Wa/52/2009 Of S.sudarsana Babu v. The Income Tax Officer, Ward-3, Kollam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE ANTONY DOMINIC TUESDAY, THE 22ND FEBRUARY 2011 / 3RD PHALGUNA 1932 WA.No. 52 of 2009() ------------------- AGAINST THE JUDGEMENT/ORDER IN OP.22984/2000 Dated 31/07/2008 .................... APPELLANT(S)/PETITIONER: ----------------------------------------- S.SUDARSANA BABU, 'THIRUVATHIRA' AYATHIL, KOLLAM 691 010. BY ADV. SRI.S.ARUN RAJ SMT.C.T.SUJA SRI.P.DANIEL RESPONDENT(S)/RESPONDENTS: ----------------------------------------------- 1. THE INCOME TAX OFFICER, WARD-3,KOLLAM. 2. THE COMMISSIONER OF INCOME TAX AYAKAR BHAVAN, KOWDIAR, TRIVANDRUM. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 22/02/2011, THE COURTON THE SAME DAY DELIVERED THE FOLLOWING: C.R. J.CHELAMESWAR, C.J. & ANTONY DOMINIC, J.===============================W.A. NO. 52 OF 2009 ====================== Dated this the 22[nd] day of February, 2011 J U D G M E N T J.Chelameswar, C.J. This is an appeal aggrieved by the judgment dated 31[st] July,2008 in OP No.22984/2000 by the petitioner/appellant. Aggrievedby the decision of the 2[nd] respondent herein as evidenced by hisproceedings dated 15/5/1998 (Ext.P2), the original petition wasfiled with the prayers as follows:- (i)to call for the entire records of the case; declarethat the payment as evidenced by Ext.P2 made by thepetitioner for the year 1989-90 towards VDI Scheme isregular; issue a writ of mandamus to the secondrespondent to accept the declaration and disburse thecertificate under Section 68(2); (ii)issue a writ of mandamus directing the secondrespondent to accept the declaration made by thepetitioner under the VDI Scheme for the year 1989-90by condoning the delay of one day and issue acertificate of immunity under section 68(2); (iii)to call for the records of the case leading to theissue of Ext.P3 notice, declare the same to be illegaland nonest in the eye of law and quash the same byway of issuing a writ of certiorari; (iv)to issue a writ of prohibition restraining therespondents from proceeding further with Ext.P3notice; 2.The facts leading to the case is as follows:- 3.By the Finance Act, 1997, voluntary disclosure of income scheme is propounded. The broad outlines of the schemeare that, any person can make a declaration in accordance withSection 65 (giving the particulars prescribed) of the said schemein respect of any income chargeable to tax under the Income TaxAct for any assessment year for which the person either failed tofurnish a return under Section 139 of the Act or in a case where areturn was in fact filed, but some part of the income pertaining tothe relevant year is not disclosed. Under the scheme, peoplefalling under the above mentioned categories can invoke thebenefit of the scheme, make a declaration and pay theappropriate tax depending upon the status of the declarant. Thevarious consequences which follow from such declaration andimmunity from the various legal proceedings to which suchdeclarant would have either exposed himself to, are provided inthe subsequent sections of the scheme, the details of which maynot be necessary or relevant for the purpose of the present case. 4.Under Section 64, such declaration as the one contemplated in the scheme is required to be made either on orafter the date of the commencement of the scheme {(1/7/1997),the notified date in terms of Section 62(2)}. 5.Section 62(2) reads as follows:- 62.(2)It shall come into force * on such date as theCentral Government may, by notification in the OfficialGazette, appoint. *By Notification No.S.O. 435(E), dated June 9, 1997, theVoluntary Disclosure of Income Scheme, 1997, comes intoforce on 1/7/1997. Such declaration must also be made before 31[st] day of December, 1997. 4.Under Section 64, such declaration as the one contemplated in the scheme is required to be made either on orafter the date of the commencement of the scheme {(1/7/1997),the notified date in terms of Section 62(2)}. 5.Section 62(2) reads as follows:- 62.(2)It shall come into force * on such date as theCentral Government may, by notification in the OfficialGazette, appoint. *By Notification No.S.O. 435(E), dated June 9, 1997, theVoluntary Disclosure of Income Scheme, 1997, comes intoforce on 1/7/1997. Such declaration must also be made before 31[st] day of December, 1997. 6.Under Section 66 of the scheme, tax payable in respectof the voluntarily disclosed income is required to be paid by thedeclarant and proof of such payment is required to accompanythe declaration. 7.Section 66 reads as follows:- 66. Time for payment of tax - The tax payable underthis Scheme in respect of the voluntarily disclosed incomeshall be paid by the declarant and the declaration shall beaccompanied by proof of payment of such tax. 8.However, under Section 67, a further facility is grantedenabling the declarants to make declaration within the periodspecified under Section 64 without paying the tax ascontemplated under Section 66 but pay the tax within a period of three months from the date of filing of the declaration subject tothe condition that such payment is accompanied with simpleinterest calculated at the rate of two per cent on the tax payable.Failure to make the payment of the tax entails a legalpresumption that there was never any declaration ascontemplated under the Scheme. 9.Section 67 reads as follows:- 67.Interest payable by declarant-(1)Notwithstanding anything contained in section 66, thedeclarant may file a declaration without paying the taxunder that section and the declarant may file thedeclaration and the declarant may pay the tax withinthree months from the date of filing of the declarationwith simple interest at the rate of two per cent forevery 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 ofthe voluntarily disclosed income before the expiry ofthree months from the date of filing of the declaration,the declaration filed by him shall be deemed never tohave been made under this Scheme. 10.Further, under Section 68 (2), the Commissioner who is the competent authority before whom the declaration is requiredto be filed under Section 65(1) is obliged to issue a certificate to adeclarant under the scheme setting forth the particulars of thevoluntarily disclosed income and the amount of income tax paid in respect of the same. Such certificate however is to be issued onan application made by the declarant. 11.Section 68, Clause (2) reads as follows: (2)The Commissioner shall, on an application madeby the declarant, grant a certificate to him settingforth the particulars of the voluntarily disclosedincome and the amount of income-tax paid in respectof the same. 12.In the instant case, admittedly the appellant made adeclaration on 30[th] of December, 1997 not before the concernedCommissioner of Income Tax, but before the AssistantCommissioner of Income Tax, who is the assessing authority ofthe appellant, who in turn forwarded the declaration to theconcerned Commissioner. The fact that the appellant filed hisdeclaration before the Assistant Commissioner is acknowledgedby the concerned Assistant Commissioner of Income Tax, Circle IQuilon by his receipt dated 30[th] of December, 1997. In so far asthe concerned Commissioner of Income Tax is concerned, theappellant produced a receipt dated 31[st] December, 1997 signedon behalf of the Commissioner of Income Tax, Trivandrum.Though the receipt is dated 31[st] December, 1997, the recitaltherein is as follows:- “Received from S. Sudarsana Babu on 30[th] December, 1997declaration dated 21[st] December, 1997 under VoluntaryDisclosure of Income Scheme, 1997.” 13.Both the dates 30[th] December, 1997 and 21[st] December, 1997 are in hand writing. As a matter of fact, printeddate 31[st] December was corrected as above, where as at the topof the receipt, the date of the receipt is shown as 31[st] December,1997. 14.The date of the receipt by the Commissioner assumesimportance for more than one reason because under Section 65of the Act, a declaration is required to be made to theCommissioner and under Section 64, such declaration is to bemade on or before 31[st] December, 1997. Therefore, the actualdate of the receipt of the declaration by the Commissioner whichentitles the declarant for the benefits of the scheme. Secondly,the appellant admittedly did not pay the appropriate amount oftax payable on the income declared under the scheme on thedate of the declaration. However, admittedly such amount of taxwas paid by the appellant on 31[st] March, 1998 with interest asstipulated in Section 67. The relevance of the date of receipt ofthe declaration by the Commissioner in the context of suchdelayed payment assumes importance in view of the stipulation : 7 : made under Section 67(2) of the Scheme. As already noticed,delayed payment is required not only to be paid with interest, butalso to be paid within “3 months from the date of the filing of thedeclaration.” 15.Respondents do not dispute the issuance of the receiptby the Commissioner's Office which bears the date 31[st]December, 1997. Though it is argued by the learned counsel forthe respondents that, since the declaration was not directlypresented to the Commissioner but filed before the AssistantCommissioner, the declaration is treated to have been filed on the30[th] of December, 1997. Therefore, the period of three monthscontemplated under Section 67(1) is to be reckoned from thatdate. 16.We reject the submission of the respondents. It is asettled principle of jurisprudence of taxation that there is neitherany scope for equities or inferences contrary to the language ofthe enactment. The law stipulates that declaration is to be madeto the Commissioner of Income Tax and therefore it is the date ofthe receipt of the declaration by the Commissioner of Income Taxthat is relevant for the purpose of settling the rights of thedeclarant. In the circumstances, we are of the opinion that the WA No.52/09 declaration must be construed to have been made on 31[st] ofDecember, 1997 by the appellant herein. 17.In view of the above finding, the next question wouldbe whether the payment of tax made on 31[st] of March, 1998 iswithin the period permissible under Section 67(2) of the scheme.As already noticed, Section 67 entitles the declarant under thescheme to pay the tax with interest within a period of threemonths from the date of the filing of the declaration. Expression'month' is defined under the General Clauses Act in Section 3(35)as follows:- “(35) “month” shall mean a month reckoned according tothe British calendar.” 18.The question as to how the period of a month is to bereckoned fell for the consideration of the Supreme Court for morethan one occasion. In the judgment reported in Bibi SalmaKhatoon v. State of Bihar {(2001) 7 SCC 197}, it is held asfollows:- 8. Here we are concerned with compliance withrequirement of making application within theprescribed period of three months. The question arises,what is meant by the word “month”. Sub-section (34)of Section 4 of the Bihar and Orissa General ClausesAct, 1917 defines the word “month” to mean a monthreckoned according to the British calendar. This meansGregorian calendar — January, February … etc. Mr Jhahas drawn our attention to Section 11 of the said Act of1917 to point out that when the word “from” is used 18.The question as to how the period of a month is to bereckoned fell for the consideration of the Supreme Court for morethan one occasion. In the judgment reported in Bibi SalmaKhatoon v. State of Bihar {(2001) 7 SCC 197}, it is held asfollows:- 8. Here we are concerned with compliance withrequirement of making application within theprescribed period of three months. The question arises,what is meant by the word “month”. Sub-section (34)of Section 4 of the Bihar and Orissa General ClausesAct, 1917 defines the word “month” to mean a monthreckoned according to the British calendar. This meansGregorian calendar — January, February … etc. Mr Jhahas drawn our attention to Section 11 of the said Act of1917 to point out that when the word “from” is used the first in the series of days or any other period oftime has to be excluded and when the word “to” isused the last in a series of days or any other period oftime has to be included but in this case the word “of” isused so that section will not apply. A perusal of Section11 shows that it is an aid for drafting a provision ratherthan for interpreting the provision of the Act. Be that asit may, since the Act does not expressly excludeSections 4 to 14 of the Limitation Act, they apply toapplication under Section 16(3) of the Act. Therefore,the date from which the limitation commences has tobe excluded in computing the period of limitation ofthree months. In Halsbury’s Laws of England, 4th Edn.,para 211[†]method of computation of month is given asfollows: “211. Calendar month running from arbitrary date.—When the period prescribed is a calendar monthrunning from any arbitrary date the period expiresupon the day in the succeeding month correspondingto the date upon which the period starts, save that, ifthe period starts at the end of a calendar month whichcontains more days than the next succeeding month,the period expires at the end of that succeeding month. If a period of one calendar month includes the last dayof February there must be 29 or 28 days, according asthe year is or is not a leap year.” Thus computed, the application filed by the appellanton 30-4-1988 is within limitation — a period of threemonths of the date of the registered sale deed dated30-1-1988. In this view of the matter, we are unable tosustain the order under challenge. We set aside theimpugned order, restore the second appeal and remitthe case to the High Court for disposal in accordancewith law. 19.Again the question fell for the consideration of the Supreme Court in the judgment in State of Himachal Pradeshv. Himachal Techno Engineers (2010(3) KLT 575). SupremeCourt once again considered the question at paras 9 to 11 and held as follows:- 9. The High Court has held that 'three months'mentioned in S.34(3) of the Act refers to a period of 90days. This is erroneous. A 'month' does not refer to aperiod of thirty days, but refers to the actual period of acalendar month. If the month is April, June, September orNovember, the period of the month will be thirty days. Ifthe month is January, March, May, July, August, Octoberor December, the period of the month will be thirty onedays. If the month is February, the period will be twentynine days or twenty eight days depending upon whetherit is a leap year or not. Supreme Court in the judgment in State of Himachal Pradeshv. Himachal Techno Engineers (2010(3) KLT 575). SupremeCourt once again considered the question at paras 9 to 11 and held as follows:- 9. The High Court has held that 'three months'mentioned in S.34(3) of the Act refers to a period of 90days. This is erroneous. A 'month' does not refer to aperiod of thirty days, but refers to the actual period of acalendar month. If the month is April, June, September orNovember, the period of the month will be thirty days. Ifthe month is January, March, May, July, August, Octoberor December, the period of the month will be thirty onedays. If the month is February, the period will be twentynine days or twenty eight days depending upon whetherit is a leap year or not. 10.Sub-section (3) of S.34 of the Act and the provisothereto significantly, do not express the period of timementioned therein in the same units. Sub- s(3) uses thewords 'three months' while prescribing the period oflimitation and the proviso uses the words 'thirty days'while referring to the outside limit of condonable delay.The legislature had the choice of describing the periodsof time in the same units, that is to describe the periodsas 'three months' and 'one month' respectively or bydescribing the periods as 'ninety days' and 'thirty days'respectively. It did not do so. Therefore, the legislaturedid not intend that the period of three months used insub-s (3) to be equated to 90 days, nor intended that theperiod of thirty days to be taken as one month. 11.Section 3(35) of the General Clauses Act, 1897defines a month as meaning a month reckonedaccording to the British calendar. In Dodds v. Walker((1981 2 All.E.R 609), the House of Lords held that incalculating the period of a month or a specified numberof months that had elapsed after the occurrence of aspecified event, such as the giving of a notice, thegeneral rule is that the period ends on the correspondingdate in the appropriate subsequent month irrespective ofwhether some months are longer than others. To thesame effect is the decision of this Court in Bibi SalmaKhatoon v. State of Bihar ((2001) 7 SCC 197). Thereforewhen the period prescribed is three months (ascontrasted from 90 days) from a specified date, the saidperiod would expire in the third month on the datecorresponding to the date upon which the period starts. As a result, depending upon the months, it may mean 90days or 91 days or 92 days or 89 days. 20.It is therefore clear from the above mentioned twojudgments that the period of three months in so far as theappellant is concerned would expire in the third month on thedate corresponding to the date upon which the period starts. Wehave already found that the date on which the period starts forreckoning is 31[st] December, 1997, and therefore, the paymentmade on 31[st] March, 1998, in our view, is within the period ofthree months for the purpose of Section 67 of the Finance Act. 21.The 2[nd] respondent declined to grant the certificatecontemplated under Section 68(2) by his communication dated15/5/98 on the ground that the payment was not made within theperiod permitted by the law. Such a communication isunsustainable in view of the conclusions reached by us and thereasons recorded. We therefore set aside the impugned order ofthe 2[nd] respondent dated 15/5/98 and direct the 2[nd] respondent toissue the necessary certificate to the appellant. In view of therejection of the certificate by the Commissioner, the AssessingOfficer issued further notice in Ext.P3 under Section 148 of theIncome Tax Act proposing to re-open the assessment for theassessment years 1989-90 based on the declaration made under 21.The 2[nd] respondent declined to grant the certificatecontemplated under Section 68(2) by his communication dated15/5/98 on the ground that the payment was not made within theperiod permitted by the law. Such a communication isunsustainable in view of the conclusions reached by us and thereasons recorded. We therefore set aside the impugned order ofthe 2[nd] respondent dated 15/5/98 and direct the 2[nd] respondent toissue the necessary certificate to the appellant. In view of therejection of the certificate by the Commissioner, the AssessingOfficer issued further notice in Ext.P3 under Section 148 of theIncome Tax Act proposing to re-open the assessment for theassessment years 1989-90 based on the declaration made under the Scheme. In view of our conclusion that the appellant isentitled for the certificate under Section 68(2) and in view of thedeclaration under Section 68(1) that the amount voluntarilydisclosed shall not be included in the total income of the declarantfor any assessment year under the Income Tax Act, Ext.P3 noticemust be declared to be illegal and we declare as such. However, itis brought to our notice by the learned counsel for therespondents that during the pendency of the litigation before thisCourt, an assessment on the basis of Ext.P3 notice has alreadybeen made by order dated 1[st] January, 2002, we are of theopinion that in view of the fact that initiation of such proceedingsitself is not permissible under the scheme, we declare thatassessment also to be illegal. The judgment under appeal is set aside and appeal isaccordingly disposed of. J.CHELAMESWAR CHIEF JUSTICE. ANTONY DOMINIC JUDGE.