Income Declared Under Income Declaration Scheme Cannot Be Taxed in Original Assessment Year Due to Non-Payment of Tax: ITAT Deletes ₹2.03 Cr Addition [Read Order]
ITAT rules unpaid IDS declaration taxable only in declaration year
![Income Declared Under Income Declaration Scheme Cannot Be Taxed in Original Assessment Year Due to Non-Payment of Tax: ITAT Deletes ₹2.03 Cr Addition [Read Order]](https://images.taxscan.in/h-upload/2026/05/09/2136103-income-declared-under-income-declaration-schemejpg.webp "Income Declared Under Income Declaration Scheme Cannot Be Taxed in Original Assessment Year Due to Non-Payment of Tax: ITAT Deletes ₹2.03 Cr Addition [Read Order]")
The Income TaxAppellate Tribunal [ITAT] Delhi Bench has deleted an addition of ₹2.03 crore made holding that income disclosed under the IncomeDeclaration Scheme (IDS), 2016 could not be taxed in the original assessment year merely because the assessee failed to pay tax within the prescribed time. The assessee Daffodils Pharmaceuticals Ltd. company had originally filed its...
The Income TaxAppellate Tribunal [ITAT] Delhi Bench has deleted an addition of ₹2.03 crore made holding that income disclosed under the IncomeDeclaration Scheme (IDS), 2016 could not be taxed in the original assessment year merely because the assessee failed to pay tax within the prescribed time.
The assessee Daffodils Pharmaceuticals Ltd. company had originally filed its return for Assessment Year 2013-14 declaring an income of ₹35.07 lakh. Subsequently, under the Income Declaration Scheme, 2016 it disclosed undisclosed income amounting to ₹2.03 crore pertaining to AY 2013-14. However, the company failed to pay the tax liability of ₹91.43 lakh within the stipulated deadline under the scheme.
Based on the non-payment the Assessing Officer reopened the assessment under Section 147 of the Income Tax Act and treated the disclosed amount as escaped income for AY 2013-14. The reassessment order added the entire amount of ₹2.03 crore to the assessee’s income. The CIT(A) subsequently upheld the addition.
The assessee stated that Section 197(b) of the IDS-2016 specifically provides that where tax under the scheme is not paid within the prescribed time the undisclosed income shall be chargeable to tax in the previous year in which the declaration is made and not in the original assessment year to which the income relates.
The assessee further relied on another assessment order passed by the Department in a separate case where similar IDS disclosures were taxed in the year of declaration after non-payment of tax under the scheme.
The Bench comprising S. Rifaur Rahman and Sudhir Kumar observed that the statutory scheme itself clearly mandates taxation in the year in which the declaration is made if the declarant fails to comply with the payment conditions. It noted that the Assessing Officer wrongly brought the amount to tax in AY 2013-14 instead of the relevant year of declaration under IDS-2016.
Thus, holding the reassessment and consequential addition to be unsustainable in law the Tribunal deleted the ₹2.03 crore addition and allowed the appeal of the assessee.
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