The main legal point established in the judgment is the mandatory nature of the provisions of the Income Declaration Scheme, 2016 (IDS) and the consequences of failure to comply with the specified time limit for payment.

JUDGMENT :

K.R. Shriram, J. -

1. By this petition, petitioner has challenged the legality and validity of the refusal by respondent No. 3 to adjust/give credit to the amount paid by petitioner under the Income Declaration Scheme, 2016 (“the IDS”), in petitioner’s application made under the Direct Tax Vivad Se Vishwas Act, 2020 (“DTVSV Act”).

2. By Chapter 9 of the Finance Act, 2016, the Government of India announced the IDS and gave an opportunity to any person to make a declaration in respect of any income chargeable to tax under the Income Tax Act for any assessment year prior to the assessment year beginning in April, 2017-(a) for which he has failed to furnish a return under section 139 of the Income Tax Act; (b) which he has failed to disclose in a return of Income Tax furnished by him under the Income Tax Act before the date of commencement of the Scheme; (c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income Tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise.

3. To put it simply, it gives opportunity to a person to voluntary disclose undisclosed income. Under the IDS it also provided a person immunity from interest, penalty and prosecution except as provided under the IDS.

4. The IDS came into force on 1st June, 2016 and was in force upto 30th September, 2016. The declaration could have been made between these two dates. The petitioner wanted to take advantage of the IDS and therefore filed a declaration on 30th September, 2016 disclosing undisclosed income of Rs. 7,31,89,985/- for assessment year 2016-2017. Under the IDS, section 184 and section 185 provides for the tax payable at 30% of such undisclosed income plus 25% of such tax by way of surcharge plus penalty at the rate of 25% of the tax payable. In short, 45% of the undisclosed income, now disclosed, was payable. The amount, therefore, payable by petitioner under the declaration filed was Rs. 3,29,35,493/-. According to petitioner, which is not disputed by respondents, petitioner was to pay upto 25% of the total scheme tax amounting to Rs. 82,33,872/- by 31st November, 2016, Rs. 82,33,872/- which would make 50% of the total scheme tax by 31st March, 2017 and Rs. 1,64,67,748/- which would make 100% of the total scheme tax by 30th September, 2017. Admittedly, petitioner paid on 30th November, 2016 the first installment of Rs. 82,33,872/- by two challans of Rs. 41,16,937/- each. This amount was paid after respondent No. 3 acknowledged the declaration made by petitioner by issuing Form-II on 5th October, 2016. Subsequent thereto petitioner, for some unavoidable reasons, was unable to pay the balance installments. In view thereof and as provided under section 187 (3) of the IDS, petitioner was deemed never to have made declaration under the IDS and the amount disclosed in the declaration as provided under section 197 (b) of the IDS, was chargeable to tax under the Income tax Act in the previous year in which the declaration was made, i.e., assessment year 2016-17. Petitioners have no dispute with this provision.

5. The Assessing officer, therefore, passed an assessment order dated 29th December, 2018 for assessment year 2016-17 and determined a sum of Rs. 3,35,08,445/- as payable by petitioner. In the assessment order, the Assessing officer has observed that petitioner had made declaration under the IDS and that petitioner has not paid the installments in respect of the declaration and that petitioner has only paid the first installment of Rs. 82,33,874/-, but strangely did not give any credit to this amount of Rs. 82,33,874/-. Against this order, petitioner has preferred an appeal under section 246A before the Commissioner of Income Tax Act (Appeal) by filling Form 35. That appeal is pending.

6. The Government of India thereafter enacted DTVSV Act to provide a resolution for pending tax disputes which have been locked up in litigation, under w