Sajan Enterprises Miraj v. The Commissioner Of Income-Tax & Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION Writ petition NO. 4132 of 1999 Sajan Enterprises Miraj. .. ... Petitioners vs. The Commissioner of Income-tax & ors. . ... Respondents Mr. K. B. Bhujale with Pramod Vaidya for Petitioners Mr. A. S. Rao for Respondents. CORAM:S. RADHAKRISHNAN ANDA. S. AGUIAR JJ. Date: 13/6/2005 ORAL JUDGMENT (Per S. Radhakrishnan J.). 1. Heard learned counsel for the Petitioners and the Respondents. 2. It appears that the Petitioners had filed an declaration under theVoluntary Disclosure Scheme 1997 (hereinafter referred to as “thescheme”). The Petitioners had under the said scheme filed adeclaration on 25[th] December 1997 disclosing an income of Rs.10lakhs. It may be noted here that under the scheme the Petitionersare liable to pay entire tax due and payable within a period of threemonths from the date of filing of the said declaration. On 29[th]January 1998 the Petitioners had paid Rs.51000/- towards tax liability and a further sum of Rs.52,000/- on 27.2.1998, totalling asum of Rs.1,03,000/-. On 26.3.1998 the Petitioners had paid anamount of Rs.2,65,000/- and a further sum of Rs.1000/- on30.3.1998. 3. The basic dispute dispute in the above petition is that the entire tax liability was not paid within a period of three months ascontemplated under the scheme. Mr. Bhujale learned counsel forthe Petitioners also fairly does not dispute that the aforesaidpayments were made beyond the said period of three months . Inthis context it would be relevant to quote section 65 and 67 of thesaid scheme: “65(1) A declaration under sub -section (1) of section 64shall be made to the Commissioner and shall be in suchform and shall be verified in such manner as may beprescribed: (2) The declaration shall be signed, - (a) where the declarant is an individual, by theindividual himself; where such individual is absent fromIndia, by the individual concerned or by some personduly authroised by him in this behalf; and where theindividual is mentally incapacitated from attending to hisaffairs, by his guardian or by any other personcompetent to act on his behalf; (b) where the declarant is a Hindu undivided family, bythe karta, and where the karta is absent from India or ismentally incapacitated from attending to his affairs, by any other adult member of such family; (c ) where the declarant is a company, by themanaging director thereof, or where for anyunavoidable reason such managing director is not ableto sign the declaration or where there is no managingdirector, by any director thereof; (d) where the declarant is a firm, by the managing partner thereof, or where for any unavoidable reasonssuch managing partner is not able to sign thedeclaration, or where there is no managing partner assuch, by any partner thereof, not being a minor; (e) where the declarant is any other association, by anymember of the association or the principal officerthereof; and (f) where the declarant is any other person, by thatperson or by some other person competent to act on hisbehalf. (3) Any person, who has made a declaration under sub – section (1) of section 64 in respect of his income or asa representative assessee in respect of the income ofany other person, shall not be entitled to make any otherdeclaration under that sub- section in respect of hisincome or the income of such other person, and anysuch other declaration, if made, shall be deemed to bevoid. 67(1). Notwithstanding anything contained in section66, the declarant may file a declaration without payingthe tax under that section and the declarant may file thedeclaratthenion and the declarant may pay the tax (f) where the declarant is any other person, by thatperson or by some other person competent to act on hisbehalf. (3) Any person, who has made a declaration under sub – section (1) of section 64 in respect of his income or asa representative assessee in respect of the income ofany other person, shall not be entitled to make any otherdeclaration under that sub- section in respect of hisincome or the income of such other person, and anysuch other declaration, if made, shall be deemed to bevoid. 67(1). Notwithstanding anything contained in section66, the declarant may file a declaration without payingthe tax under that section and the declarant may file thedeclaratthenion and the declarant may pay the tax within three months from the date of filing of thedeclaration with simple interest at the rate of two percent for every month or part of a month comprised in theperiod beginning from the date of filing the declarationand ending on the date of payment of such tax and filethe proof of such payment within the said period ofthree months. (2) If the declarant fails to pay the tax in respect of thevoluntarily disclosed income before the expiry of threemonths from the date of filing of the declaration, thedeclaration filed by him shall be deemed never to havebeen under this Scheme.” 4. By this petition the Petitioners are challenging the the constitutional validity of section 67 of the said scheme to be discriminatory andviolative of Article 14 of the Constitution of India. The Petitionershave also prayed that the Respondent ought to have issued acertificate under section 68(2) of the scheme in respect of full amountof the declaration made by the Petitioner firm. Alternatively there sis a prayer that if the court does not accept the said contention that theentire amount should be accepted under the scheme, then theRespondent should be directed to refund the amounts paid on 26[th]March 1998 and 30[th] March 1998, totalling to Rs.2,66,000/- alongwith interest. 5. Shri Bhujale learned counsel for the Petitioners pointed out that now the issue raised in this Petition has already been concluded byjudgment of the Supreme Court in Hemalata Gargya v.Commissioner of Income Tax and anr. (2003) 259 ITR 1 whereinthe Supreme Court has very categorically held that there is nothing inthe language of the provisions of the scheme which would justifysuch a departure. On the other hand, the provisions of section 67(2)make it abundantly clear that if the declarant fails to pay the taxwithin the period of three months as specified, the declaration filedshall be deemed never to have been made under the scheme. Inother words the consequences of non- compliance with theprovisions of section 67(1) relating to the payment have been clearlyand explicitly provided. The Supreme Court finally directed theRevenue authorities to refund or adjust the amounts alreadydeposited by the assessees in purported compliance with theprovisions of the scheme, to the concerned assessees inaccordance with law. 6. Shri Rao learned counsel for Respondent states that theRespondent has already adjusted Rs.1,03,000/- , paid within threemonths, towards various tax liability of the Petitioners. Shri Rao couldnot controvert that the settlement officer has made it abundantlyclear that any amount paid after 90 days cannot be accepted underthe scheme, hence the balance amount will have to be refunded back to the assessee. 7. In the aforesaid facts and circumstances we direct the Respondent 6. Shri Rao learned counsel for Respondent states that theRespondent has already adjusted Rs.1,03,000/- , paid within threemonths, towards various tax liability of the Petitioners. Shri Rao couldnot controvert that the settlement officer has made it abundantlyclear that any amount paid after 90 days cannot be accepted underthe scheme, hence the balance amount will have to be refunded back to the assessee. 7. In the aforesaid facts and circumstances we direct the Respondent to refund the said sum of Rs.2,66,000/- which was paid by theassessee to the Respondent beyond the period of 90 days under thescheme, subject to Petitioners producing necessary proof of suchpayments. The aforesaid amount shall be refunded within a periodof 8 weeks from today and if the Respondent failed to do so theRespondent shall pay interest at the rate of 9% per annum after theperiod of 8 weeks. Accordingly the rule is made absolute in theabove terms, however with no order as to costs. S. RADHAKRISHNAN J. A. S. AGUIAR J. -x-