The Supreme Court has held that the immunity under the Income Declaration Scheme was available only to the declarant and not to another assessee. The immunity under Section 192 is available only to the declarant.
The Supreme Court has overruled the Gujarat High Court judgment for extending the immunity under the “Income Declaration Scheme” (IDS) to an assessee who was not the declarant under the scheme.
Earlier, the High Court had quashed the reassessment notice issued under Sections 147/148 of the Income Tax Act, 1961, against a company M/s MR Shah Logistics Private Ltd. One of the grounds for the re-opening of the assessment was contended to have been a declaration by another company, Garg Logistics Private Ltd, regarding an investment of Rs 6.3 crores in the shares of the assessee.
Analysing the provisions of section 192, Justice Uday Umesh Lalit and Justice S. Ravindra Bhat held that the protection given, is to the declarant, and for a limited purpose.
“However, the High Court proceeded on the footing that such protection would bar the revenue from scrutinizing the assessee’s return, absolutely. Quite apart from the fact that the re-opening of assessment was not based on Garg Logistic’s declaration, the fact that such an entity owned up and paid tax and penalty on amounts which it claimed, were invested by it as share applicant, (though the share applicants were other companies and entities) to the assessee in the present case, cannot – by any rule or principle inure to the assessee’s advantage,” the two-judge bench observed.
While allowing the appeal by the Revenue against the High Court order, the Court held that “this court is, therefore, of the opinion that the High Court fell into error, in holding that the sequitur to a declaration under the IDS can lead to immunity (from taxation) in the hands of a non-declarant.”
DEPUTY COMMISSIONER OF INCOME TAX vs M/S. M. R. SHAH LOGISTICS PVT. LTD
CITATION: 2022 TAXSCAN (SC) 129
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