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Ms. Grihalakshmi Films Versus Joint Commissioner of Income Tax, Range 1, Principal Commissioner Of Income Tax, Commissioner of Income Tax, Central Board of Direct Taxes, And Union of India, Ministry of Finance

2017 (7) TMI 732 - HIGH COURT OF KERALA

Benefit of Amnesty scheme in respect of penalty only - Penalty imposed on the petitioners u/s 271D, 271E and 272A(2)(C) - Revenue denied the benefit as there is a reference to a payment of tax and interest payable on the total income finally determined, along with 25% of the minimum penalty leviable, the Scheme must be intended to cover only such penalties as have been imposed on an assessee along with the assessment order. - Held that:- Firstly, the definition of tax arrears does not exclud .....

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ment year in question. The object of the Scheme appears to be to ensure that, while a person seeking an Amnesty Scheme only in respect of the penalty that is imposed on him, avails the benefit of the Scheme to that extent, it should also be ensured that the said declarant discharges the tax and interest liability under the Income Tax Act for the assessment year in question. - A person, who defaults on the tax and interest liability under the Income Tax Act for the assessment year, cannot cl .....

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cannot be legally sustained to deny the petitioners the benefit of Ext.P4 Amnesty Scheme. - Resultantly, quash Exts.P8, P9 and P10 intimations in both the writ petitions and direct the 2nd respondent to process Exts.P5, P6 and P7 declarations submitted by the petitioners in both the writ petitions expeditiously and in terms of Exts.P4 Scheme, as clarified in this judgment. - Decided in favor of assessee. - W.P.(C).Nos.6417 And 6418 of 2017 - Dated:- 26-5-2017 - MR. A.K.JAYASANKARAN NAMBIAR, .....

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he refusal by the 2nd respondent - Principal Commissioner of Income Tax to process an application that was preferred by them for obtaining the benefit of the Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as 'the Amnesty Scheme') in respect of penalties that were imposed on the petitioner under Sections 271D, 271E and 272A (2) (C) of the Income Tax Act. The facts in these writ petitions would indicate that, for the assessment years 2007-2008, the petitioners had decl .....

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s required by Section 285B regarding the film production carried on by them. The notices issued to the petitioners culminated in orders of penalty that were imposed on the petitioners under Sections 271D, 271E and 272A (2) (C) of the Income Tax Act. The petitioners, aggrieved by the orders of penalty passed against them, preferred appeals before the Commissioner of Income Tax (Appeals), the 3rd respondent herein and the said appeals are stated to be pending. While so, by Ext.P4 Amnesty Scheme, t .....

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tax and interest payable on the total income finally determined. The phrase 'tax arrear' is defined in the Amnesty Scheme as meaning the amount of tax, interest or penalty determined under the Income Tax Act or the Wealth-tax Act, in respect of which an appeal is pending before the Commissioner of Income Tax (Appeals) or the Commissioner of Wealth-tax (Appeals) as on the 29th day of February, 2016. For ease of reference the relevant provisions are extracted hereunder: 201. (1) In this S .....

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n or before a date to be notified by the Central Government in the Official Gazette, a declaration to the designated authority in accordance with the provisions of section 203 in respect of tax arrear, or specified tax, then, notwithstanding anything contained in the Income-tax Act or the Wealth-tax Act or any other provision of any law for the time being in force, the amount payable under this Scheme by the declarant shall be as under, namely:- (I) in case of pending appeal related to tax arrea .....

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and the tax and interest payable on the total income finally determined. (II) In case of specified tax, the amount of such tax so determined. 3. A perusal of the Scheme also indicates that a declaration under Section 202 of the Finance Act, 2016, governing the Amnesty Scheme is to be made, by the applicant seeking the benefit of the Scheme, before the designated authority in the prescribed form and in the prescribed manner and, on the application of the declarant being considered in terms of th .....

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ment years, in consequence of a search initiated under Section 37A or requisition made under Section 37B of the Wealth-tax Act if it relates to any tax arrear; (ii) relating to an assessment or reassessment in respect of which a survey conducted under section 133A of the Income-tax Act or section 38A of the Wealth-tax Act, has a bearing if it relates to any tax arrear; (iii) relating to an assessment year in respect of which prosecution has been instituted or or before the date of filing of decl .....

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sputed tax, interest or penalty, and the amnesty is to be granted to the extent contemplated in the Amnesty Scheme. 4. In the instant case, while the petitioners submitted their declarations in the prescribed form before the designated authority, by Exts.P8, P9 and P10 intimations served on them, they were informed that the declarations submitted by them could not be processed since, as per the Amnesty Scheme, the tax arrears in the case of penalty necessarily referred only to such penalty as wa .....

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sty Scheme. 5. A statement has been filed on behalf of the respondents 1 to 3, wherein the stand taken in Exts.P8 to P10 intimations served on the petitioners is sought to be justified based on the clarificatory Circulars issued by the Central Board of Direct Taxes (CBDT) which purport to clarify the scope of Ext.P4 Amnesty Scheme. In particular, it is reiterated that the petitioners would not be entitled to the benefit of the Amnesty Scheme since the penalties imposed on them were not linked to .....

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ned as meaning an amount of tax, interest or penalty determined, inter alia, under the Income Tax Act, and in respect of which an appeal is pending before the appellate authority as on 29.02.2016. The Scheme also envisages that, in the case of a pending appeal related only to penalty,the amount payable by an eligible declarant would be 25% of the minimum penalty leviable, along with the tax and interest payable on the total income finally determined. It is not in dispute that, in the instant cas .....

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heme must be intended to cover only such penalties as have been imposed on an assessee along with the assessment order. The clarification of the CBDT in the context of a penalty order under Section 271(C) or 271 (C) (A) of the Income Tax Act also suggests that, such penalties, as are not linked to assessment proceedings, would not be covered under the Scheme. On an overall consideration of the Scheme, however, I do not see any scope for such a restrictive interpretation of the ambit of the Amnes .....

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