E PRAHALATHA BABU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner submitted his declaration under Voluntary Disclosure of Income Scheme, 1997 (VDIS). The said scheme came into force from 1st July, 1997. The last date for making the declaration was 31st Dec., 1997. Sec. 64 of the Finance Act, 1997 (Act No. 26 of 1997), deals with the charging of tax. Sec. 65 of the said Act prescribes the particulars to be furnished in the declaration. Sec. 66 prescribes the time limit for payment of tax, according to which the declarant is to pay the tax along with the declaration. Sec. 67(1) enables the declarant to file the declaration without paying the tax as contemplated under S. 66 and he may pay the tax within three months from the date of filing of the declaration with simple interest at the rate of 2 per cent for every month or part of the month comprised in the period beginning from the date of filing the declaration and ending on the date of payment of such tax. Sec. 67(2) made it clear that if the declarant fails to pay the tax in respect of the voluntarily disclosed income before the expiry of three months from the date of filing of the declaration, the declaration filed by him shall be deemed never to have been made under the scheme. Sec. 70 contemplates that the tax paid in respect of voluntarily disclosed income under S. 64(1) of the said Act shall not be refundable. The petitioner has filed the declaration before the respondent on 29th Dec., 1997. The petitioner did not pay the tax along with the return. The petitioner ought to have paid the tax on or before 28th March, 1998, before the expiry of three months period in accordance with S. 67(1) of the said Act. Admittedly the petitioner did not pay the tax within the stipulated time. But, however, he paid the amount of tax on 31st March, 1998. As there is a delay of three days in paying the tax, the respondent, under the impugned proceedings, rejected the declaration made by the petitioner under the scheme and refused to give the benefit of the scheme. Challenging the said order, the writ petition has been filed.

(2.) THE learned counsel for the petitioner contended that the petitioner approached the Vyasa Bank, Kutchary Road Branch, Mylapore for the sanction of the loan to pay the tax in accordance with the scheme. The total value of the declaration made under the scheme by the petitioner is Rs. 38.36 lakhs and the petitioner is liable to pay the tax at 30 per cent of the declared amount. The petitioner applied for the loan of Rs. 9.75 lakhs to be repaid in 18 monthly instalments. The bank sanctioned the loan only on 31st March, 1998, and immediately thereafter the tax had been paid. The tax having been paid, the benefit to the petitioner under the scheme cannot be refused on the technical grounds; especially when the tax paid is not refundable and also when the declaration made by the petitioner can be used against him for reopening of the IT returns submitted by him for the previous assessment years.

(3.) I carefully considered the contentions of both the counsel. The purpose of the introduction of the scheme is clear from S. 64 of the Finance Act, 1997 (Act 26 of 1997), which is as follows :