The Madhya Pradesh High Court (Jabalpur Bench) refused to quash the notices issued under Section 143(2) and Section 147 of the Income Tax Act on the mere allegation that they contravene the very Voluntary Disclosures of Income Scheme, 1997, after finding that the instructions came into operation with effect from June 09, 2000, whereas the notice had already been issued under Section 147 before the said date.
The Court therefore refused to interfere in the best judgment assessment passed by the AO, as the petitioner shall have a remedy to approach the Central Board of Direct Taxes, and he can still thereafter approach the Writ Court, in case aggrieved.
The Division Bench comprising Justice Vivek Rusia and Justice Pradeep Mittal observed that under Section 64 of the Finance Act, the minor would be entitled to make a voluntary disclosure for his income under the Voluntary Disclosures of Income Scheme, 1997, and the Authorities are not entitled to make any enquiry from the sources from where he has earned the income.
However, the Bench cautioned that if it comes to the knowledge of the department that the higher amount is there, then Section 64 nowhere provides that the declaration relating to the extended income would also be taken to be correct.
The Court remarked that a taxpayer is only protected from disclosing the source of income under the Voluntary Disclosures of Income Scheme, but it comes with a caveat that calls for the disclosure of the correct income.
Briefly, the petitioner, a partnership firm, engaged in the business of purchase and sale of tractors, motorcycles, tractor parts, etc, could not submit the ITR for the assessment years 1996-97 and 1997-98 within the stipulated time. In the meantime, the Finance Department came up with the Voluntary Disclosures of Income Scheme, 1997, and to take advantage of the same, the petitioner submitted a declaration under Section 64 of the Scheme, disclosing income from its business. Resultantly, a Certificate was issued by the CIT and taxes were paid accordingly.
The AO, however, found vast differences in the declarations of the income, and citing tax evasion, issued notices under Section 148 of the Income Tax Act. The petitioner objected to the reopening proceedings, but the AO passed an order under Section 144A of the Income Tax Act, rejecting those objections.
Appearances:
Senior Advocate Sumit Nema, along with Advocates Ayush Gupta and Mukesh Agrawal, for the Petitioner/ Taxpayer
Advocates Shubham Manchani and Harpreet Singh Gupta, for the Respondent/ Revenue
