1. Challenge to the constitutional validity of the Voluntary Disclosure of Income Scheme, 1997. (Para 1 )
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1997 Supreme(SC) 1357
SUPREME COURT OF INDIA
All India Federation Tax Practitioner
Vs.
Union of India
Decided on : 20th October, 1997
The Supreme Court affirmed the constitutional validity of the Voluntary Disclosure of Income Scheme, 1997 (VDIS), dismissing the special leave petition and upholding the judgment of the Bombay High Court.
Headnote:
Income Tax Act, 1961 – Section 132, 133-A – Special leave petition filed against the judgment – Checking tax evasion and the said statement – Appearing for the petitioners, in support of the special leave petition and the learned Attorney General for India for the Union of India – Learned Attorney General has placed the following statement indicating the policy the government is following and will be following in checking tax evasion and the said statement is reproduced – Special leave petition is, therefore, dismissed.
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2. Petitioners assailed the constitutional validity of the Voluntary Disclosure of Income Scheme, 1997. (Para 1 )
3. The court concurred with the High Court's finding on the Scheme's validity and noted the government's comprehensive policy to combat tax evasion. (Para 1 , 2 , 3 )
4. The Voluntary Disclosure of Income Scheme, 1997, is constitutionally valid. (Para 1 , 3 )
5. Special leave petition dismissed. (Para 3 )
6. Is the Voluntary Disclosure of Income Scheme, 1997, constitutionally valid?
Yes, the court affirmed the High Court's judgment upholding the constitutional validity of the Voluntary Disclosure of Income Scheme, 1997. (Para 1 , 3 )
7. What are the legal consequences for undisclosed income detected during a search under the Income Tax Act?
Undisclosed income is subject to a 60% tax rate, penalties up to 300% of the tax evaded, interest under Section 158 BFA, and prosecution under Chapter XXII of the Income Tax Act. (Para 2 )
8. What administrative and legal measures are used by the government to detect and curb tax evasion?
The government utilizes survey operations under Section 133-A, search operations under Section 132, PAN acceleration, computerization, and software to identify assessees meeting Section 139(1) criteria. (Para 2 )
( 1 ) IN this special leave petition filed against the judgment of the Bombay High court the petitioners are seeking to challenge the validity of the Voluntary Disclosure of Income Scheme, 1997 (VDIS ). The High court in an elaborate judgment has dealt with the various submissions made assailing the constitutional validity of the Scheme. We are in agreement with the said view of the High court.
( 2 ) WE have heard Shri Dinesh Vyas, learned Senior Counsel appearing for the petitioners, in support of the special leave petition and the learned Attorney General for India for the Union of India. The learned Attorney General has placed the following statement indicating the policy the government is following and will be following in checking tax evasion and the said statement is reproduced as follows:
"1. After 31/12/1997, the Income Tax Department will considerably step up survey operations under Section 133-A of the IT Act, 1961 and search operations under Section 132 of the IT Act, 1961.
2. According to Ch. XIV-B of the Income Tax Act as amended w. e. f. I-1-1997, if in the course of a search, undisclosed income is detected then the assessee is liable to the following:
(I) Tax at the rate of 60 per cent;
(II) Penalty which can be up to 300 per cent on the tax evaded;
(III) Interest under Section 158 BFA.
IN addition, the Finance Minister has announced that in every case of detection of undisclosed income, prosecution will be launched. The relevant provisions are in Ch. XXII of the Income Tax Act.
BESIDES tightening up of legal provisions, the following steps have also been taken:
(I) Acceleration of the process of issuing Permanent Account Number (PAN);
(II) Acceleration of the computerisation of the Income Tax Department;
(III) Installation of software to detect assessees who satisfy the criteria laid down under proviso to Section 139 (1 of the Income Tax Act.
5 government is committed to making a success of the VDIS-97 for fulfilling the objectives set by the government in FMs Budget Speech, We also wish to emphasise that Section 72 of the VDIS-97, guarantees complete confidentiality in respect of declarations. "
( 3 ) TAKING into consideration the aforesaid statement made by the learned Attorney General, we are not inclined to interfere with the impugned judgment of the High court. The special leave petition is, therefore, dismissed
