pay tax on such income. The judge noted that the tax paid under the scheme was non-refundable, and the scheme was intended to convert hidden wealth into legitimate assets.

Referring to a similar case in the Punjab and Haryana High Court, the judge agreed that strict adherence to the time limit may not be reasonable in cases where circumstances beyond the declarant's control caused a delay in payment. The judge highlighted that the scheme's objective was not only to uncover hidden income but also to generate revenue for the government.

Ultimately, the judge ruled in favor of the petitioner, setting aside the impugned proceedings and allowing the writ petition, emphasizing that the declarant should be given the benefit of the scheme if the tax is paid with interest, even if there was a slight delay in payment.

In conclusion, the judgment underscores the importance of balancing strict compliance with the scheme's objectives of disclosing hidden income and generating revenue, particularly when considering the impact of minor delays in tax payment on declarants.