Home » Sudarsana Babu V. Income Tax Officer, O.P. No. 22984 of 2000 Ker.

Sudarsana Babu V. Income Tax Officer, O.P. No. 22984 of 2000 Ker.

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2009 (1) KLT SN 35 (Case No.37)

IN THE HIGH COURT OF KERALA AT ERNAKULAM

Justice C.N.Ramachandran Nair

2008-07-31T00:00:00

O.P. No. 22984 of 2000

Sudarsana Babu v. Income Tax Officer

Advocates appearing for the Parties : S.Arun Raj; P.K.Ravindranatha Menon & George K.George

J U D G M E N T

C.N.RAMACHANDRAN NAIR, J.
                 …………………………………………………………..
                               O.P. No.22984 of 2000
                 …………………………………………………………..
                    Dated this the 31st day of July, 2008.

                                        JUDGMENT

      The petitioner is challenging Ext.P2 whereunder petitioner's

application for benefit under the Voluntary Disclosure of Income Scheme

introduced by the Finance Act, 1997 was rejected by the Commissioner of

Income Tax.     I heard counsel for the petitioner and Standing Counsel

appearing for the respondents.

      2. The petitioner made application under VDIS under Section 64(1) of

the Finance Act, 1997 on 30.12.1997. Though the application was to be

filed before the Commissioner of Income Tax, petitioner submitted the

application before the Assessing Officer at Kollam on 30.12.1997. The

officer immediately transmitted the same to the concerned authority namely,

the Commissioner of Income Tax at Trivandrum. The application reached

the Commissioner on 31.12.1997 and Ext.P4 receipt was also issued from

the Commissioner's office. Though VDIS application has to accompany

payment of tax in terms of Section 66 of the Act, Section 67 of the Finance

Act, 1997 authorises payment of tax along with interest within 90 days of

making declaration. The petitioner admittedly did not remit the tax along

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with the declaration in terms of Section 66 of the Act. However, petitioner

remitted the tax along with interest under Section 67           on 31.3.1998.

According to the Commissioner of Income-Tax, payment ought to have

been made on or before 30.3.1998 and on account of the delay of one day in

making payment, petitioner was not entitled to the benefit of VDIS. After

declining the benefit under VDI Scheme, notice under Section 148 was

issued to the petitioner for bringing to tax the escaped income which again

is based on information available in the VDIS declaration.

       3. Counsel for the respondent contended that the authority to entertain

the application under the VDI Scheme is the Commissioner of Income-Tax

and therefore, the date of filing of declaration has to be reckoned with

reference to the date on which the application was received by the

Commissioner of Income Tax at Trivandrum, which is 31.12.1997.

Counsel appearing for the petitioner contended that the respondents'

argument is not tenable because the declaration to the Commissioner was

received by the Assessing Officer at Kollam on 30.3.1997 and the balance

i.e. transmission of the application by the Assessing Officer to the

Commissioner, is with the department.          I am of the view that the

department's contention that date of filing the declaration has to be reckoned

from the date on which the Commissioner actually received the application

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at Trivandrum is not tenable for the simple reason that if the application

received by the Assessing Officer at Kollam reaches the Commissioner on

1st January or any later date on account of the delay taken by the Assessing

Officer in transmitting the application, it should not lead to denial of benefit

of the scheme to the applicant.       In this case it so happened that the

application reached in one day from the Assessing Officer at Kollam to the

Commissioner at Trivandrum. However, even if there was a delay of one or

two days in the application reaching the Commissioner, Trivandrum from

the Assessing Officer at Kollam, then obviously department cannot reject

the application on account of such delay because application should be

deemed to have been received by the Commissioner as on the date on

which his subordinate officer received it at Kollam.         Even though the

Assessing Officer is not the authority to entertain the application under

VDIS and under Section 64(5) and the Commissioner is the authority to

receive the application, when the assessee makes the declaration to the

Commissioner, but delivers it to the Assessing Officer and such officer

accepts it, then the date of application to the Commissioner should be

certainly the date of receipt by the Assessing Officer, no matter how much

time he may take to deliver it to the Commissioner.        If the department's

claim is accepted, then the same will lead to an anomalous situation that

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applications received in time by the assessing authorities would have to be

rejected, if such applications did not reach the Commissioner on the last

date.   Therefore, I am of the view that the department's case that date of

making declaration is 31.12.1997 when the Commissioner's office issued

receipt of the same, is not correct and the date of receipt of the application is

30.12.1997 when the petitioner delivered the application before the

Assessing Officer.       Ext.P4 is only an acknowledgement of receipt of

application and the date given therein has no significance because assessee

can always plead that the application was filed on 30.12.1997 when it was

delivered to the Assessing Officer.

      4. Since the declaration is found to have been made by the petitioner

on 30.12.1997 without being accompanied by payment of tax under Section

66 of the Finance Act 1997, the tax with interest should have been paid on

or before 30.3.1998. Petitioner admittedly delayed payment by one day and

the Supreme Court in the decision in DR.ARJUN D.BHARAD V.

INCOME-TAX OFFICER (2003) 259 ITR 1 held that any delay in payment

under VDIS will be fatal to the claim.      Consequently petitioner is rightly

held to be not eligible for VDIS benefit and I reject challenge against

Ext.P4. However, I make it clear that the intention of the petitioner for

settlement under VDIS is very clear and the denial of benefit is only on

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account of a mis-understanding on his side with regard to last date on which

amount was payable.      Consequently I direct the respondents to consider

sympathetically petitioner's claim pursuant to proceedings initiated under

Section 148, particularly in regard to levy of penalty, waiver of interest etc.

      The O.P. is disposed of as above.

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