By Sri. Y v. Raviraj, Adv. For R1 And R2Sri. M.b.kanavi, Standing Counsel For R3Sri.narayan V.yaji, Adv. For R3

an ae IN THE HIGH COURT OF KARNATAKA|DHARWAD BENCH. DATED THIS THE 12 DAY OF NOVEMBER, 2021 BEFORE THE HON’BLE MR.JUSTICE SURAJ] GOVINDARA] &WRIT PETITION No.104866/2018 (TIT) BETWEEN: SHRI. SABEEL MKOHAMMED SIRAJAHMED UMACHIGI AGED ABOUT: 33 YAERS, 1, UMACHIGI COMPLEX, COEN ROAD, HUBBALLI-580020. .. PETITIONER| (BY SRI.: H R KAMBIYAVAR, ADV. M/S.K.R.PRASAD PATRI, SRI. PATRI S.K,SRI. ASHOK A.KULKARNI, ADVS. ) AND 1.)THE INCOME TAX OFFICERWARD-3(4),INCOME TAX OFFICES,WARD-3(4),INCOME TAX OFFICES, NAVANAGAR,HUBBALLI-5800725.HUBBALLI-5800725. D> |THE PRINCIPAL COMMISSIONER OF INCOME TAXINCOME TAX OFFICES,NAVANAGAR,INCOME TAX OFFICES,NAVANAGAR, HUBBALLI-580025. ceeTHE SECRETARYDEPARTMENT OF ECONOMIC AFFAIRS,DEPARTMENT OF ECONOMIC AFFAIRS, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI-110001.. aATHE MANAGER|STATE BANK OF INDIA,STATE BANK OF INDIA, SAMYUKTHA KARNATAKA MAIN GATE, KOPPIKAR ROAD BRANCH, HUBBALLI-580070. 5.THE MANAGER|STATE BANK OF INDIA,STATE BANK OF INDIA, KESHAVAPUR BRANCH, HUBBALLI-5800723. Respondents (BY SRI. Y. V. RAVIRAJ, ADV. FOR R1 AND R2SRI. M.B.KANAVI, STANDING COUNSEL FOR R3SRI.NARAYAN V.YAJI, ADV. FOR R3 SRI.K.L.PATIL, & SRI. S.S. BETRUMATH, ADVS. FOR R4 &R5) THIS WRIT PETITION IS FILED UNDER ARTICLES 22726 22/7 OF THE CONSTITUTION OF INDIA, PRAYING TO THIS WPISFILED|PRAYINGTO:-A.QUASH BY AN ORDER, WRIT OR DIRECTION IN THE}NATUREOF|CERTIORARITHE|COMMUNICATIONDATED:20.03.27018BEARING TO:- NO.ITO/W.3(4)/HBL/153A/2017-18 (ANNEXURE-'J°) OF THE.1ST RESPONDENT WHERE THE DECISION OF THE 2ND)RESPONDENT TO THE EFFECT THAT THE PMGKY SCHEME [S|INAPPLICABLE TO THE PETITIONER IS COMMUNICATED.| B.DIRECT TO THE 1ST RESPONDENT THAT THE PETITIONER|QUALIFIES FOR THE BENEFITS ENUMERATED IN SECTION|199-1 OF THE ACT NO.48 OF 2016 GRANTING IMMUNITY|FROM THE PROVISIONS OF THE INCOME TAX ACT.| C.ISSUE A WRIT ORDER OR DIRECTION IN THE NATURE OF|MANDAMUSTO)THE|AND|RESPONDENT|THATTHE|PETITIONER QUALIFIES FOR THE BENEFITS ENUMERATED IN.SECTION 199-1 OF THE ACT OF 48 OF 2016 GRANTING|IMMUNITY FROM THE PROVISIONS OF THE INCOME TAX! ACT. D.DIRECT AS THE CASE MAY BE TO THE 4TH RESPONDENT|TO ISSUE ACERTIFICATE FO HOLDING THE DEPOSIT AS PER!CLAUSE|3(2)OF|THE|NOTIFICATION)NO.S.0.4061(E).DATED:16.12.2016 UNDER THE PMGKY SCHEME 2016 (389.ITR 56) ON THE REPAYMENT TO THE BANK OF A SUM OFRS./7.50LAKHSWHICHTHE|PETITIONER.WILLDOFORTHWITH. E.IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO WHAT|IS STATED IN PARA-31 ABOVE ISSUE A WRIT, ORDER OR)DIRECTION IN THE NATUE OF MANDAMUS OR ANY OTHER|SRIT, ORDER OR DIRECTION AS THE CASE MAY BE TO THE}STH RESPONDENT TO ISSUE A CERTIFICATE OF HOLDING|THE DEPOSIT AS PER CLAUSE 3(2) OF THE NOTIFICATION|NO.S.0.4061(3) DATED:16.12.2016 UNDER THE PMGKY.SCHEME, 2016 (389 ITR 56) ON THE REPAYMENT OF RS.7.50LAKHS BY WAY OF DEPOSIT UNDER THE SCHEME WITH THE!ABOVE RESPONDENT. F. ISSUE A WRIT ORDER OR DIRECTION OF MANDAMUS TO!THE|AND|RESPONDENTDIRECTING.HIM TO ISSUE A CERTIFICATE IN FORM NO.II AS PER!NOTIFICATION NO.225/ 231/201/7-ITA-II DATED:27.09.201/ENABLING THE PETITIONER TO AVAIL ALL THE BENEFITS|UNDER THE PMGKY SCHEME. G.ISSUE A WRIT, ORDER OR DIRECTION IN THE NATURE OF|MANDAMUS OR ANY OTHER WRIT, ORDER OR DIRECTION OF.ANY NATURE TO THE 2ND RESPONDENT DIRECTING HIM TO)ISSUE A CERTIFICATE IN FORM 2 AS ENVISAGED UNDER|RULE|3(3).AS|PER|NOTIFICATION.NO.S.0.4059(E) DATED:16.12.2016 UNDER SECTION 199C(1) OF CHAPTER:IX-A OF ACT NO.48 OF 2016 (389 ITR (St) 63).| THIS WRIT PETITION COMING ON FOR HEARING ON!INTERLOCUTORY APPLICAITON, THIS DAY, THE COURT MADE THEFOLLOWING: "As ORDER 1]The petitioner is before this Court seeking for the following relief: F. ISSUE A WRIT ORDER OR DIRECTION OF MANDAMUS TO!THE|AND|RESPONDENTDIRECTING.HIM TO ISSUE A CERTIFICATE IN FORM NO.II AS PER!NOTIFICATION NO.225/ 231/201/7-ITA-II DATED:27.09.201/ENABLING THE PETITIONER TO AVAIL ALL THE BENEFITS|UNDER THE PMGKY SCHEME. G.ISSUE A WRIT, ORDER OR DIRECTION IN THE NATURE OF|MANDAMUS OR ANY OTHER WRIT, ORDER OR DIRECTION OF.ANY NATURE TO THE 2ND RESPONDENT DIRECTING HIM TO)ISSUE A CERTIFICATE IN FORM 2 AS ENVISAGED UNDER|RULE|3(3).AS|PER|NOTIFICATION.NO.S.0.4059(E) DATED:16.12.2016 UNDER SECTION 199C(1) OF CHAPTER:IX-A OF ACT NO.48 OF 2016 (389 ITR (St) 63).| THIS WRIT PETITION COMING ON FOR HEARING ON!INTERLOCUTORY APPLICAITON, THIS DAY, THE COURT MADE THEFOLLOWING: "As ORDER 1]The petitioner is before this Court seeking for the following relief: "A. Quash by an order, writ or direction in thenatureof|certiorarlthecommunicationdated:70.03.7018|bearingNO.ITO/W.3(4)/HBL/153A/2017-18 (ANNEXURE-"J") of the|istrespondentwherethedecisionof|thePNGrespondent to the effect that the PMGKY scheme Is inapplicabletothepetitioner|IS communicated. B. Direct to tne ist respondent that the petitioner|gualifies for the benefits enumerated in section 199-1 ofthe act no.48 of 2016 granting immunity from the)provisions of the income tax act. C [ssue ga writ order or direction in the neture Ofmandamus to the 2nd respondent that the petitioner|gualifies for the benefits enumerated in section 199-1 ofthe act of 48 of 2016 granting immunity from the)provisions of the income tax act D, Direct as the case may be to tne 4th respondent to|issue a certificate of holding the deposit as per clause|3(2)|Of|thenotificationNno.S.0.4061(E)dated: 16.12.2016 under the PMGKY scheme 2016 (389ITR 56) on the repayment to the bank of a sum ofrs.7.50 lakns whicn tne petitioner will ao fortnwitn.| E In the alternative and without prejudice to what Is Stated in para-31 above issue a writ, order or direction|in the nature of mandamus or any other writ, order or|direction as the case may be to the 5tn respondent to|issue a certificate of holding the deposit as per clause|3(2)|Of|thenotificationno.s.0.4061(3)dated: 16.12.2016 under the PMGKY scheme, 2016 (389ITR 56) on the repayment of Rs.7.50 lakhs by way ofdeposit under the scheme with tne above respondent. f. Issue a writ order or direction of mandamus to the| 2. 3. DPndrespondentdirecting|him to tssue a certificate in Form WNo.II as_ penotification No.225/ 231/201/7-ITA-II dated:27.09.2017enabling the petitioner to avail all the benefits under thePMGKY scheme. g .lssue a writ, order or direction in the nature of|mandamus or any otner writ, order or direction of any|nature to the 2nd respondent directing nim to issue acertificate in form 2 as envisaged under rule 3(3) as per|notification No.S.0.4059(E) dated:16.12.72016 Undersection 199C(1) of chapter ix-a of act no.48 of 2016|(389 itr (st) 63).” On 21/12/2016, office of the Police Department|seized an amount of R.29,98,000/- from _ themployee of the petitioner. The said amount was.)taken over by the Income Tax Department who,proceeded in the matter by issuing Summons|under Section 13 of the Income Tax 1961,recorded a statement on 26/12/2016. # Similarstatements were recorded from several other.persons who are stated to be involved in the said|transaction or otnerwise. | The petitioner wished to avail the benefit Under|Pradhan Mantri Garib Kalyan Deposit Scheme 2016| (PMGK Scheme), which had been then introduced|more particularly providing that in the event of|undisclosed income being declared the same couldbe compounded by making payment of certain tax|amount, cess and penalty which amount once) collected were to be used for the PMGK Scheme. | 4. The petitioner wished to avail the benefit Under|Pradhan Mantri Garib Kalyan Deposit Scheme 2016| (PMGK Scheme), which had been then introduced|more particularly providing that in the event of|undisclosed income being declared the same couldbe compounded by making payment of certain tax|amount, cess and penalty which amount once) collected were to be used for the PMGK Scheme. | 4. In terms of Section 199D of the Act, the unclosed|income would be chargeable tax at the rate of|33%, a surcharge at 33% on the tax and further|an amount was 10% towards penalty in terms of)Section 199A of the Act.income would be chargeable tax at the rate of|33%, a surcharge at 33% on the tax and further|an amount was 10% towards penalty in terms of)Section 199A of the Act. 5.Interms of Section 199F an amount equal to 25%|of the undisclosed income was to be deposited in|the PMGK Scheme, which deposit would bear no)interest and the amount would be permitted to be|withdrawn after 4 years from the date of deposit. of the undisclosed income was to be deposited in|the PMGK Scheme, which deposit would bear no)interest and the amount would be permitted to be|withdrawn after 4 years from the date of deposit. 6. Thus in effect approximately 50% would have to)be appropriate towards tax, cess, penalty and 25%be appropriate towards tax, cess, penalty and 25% would be retained by the income tax department|for a period of 4 years and returned to the)assessee disclosing undisclosed income without)interest, this being a methodology resorted to by|the state to raise monies without interest. J. The Commissioner of the income tax appropriated|an amount of Rs.15,00,000/- towards tax amount)out of the seized amount of Rs.29,98,000/- and)instruction thereto were issued to the Manager of the State Bank of India on 30/3/2017. Thus, the)requirement of Section 199D and 199E had been|met. What was left for the petitioner to comply|with the provisions of 199F in as much as ansamount equivalent to 25% of the undisclosed|income was to be deposited in the PMGK Scheme. |Initially, the said deposit was required to be made.by 31/3/2017. 8 The grievance of the petitioner is that though the.petitioner tried to deposit the said amount on| 31/3/2017 with the State Bank of India, Koppikar|road, branch Hubli.The said bank informed thepetitioner that the said branch was not identified orpermitted to accept the deposit under the PMGKScheme and therefore, referred the petitioner to.Keshavapur branch. Petitioner immediately went tothe Keshavapur branch to deposit the money. |However, by then, the Bank terminal was closedand the amount could not be accepted by theKeshavapur branch even though the petitioner wasready to deposit the amount. Q.It is on account of the non deposit of the balance.amount of Rs.7.50 lakh that the respondentauthority nas held that the petitioner is not entitledto tne penefit of PMGK Scnemeand denied tnepetitioner refund of the amount which were heldwith the income tax department tI.e. the balance of14.98 lakh.. "QO: 10.It is this that the petitioner has challenged before|this Court and sought for relief as afore mentioned.this Court and sought for relief as afore mentioned. 11.The contention of the learned counsel for the.petitioner is that the petitioner is entitled to the|benefit of the scheme when the petitioner was|ready and willing to deposit the amount. The|amount could not be deposited solely on account of the fact that the first bank that the petitioner went|to was not authorised to collect the money and the)second bank that the petitioner went to could not)accept the money since the banking hours had)closed.petitioner is that the petitioner is entitled to the|benefit of the scheme when the petitioner was|ready and willing to deposit the amount. The|amount could not be deposited solely on account of the fact that the first bank that the petitioner went|to was not authorised to collect the money and the)second bank that the petitioner went to could not)accept the money since the banking hours had)closed. 12.It is further contended that an amount of.Rs.15,00,000/- has already been appropriated|towards, tax, surcharge and penalty interms of)Section 199D and 199E, when there is such asubstantial compliance made by the petitioner, the|alleged non compliance of the requirement of)Section 199F cannot be a ground for disentitling|Rs.15,00,000/- has already been appropriated|towards, tax, surcharge and penalty interms of)Section 199D and 199E, when there is such asubstantial compliance made by the petitioner, the|alleged non compliance of the requirement of)Section 199F cannot be a ground for disentitling| the petitioner of the benefit. More so, when the)respondent authorities having in their possession,|an amount double the amount required to be)deposited under Section 199F. 13.Learned counsel for the petitioner further submits|that the petitioner is even as on today ready to)deposit the amount with the authorities to be)adjusted. The period of deposit under Section|199F can be taken into consideration from today,the petitioner would not seek for withdrawal of the|amount for a period of four years from today nor|seek for interest from the year 2017 till now or)going further for a period of four years. On these)grounds, learned counsel for the petitioner submits|that writ petition requires to be allowed. 14.Per contra, Sri. Y.V.Raviraj, learned counselappearing for the department would contend thatthe benefits of the PMGK Scheme, is more in thenature of a compounding scheme which is time bound and it was required for the petitioner to comply with the same within the time frame so.prescribed. The petitioner not having deposited|25% of the undisclosed income interms of Section.199F cannot claim the benefit of the said scheme.The deposit of the said 25% is pre-requisite for the|considered of the Petitioner to be eligible for the)scheme. The deposit of 25% was required to be)accompanied by declaration in Form No.1 as)required under Section 199D(1) which has not!been done and thereafter, Form No.2 to be filed|with the income tax authorities. Both of these not.having been done, the respondent-department has|rightly rejected the claim of the petitioner and|therefore, he submits that the petition is liable to)be rejected. 15)Heard the learned counsel for the petitioner and|learned counsel for respondent. Perused the.papers. an 16,Though lengthy petition, lengthy objection and |statement of objections have been filed as also)arguments advanced, the short question that)arises is: “Can an assessee be denied benefit of.scheme when there is partial fulfillment of the)requirement of the scheme?” —statement of objections have been filed as also)arguments advanced, the short question that)arises is: “Can an assessee be denied benefit of.scheme when there is partial fulfillment of the)requirement of the scheme?” — 1/.In the present case, it is not that the assessee Nas|not complied with any portion of the scheme. |Admittedly,theaSSe@SSCEcompliedwiththerequirement of Section 199D and 199E in as much|as the tax at the rate of 33%, surcharge at the)rate of 33% on the income tax and penalty at the|rate of 10% has been received by the respondent-|departmentand|creditedTO.therespectiveauthority. It is only 25% of the penalty which is)required to be deposited with the respondent|authorities for a period of four years in terms of)Section 199F which has not been complied with.|Since the matter is relating to tax, if the)not complied with any portion of the scheme. |Admittedly,theaSSe@SSCEcompliedwiththerequirement of Section 199D and 199E in as much|as the tax at the rate of 33%, surcharge at the)rate of 33% on the income tax and penalty at the|rate of 10% has been received by the respondent-|departmentand|creditedTO.therespectiveauthority. It is only 25% of the penalty which is)required to be deposited with the respondent|authorities for a period of four years in terms of)Section 199F which has not been complied with.|Since the matter is relating to tax, if the) percentage is determined, the petitioner has|complied with 66% of the requirement leaving a)balance of 33% to be complied with. Which 33%|also the petitioner sought to comply with by)depositing with the bank but was unable to do so.for the reasons aforesaid which are not in dispute. 18.It is also not in dispute that the respondent.department continues to have within its possessiona sum of Rs.14.98 lakh. department continues to have within its possessiona sum of Rs.14.98 lakh. 19.It is an oft repeated and oft stated fact that the.Income Tax Act, the provision thereunder, the.rules, circulars, notification issued thereunder are.very burdensome and many a time are notassessee friendly. |Income Tax Act, the provision thereunder, the.rules, circulars, notification issued thereunder are.very burdensome and many a time are notassessee friendly. | 20.In the present matter, the scheme could have beensimplified in aS much as from and out of theundisclosed amount seized, the amount requiredto be adjusted under Section 199D, E and F couldsimplified in aS much as from and out of theundisclosed amount seized, the amount requiredto be adjusted under Section 199D, E and F could 21 have been so adjusted and the balance returned to the assessee as long as the assessee wished to)avail the benefit of the PMGK Scheme. Instead of.doing so, the scheme is being made burdensome in|as much as the amount has been seized and.thereafter, the assessee would be required to)make payment of tax, surcharge and penalty as|also deposit the amount under 199F in the)particular|scheme.This|onlyresults|In|unnecessary administrative burden and cots. Be that as it may. In the present case, the|petitioner assessee has tried to deposit the amountand in support thereof has produced Annexures-C |and D to the writ petition. Annexure-D is the)application Form in Form No.2 as required under|the PMGK Scheme 27016. If at all the amount had.been accepted by the Bank, this application and|declarationcouldhave|been|subsequentlysubmitted by the petitioner to the respondent) department. It is only on account of the Bank not)accepting the deposit that Form No.2 could not be)got counter signed with an acknowledgement from the bank and not be submitted by the petitioner to| the respondent department. | 2D)In the peculiar nature of the facts of the present|case, I am of the considered opinion that the)petitioner has made all efforts to try and comply|with the requirement of the PMKGK Scheme. In)such a situation, 66% of the compliance Naving|been done, the petitioner ought not be denied the|benefit of the scheme more so that the learned|counsel for the petitioner has made a submission|that he is still willing to deposit the amount for a)period of four years from today and would not!claim any interest on the same.case, I am of the considered opinion that the)petitioner has made all efforts to try and comply|with the requirement of the PMKGK Scheme. In)such a situation, 66% of the compliance Naving|been done, the petitioner ought not be denied the|benefit of the scheme more so that the learned|counsel for the petitioner has made a submission|that he is still willing to deposit the amount for a)period of four years from today and would not!claim any interest on the same. 23.In the above facts, the petition stands allowed. |The communication dated 23/3/2018 bearingNo.ITO/W-3(4)/HBL/153A/2017-18-Annexure-JISThe communication dated 23/3/2018 bearingNo.ITO/W-3(4)/HBL/153A/2017-18-Annexure-JIS 23.In the above facts, the petition stands allowed. |The communication dated 23/3/2018 bearingNo.ITO/W-3(4)/HBL/153A/2017-18-Annexure-JISThe communication dated 23/3/2018 bearingNo.ITO/W-3(4)/HBL/153A/2017-18-Annexure-JIS hereby quashed, a mandamus is issued directing|the respondents to appropriate the sum equivalent|to Rs.7,50,000/- of the amount held by the)respondent to the PMGK Scheme and return the|balance amount of Rs.7,50,000/- to the petitioner|within a period of 30 days from the date of receipt|of certified copy of this order. The said amount of|Rs.7,50,000/- deposited in the PMGK Schemeshall|be held by the respondent for a period of 4 years |calculated from the date of deposit made andreturned to the petitioner after expiry of four yearswithout any interest. Needless to say that the)concernedBanktO|whichtherespondent:department corresponds to will hold the said)amount of Rs.7,50,000/- under PMGK Schemeforperiod of four years. — Vmb _ Sd/-.JUDGE |