2003 (4) TMI 63 - HC - Income Tax

Voluntary Disclosure of Income Scheme 1997 (VDIS) - This writ petition has been filed for quashing the impugned notice u/s 144A for proceeding under section 158BD read with section 158BC. - refund of seized amount. The petitioner has also prayed for a mandamus restraining the respondents from proceeding with block assessment under section 158BC. - The petitioner had a valid certificate granted to him by the Commissioner of Income tax Meerut under section 68(2) of the Voluntary Disclosure of Income Scheme 1997 and hence the impugned proceedings under section 158BD in pursuance of notice dated October 29 2001 and December 12 2001 are illegal and are hereby quashed. The amount seized from the petitioner shall be re funded to the petitioner along with interest at 12 per cent. per annum from the date of seizure to the date of refund

Summary

Issues:
Challenge to notice under section 144A of the Income-tax Act, 1961 for proceeding under section 158BD, read with section 158BC. Refund with interest of the seized amount. Mandamus restraining respondents from proceeding with block assessment under section 158BC.

Detailed Analysis:

Challenge to Notice under Section 144A:
The petitioner filed a writ petition seeking to quash the notice dated October 29, 2001, under section 144A of the Income-tax Act, 1961, for proceeding under sections 158BD and 158BC. The petitioner argued that he was entitled to make a declaration under section 64 of the Voluntary Disclosure of Income Scheme, 1997, as he did not fall under the categories ineligible for declaration. The petitioner contended that the seizure of the amount and subsequent block assessment proceedings were unlawful.

Validity of Voluntary Disclosure:
The petitioner declared an amount under the Voluntary Disclosure of Income Scheme, 1997, which was accepted by the Commissioner of Income-tax, Meerut. The petitioner sought the return of the seized amount as it was already disclosed under the scheme. The Department alleged fraudulent declaration by the petitioner and attempted to cancel the certificate granted under the scheme. However, the court found that the petitioner was eligible for the scheme and entitled to immunity under section 68(2) of the Scheme.

Legal Immunity and Refund of Seized Amount:
The court emphasized that the petitioner, having obtained a valid certificate under the Voluntary Disclosure of Income Scheme, was immune from further assessment under the Income-tax Act. Citing relevant case laws, the court held that the impugned proceedings under section 158BD were illegal and quashed them. The court ordered the refund of the seized amount to the petitioner with interest at 12% per annum within two months from the date of production of the order.

Conclusion:
The court allowed the petition, quashed the illegal proceedings under section 158BD, and directed the refund of the seized amount to the petitioner. The judgment upheld the petitioner's entitlement to immunity under the Voluntary Disclosure of Income Scheme, 1997, and emphasized the importance of honoring valid certificates granted under such schemes.