While upholding the legality of the the communication dated 18th March, 1998 of the Commissioner of Income Tax and the Circular dated 25th July, 1997 of the Central Board of Direct Taxes, the Bombay High Court confirmed that the TDS paid under Income Tax Act cannot be adjusted against the tax payable under the Voluntary Disclosure of Income Scheme, 1997.
The Petitioner challenged the above communication and the circular rejecting the Petitioner’s claim that TDS under the Income Tax Act, 1961 can be adjusted against the tax payable on the undisclosed income declared by it under the Voluntary Disclosure of Income Scheme under the Finance Act, 1997.
The petitioner contended that the communication as well as the connected circular dated 25th July, 1997 were against the provisions of the scheme.
The bench division bench comprising of Justice M.S Sanklecha and Justice A.K Menon noted that the payment of the tax under the Scheme of 1997 Act was in terms of the declaration made by the petitioner on 31st December, 1997.
“In its declaration, no claim for the Tax Deducted at Source under the 1961 Act being treated as tax paid under the Scheme was made by the petitioner. Further, it is pertinent to note that the letter dated 31st March, 1998 has been filed by the petitioner with the Commissioner of Income Tax, not along with the proof of payment of tax under the Scheme but separately and only after the proof of payment had been submitted to the Revenue. Further, the communication does not in terms states that the petitioner reserves its rights to claim refund nor does it state that the right to refund is subject to the result of the petition. The payment could not have been made under protest as the payment had already been made prior to addressing the above letter dated 31st March, 1998. The Petitioners’ who seek an equitable relief in Writ, should have been more forthright in its communication to the Revenue. This conduct on the part of the Petitioner is an attempt on the part of the Petitioner to secure the benefit of the Scheme i.e. Protection (insulation) from prosecution and penalty under the 1961 Act, and at the same time challenge the payment made under the Scheme of 1997 Act”, the bench also added.
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