Kamla Chandrasingh Kabali) v. Principal Commissioner Of Income Tax-27)4[Th] Floor, Tower

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3622 OF 2019 Kamla Chandrasingh Kabali)PAN: , an individual)residing at 402, Spectrum, MP Vaidya Marg, )Near Balaji Temple, Ghatkopar (E),)Mumbai - 400 077.)...Petitioner Vs. 1. Principal Commissioner of Income Tax-27)4[th] Floor, Tower No.6, Vashi Railway Station )Commercial Complex, Vashi, Navi Mumbai. )4[th] Floor, Tower No.6, Vashi Railway Station )Commercial Complex, Vashi, Navi Mumbai. ) 2. Central Board of Direct Taxes)North Block, New Delhi - 110 001.)3. Union of India)Through the Secretary, Ministry of Finance,)Government of India,)North Block, New Delhi - 110 001.)...Respondents Mr. Devendra H. Jain for Petitioner. Mr. Arvind Pinto for Respondents - Revenue. CORAM : K. R. SHRIRAM &N. J. JAMADAR, JJ.DATE :FEBRUARY 02, 2022 JUDGMENT:- (Per N. J. Jamadar, J.) Rule. Rule made returnable forthwith and, with the consent of thelearned Counsel for the parties, heard finally. 2.By this petition under Article 226 of the Constitution of India, thepetitioner - an individual, seeks a direction to the PrincipalCommissioner of Income Tax - respondent No.1 to issue the certificatein Form 4 as required by Rule 4(5) of the Income Declaration SchemeRules, 2016 (“Rules 2016”) in respect of the income declared by the petitioner under the said scheme in Form 1 under Section 183 of theFinance Act, 2016 (“the Act, 2016”) , after accepting the declaration somade by the petitioner. 3.The petition arises in the backdrop of the following facts:- (a) The petitioner is a spinster. On account of certainunfavourable familial circumstances, the petitioner could notfile returns for the assessment years 2011-12 to 2014-15.unfavourable familial circumstances, the petitioner could notfile returns for the assessment years 2011-12 to 2014-15. (b) The Parliament introduced a scheme titled “IncomeDeclaration Scheme, 2016” (“Scheme, 2016”)under Section183 of the Act, 2016, with a view to provide opportunity tothe assessees to make declarations of undisclosed income.Declaration Scheme, 2016” (“Scheme, 2016”)under Section183 of the Act, 2016, with a view to provide opportunity tothe assessees to make declarations of undisclosed income. (c) Availing the benefit of the said Scheme, 2016, the petitionerfiled a declaration in the prescribed Form 1 thereunder on30[th] December 2016, declaring total undisclosed income ofRs.2,39,08,854/-, which comprised undisclosed income ofRs.52,74,620/- for the assessment year 2011-12;Rs.69,14,678/- for the assessment year 2012-13;Rs.62,87,925/- for the assessment year 2013-14; andRs.54,31,631/- for the assessment year 2014-15.filed a declaration in the prescribed Form 1 thereunder on30[th] December 2016, declaring total undisclosed income ofRs.2,39,08,854/-, which comprised undisclosed income ofRs.52,74,620/- for the assessment year 2011-12;Rs.69,14,678/- for the assessment year 2012-13;Rs.62,87,925/- for the assessment year 2013-14; andRs.54,31,631/- for the assessment year 2014-15. (d) In accordance with the provisions of the Act, 2016, the saidundisclosed income entailed total tax, surcharge and penaltyto the tune of Rs.1,07,58,986/-.undisclosed income entailed total tax, surcharge and penaltyto the tune of Rs.1,07,58,986/-. (e) It transpired that the said Form was not acted upon by therespondent No.1 as there were certain mistakes.respondent No.1 as there were certain mistakes. (f)After a notice under Section 147 of the Income Tax Act,1961 (“the Act, 1961”) was received, the petitioner submitteda revised Form on 18[th] January 2019.1961 (“the Act, 1961”) was received, the petitioner submitteda revised Form on 18[th] January 2019. (g) The respondent No.1, despite the petitioner having compliedwith all the requirements to be eligible to get the benefit ofthe Scheme 2016, including the payment of the aforesaidwith all the requirements to be eligible to get the benefit ofthe Scheme 2016, including the payment of the aforesaid (e) It transpired that the said Form was not acted upon by therespondent No.1 as there were certain mistakes.respondent No.1 as there were certain mistakes. (f)After a notice under Section 147 of the Income Tax Act,1961 (“the Act, 1961”) was received, the petitioner submitteda revised Form on 18[th] January 2019.1961 (“the Act, 1961”) was received, the petitioner submitteda revised Form on 18[th] January 2019. (g) The respondent No.1, despite the petitioner having compliedwith all the requirements to be eligible to get the benefit ofthe Scheme 2016, including the payment of the aforesaidwith all the requirements to be eligible to get the benefit ofthe Scheme 2016, including the payment of the aforesaid amount of Rs.1,07,58,986/-, did not issue the certificate inForm 4. (h) The petitioner claimed that she had paid advance tax andthus entitled to credit for the same against the aforesaidliability of Rs.1,07,58,986/-.thus entitled to credit for the same against the aforesaidliability of Rs.1,07,58,986/-. (i)The respondent No.1 took a stand that the petitioner was notentitled to credit of the amount, which was paid by way ofadvance tax.entitled to credit of the amount, which was paid by way ofadvance tax. Hence, this petition. 4.An affidavit in reply is filed by Mr. Jagdish Babu Malempati,Principal Commissioner of Income Tax. The claim of the petitioner thatdespite the petitioner having complied with all the requirements underthe Scheme 2016, the respondent No.1 had not issued the certificate inForm No.4, was contested. It was contended that as against the amountof Rs.1,07,58,986/- payable in respect of the undisclosed income underthe Scheme, 2016, the petitioner had paid only a sum of Rs.40,03,031/-towards the tax, and thus until full and final payment of tax, surchargeand penalty, as applicable under the Scheme, 2016 was made, thepetitioner was not entitled for the grant of certificate in Form No.4.Consequently, no case for grant of mandamus was made out. As regardsthe claim of the petitioner for adjustment of pre-deposited tax, such asadvance tax and self-assessment tax, the respondent No.1 contended thatthere was no provision under the Scheme, 2016 to give credit for suchpayment. 5.A copy of the communication dated 14[th] January 2020 spelling outthe reasons for non-issue of Form No.4, is annexed to the affidavit inreply. 6.Since the controversy revolves around the justifiability of the reasons ascribed by respondent No.1 for non-issue of Form No.4, it maybe apposite to extract the relevant part of the said communication, whichreads as under:- 2.On perusal of the IDS portal, it is seen that you havepaid total tax of Rs.40,03,031/- and TDS of Rs.24,75,135/-towards consolidate declaration made of Rs.2,39,08,850/-under the IDS 2016 relevant to the Ays.2011-12, 2012-13,2013-14 and 2014-15 which is 60.21% of total tax payable(Rs.1,07,58,986/-). 2.1.However, your representative vide their letters dated21.01.2019 & 13.02.2019 has requested to allow credit forpre-deposited taxes i.e. Self Assessment Tax and Advance Tax. 3.As per IDS 2016 there is no provision for adjustment ofany of the pre-deposited tax, such as Advance Tax and SelfAssessment Tax. The relevant issue is covered by the decisionpassed by Hon’ble Bombay High Court in the case of UmeshD. Ganore Vs. PCIT vide order dated 08.03.2019 against WritPetition No.14709 of 2018. 4.In view of the above facts and circumstances, yourrequest for adjustment of Self Assessment Tax and Advance Taxinto IDS 2016 is not acceptable as per NotificationNo.103/2019 dated 13.12.2019, you may deposit balance taxalong with interest @ 1% p.m. on or before 31.01.2020 andForm No.4 will be issued immediate to making of balance taxliabilities payable by you towards IDS 2016.” 3.As per IDS 2016 there is no provision for adjustment ofany of the pre-deposited tax, such as Advance Tax and SelfAssessment Tax. The relevant issue is covered by the decisionpassed by Hon’ble Bombay High Court in the case of UmeshD. Ganore Vs. PCIT vide order dated 08.03.2019 against WritPetition No.14709 of 2018. 4.In view of the above facts and circumstances, yourrequest for adjustment of Self Assessment Tax and Advance Taxinto IDS 2016 is not acceptable as per NotificationNo.103/2019 dated 13.12.2019, you may deposit balance taxalong with interest @ 1% p.m. on or before 31.01.2020 andForm No.4 will be issued immediate to making of balance taxliabilities payable by you towards IDS 2016.” 7.From the aforesaid communication, it becomes evident that thereis no controversy over material facts. Firstly, the petitioner had disclosedRs.2,39,08,850/- under the Scheme, 2016; secondly, the petitioner wasrequired to pay a sum of Rs.1,07,58,986/- towards the tax, surcharge andpenalty; thirdly, the petitioner paid a sum of Rs.40,03,031/- towards thetax and fourthly, a sum of Rs.24,75,135/- was adjusted towards the TDS. 8.The Revenue thus claimed that only 60.21% of the total amountdue under the Scheme, 2016 was received. The Revenue took a standthat the request of the petitioner to adjust pre-deposited tax such as,advance tax and self-assessment tax, cannot be acceded to as under theScheme, 2016, there was no provision for such adjustment. The Revenuesought to draw support from a judgment of this Court in the case of Umesh D. Ganore Vs. Principal Commissioner of Income Tax[1]. 9.In the light of the aforesaid assertions of the petitioner and thecontentions of respondent No.1, we have heard Mr. Devendra H. Jain,the learned counsel for the petitioner and Mr. Arvind Pinto, the learnedcounsel for the respondents. 10.Mr. Jain would urge that the stand of the respondents that theadvance tax paid by the petitioner cannot be adjusted against the liabilityunder the Scheme, 2016 is not in consonance with law. A two-foldsubmission was canvassed by Mr. Jain. Firstly, in the Circular No.25 of2016 dated 30[th] June 2016, the Central Board of Direct Taxes (CBDT)has clarified that the credit for tax deducted at source (TDS) shall beallowed in those cases where the related income is declared under thescheme and the credit for the tax has not already been claimed in thereturn of income filed for any assessment year. Mr. Jain would thus urgethat if credit can be given in respect of the TDS, there is no reason not togrant the same dispensation in respect of the advance tax. 11.Secondly, Mr. Jain would urge that in the case of Umesh D.Ganore (supra), this Court has not considered a Constitution Benchjudgment of the Supreme Court in the case of Brij Lal Vs.Commissioner of Income Tax, Jalandhar[2]. Moreover, the judgment ofthe Delhi High Court in the case of Kumudam Publications PrivateLimited Vs. Central Board of Direct Taxes[3] in which the Delhi HighCourt held that advance tax could be adjusted against the liabilitiesunder the Scheme 2016, and with which this Court differed in the case ofUmesh D. Ganore (supra), was upheld by the Supreme Court in asmuch as the Special Leave Petition (Civil) Diary No.33000 of 2017preferred by the Revenue thereagainst came to be dismissed. In contrast, 1[2019] 104 taxmann.com 209 (Bombay) 2[2010] 194 Taxman 566 (SC) 3[2017] 79 taxmann.com 466 (Delhi) the Special Leave Petition preferred by the assessee against the decisionof this Court in the case of Umesh Ganore (supra) is sub-judice beforethe Supreme Court as notice has been issued on 26[th] July 2019. 1[2019] 104 taxmann.com 209 (Bombay) 2[2010] 194 Taxman 566 (SC) 3[2017] 79 taxmann.com 466 (Delhi) the Special Leave Petition preferred by the assessee against the decisionof this Court in the case of Umesh Ganore (supra) is sub-judice beforethe Supreme Court as notice has been issued on 26[th] July 2019. 12.Per contra, Mr. Pinto, the learned counsel for the Revenue wouldsubmit that the issue sought to be raised by the petitioner is settled bythe decision of this Court in the case of Umesh Ganore (supra) and,thus, the respondent No.1 was well within his rights in declining to issuethe certificate in Form 4. Mr. Pinto further submitted that in the case ofUmesh Ganore (supra), this Court considered the judgment of DelhiHigh Court in the case of Kumudam Publications Private Limited(supra) as well as the circular dated 30[th] June 2016 issued by the CBDTand yet disagreed with the views expressed therein for reasons which arebased on the construction of the Scheme, 2016. Therefore, the petitiondoes not deserve to be entertained. 13.In the case of Umesh Ganore (supra), a Division Bench of thisCourt considered the question as to whether advance tax, self-assessedtax and TDS paid by the assessee prior to filing of declaration should beadjusted towards the discharge of the assessee’s liability to pay tax,surcharge and penalty under the said scheme. After adverting to theprovisions of the Scheme, 2016, this Court recorded that the assessmentproceedings under the Act, 1961 and declaration of undisclosed incomeunder the Scheme, 2016 are required to be considered in two separatecompartments. The self-assessed tax and advance tax could be adjustedagainst the assessee’s liability arising in the assessment under the Act,1961. However, the same cannot be transposed for the purpose ofdischarging the liability to pay tax, surcharge or penalty by declarant ofthe undisclosed income under the Scheme, 2016. The Court was of theview that the Scheme, 2016 is a complete Code in itself. 14.As indicated above, pursuant to the Circular of CBDT, therespondent No.1 has given credit for the TDS. The controversy, thus, revolves around the claim for credit in respect of advance tax paid by adeclarant under the Scheme, 2016. The question that essentially arisesfor consideration is the character of the advance tax. Is advance taxentitled to the same dispensation as is given to the TDS? 15.The Constitution Bench judgment in the case of Brij Lal (supra)illuminates the path. While expounding the nature of the levy of interestunder Section 234B of the Act, 1961, in the context of the proceedingsof the Settlement Commission under Chapter XIX-A of the said Act, theSupreme Court analyzed the provisions of the Act, 1961, which bearupon the advance tax as well. The object behind introduction of themeasure of advance tax and the character of such impost was explainedby the Supreme Court, in the following words:- revolves around the claim for credit in respect of advance tax paid by adeclarant under the Scheme, 2016. The question that essentially arisesfor consideration is the character of the advance tax. Is advance taxentitled to the same dispensation as is given to the TDS? 15.The Constitution Bench judgment in the case of Brij Lal (supra)illuminates the path. While expounding the nature of the levy of interestunder Section 234B of the Act, 1961, in the context of the proceedingsof the Settlement Commission under Chapter XIX-A of the said Act, theSupreme Court analyzed the provisions of the Act, 1961, which bearupon the advance tax as well. The object behind introduction of themeasure of advance tax and the character of such impost was explainedby the Supreme Court, in the following words:- “7.Liability to pay advance tax arises under section 207.The said section is based on the principle "pay as you earn". Itrequires tax to be paid during the financial year. It has to be inrespect of the total income of the assessee which would bechargeable to tax under the Act. The said total income is not asunderstood in section 2(45) but it is equated to "currentincome" for the purposes of Chapter XVII. After the AmendingAct of 1987, advance tax is to be paid on the current incomewhich would be chargeable to tax for the assessment yearimmediately following the financial year. Section 210 casts theresponsibility of payment of advance tax on the assesseewithout requiring the assessee to submit his estimate ofadvance tax payable. Provision for payment of advance tax ismode of quick collection of tax. Thus, section 207 definesliability to pay advance tax in respect of incomes referred to insection 208. However, advance tax paid is adjustable towardsthe tax due. Advance tax is collected even before the income taxbecomes due and payable. By its very nature, advance tax ispre-assessment collection of taxes either by deduction of tax atsource or by payment of advance tax which has to be adjustedtowards income tax levied on the total income. The above twomethods of realization even before any assessment isauthorized by section 4(2) are incorporated in Chapter XVIIwhich deals with "collection and recovery". In fact, section190(1) clarifies that this method of payment of tax will notprejudice the charge of tax under section 4(1) nor will it modifythe liability of the assessee to pay income tax pursuant to anassessment order. [See Modi Industries Limited v. CIT, [1995]216 ITR 759 (SC)]. (emphasis supplied)” 16.The Supreme Court has, in terms, observed that the advance taxpaid is adjustable towards the tax due. Advance tax is essentially a pre-assessment collection of taxes either by deduction of tax at source or bypayment of advance tax which has to be adjusted towards income taxlevied on the total income. The advance collection, however, does notdenude the said payment the character of “tax”. 17.Mr. Jain was justified in canvassing a submission that theaforesaid aspect of the matter was not considered in the case of UmeshGanore(supra). Whereas, the Delhi High Court decision in the case ofKumudam Publications Private Limited(supra), which consideredthe effect of CBDT Circular dated 30[th] June 2016 as regards credit forTDS and its applicability to the advance tax as well, was not disturbedby the Supreme Court in Special Leave Petition (Civil) Diary No.33000of 2017 at the instance of Revenue. 18.The matter can be looked at from a slightly different perspective.Can a legally sustainable distinction be made between ‘TDS’ and‘Advance Tax’ in the matter of credit to be given against the liabilityunder the Scheme, 2016? Section 190(1) of the 1961 Act provides thatnotwithstanding that the regular assessment in respect of any income isto be made in a later assessment year, the tax on such income shall bepayable by deduction or collection at source or by advance payment. Itthus becomes evident that both TDS or advance payment of tax are themethods of collection of tax in advance. 18.The matter can be looked at from a slightly different perspective.Can a legally sustainable distinction be made between ‘TDS’ and‘Advance Tax’ in the matter of credit to be given against the liabilityunder the Scheme, 2016? Section 190(1) of the 1961 Act provides thatnotwithstanding that the regular assessment in respect of any income isto be made in a later assessment year, the tax on such income shall bepayable by deduction or collection at source or by advance payment. Itthus becomes evident that both TDS or advance payment of tax are themethods of collection of tax in advance. 19.Section 199 of the Act, 1961 provides for credit for tax deducted.Sub-section (1) of Section 199 declares, inter alia, that any deductionmade in accordance with the provisions of Chapter XVIII of the Act1961 and paid to the Central Government shall be treated as a paymentof tax on behalf of the person from whose income the deduction wasmade. 20.Section 219 of the Act, 1961 provides for credit for advance tax. Itreads as under:- “219. Any sum, other than a penalty or interest, paid by orrecovered from an assessee as advance tax in pursuance of thisChapter shall be treated as a payment of tax in respect of theincome of the period which would be the previous year for anassessment for the assessment year next following the financialyear in which it was payable, and credit therefor shall be givento the assessee in the regular assessment.” 21.Section 219 provides in clear and explicit terms that an assesseewho pays advance tax shall be entitled to credit therefor in the regularassessment. From a conjoint reading of Sections 199 and 219, itbecomes clear that in the matter of credit, the TDS and advance tax standon the same footing. As there is no sustainable ground to make adistinction between ‘TDS’ and ‘Advance Tax’ for the purpose of credit,we do not find any reason not to equate an advance tax with TDS for thepurpose of the Scheme, 2016. If a TDS is entitled to credit, a fortioriadvance tax must get the same dispensation. 22.It is true that the provisions of Chapter XVII primarily deal withregular assessment in respect of the liability to pay income tax foundedin Sections 4 and 5 of the Act, 1961, which are the charging sections. Itis also true that the provisions of Sections 184 and 185 of the Act, 2016incorporating the Scheme, 2016, begin with a non obstante clause.However, the overriding effect of Sections 184 and 185 is confined tothe rate at which the tax is to be imposed on the undisclosed income,surcharge to be paid thereon and the penalty. The substance of thematter, especially the fact that the advance payment made by thedeclarant retains the character of tax, however, cannot be lost sight of. 23.In the case at hand, it is not the case of respondent No.1 that theadvance tax paid by the petitioner was not relatable to the income for therelevant assessment years, which petitioner disclosed. If the saidpayment is not apportionable towards any other liability, there is no justifiable reason to deprive the declarant from getting the credit for thesame against the liability under the Scheme, 2016. 24.For the foregoing reasons, we are persuaded to allow the petitionby setting aside the communication dated 14[th] January, 2020. Hence, thefollowing order:- : ORDER : (i) The petition stands allowed; (ii) Respondent No.1 shall issue certificate in Form 4 asrequired by Rule 4(5) of Income Declaration SchemeRules, 2016, upon the petitioner complying with all therequirements under the said Scheme, 2016.required by Rule 4(5) of Income Declaration SchemeRules, 2016, upon the petitioner complying with all therequirements under the said Scheme, 2016. However, the petitioner shall be entitled to andgiven credit for the advance tax already paid by thepetitioner and the respondent No.1 shall not refuse toissue Form No.4 on the said count. Rule made absolute in aforesaid terms. No costs. (N. J. JAMADAR, J.) (K. R. SHRIRAM, J.) Minal Parab