Benefit of 2016 Income declaration scheme not available even if search proceedings under section 132 initiated after launching of scheme

By | May 16, 2017
(Last Updated On: May 16, 2017)

Held

In the taxing statutes, the Court has to be very slow in interpreting the statutes where intention of the legislature is to curb the evasion of tax. This is a peculiar case where the Government has granted the benefit under the scheme only to the persons who are not covered under Section 132 of Act and other proceedings. If the class which has been debarred under the scheme and any person acquiring the same debar during the scheme can be granted the benefit of the scheme, the answer in is ‘No’. The terms are not which are prohibited by law prior to launching of the scheme. If anybody acquired any disqualification during the scheme, has to be treated equal otherwise that will create two class.

HIGH COURT OF RAJASTHAN

Surendra Pal Singh Sahni

v.

Director General of Income-tax (Investigation), Jaipur

K.S. JHAVERI, ACTG.CJ.
AND VIJAY KUMAR VYAS, J.

D.B. SPECIAL APPEAL WRIT NO. 362 OF 2017

MARCH  24, 2017

Suresh Sahni and R.M. Sharma for the Appellant.

ORDER

1. By way of this appeal, the appellant has challenged the judgment and order of the learned Single Judge, whereby the learned Single Judge has dismissed the writ petition of the appellant/petitioner.

2. The appellant is an assessee and has challenged the action of the respondents not granting him the benefit of scheme, which was launched by the Central Government under the Finance Act, 2016.

3. Learned counsel for the appellant has contended that the Central Government has come with an Income Declaration Scheme, 2016 on 14.05.2016, which was made effective from 01.06.2016 to 30.09.2016. The appellant has faced in between the proceedings under Section 132 of the Income Tax Act, 1961 and a search warrant was also served upon him and a search was carried out from 30.06.2016 to 02.07.2016. In the meantime before 30.09.2016, the appellant has applied pursuant to the scheme which was launched by the Central Government and contended that in view of para/clause 196 of the scheme, he is entitled to be covered under clause 196(e)(ii), which reads as under:-

“Scheme not to apply to certain persons.

196. The provisions of this scheme shall not apply-

(a) to (d)** ** **

(e) in relation to any undisclosed income chargeable to tax under the Income-tax Act for any previous year relevant to an assessment year prior to the assessment year beginning on the 1st day of April, 2017-

(i)** ** **

(ii) where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under Section 133A of the Income-tax Act in a previous year and a notice under sub-section (2) of section 143 for the assessment year relevant to such previous year or a notice under section 153A or under section 153C of the said Act for an assessment year relevant to any previous year prior to such previous year has not been issued and the time for issuance of such notice has not expired; or”

4. Since the raid and search proceedings under Section 132 were initiated after the launching of the scheme and clause (ii) covers only prior to the launching of the scheme and that too 01.06.2016, in that view of the matter the authority has misinterpreted the provisions and the appellant has been deprived of his legitimate and legal right of exercising power under the scheme. It is further contended that though first proceedings are pending before the learned Single Judge in S.B. Civil Writ Petition No.2481/2017, where the order of the designated authority dated 03.10.2016 is challenged, however in the meantime notice under Section 153A of the Act of 1961 was issued and the present writ petition was dismissed and his earlier writ petition has become infructuous in view of the order passed by the learned Single Judge.

5. Learned counsel for the appellant has raised the following questions for consideration:-

“1. Whether the IDS, 2016 is a self contained code and can the designated authority go beyond the scope and mandate of the same?
“2. Whether the designated authority and the Learned Single Judge has correctly interpreted the mandate of 196(e) (ii) ?
“3. Whether the learned Single Judge was legally right in holding that the provisions of the Finance Act, 2016 (IDS,2016) cannot override the provisions of Income Tax Act, 1961 during the currency of the scheme?
“4. Whether the scheme is a special legislation for a limited period i.e. 1st June 2016 to 30th September 2016 and shall prevail upon the general law i.e. Income Tax Act, 1961?
“5. Whether despite the non-ambiguity in the language of 196(e)(ii), the designated authority or the courts can hunt for the aims and objects of the statute?”

6. Counsel for the appellant has taken us to the scheme and its clause 196(e)(ii) and contended that the Legislature while interpreting has not included a class which can make declaration if any proceedings are initiated under Section 132 of the Act after 01.06.2016.

7. We have heard the Counsel for the appellant.

8. Before proceedings with the matter, it will not be out of place to mention here that in the taxing statutes, the Court has to be very slow in interpreting the statutes where intention of the legislature is to curb the evasion of tax. This is a peculiar case where the Government has granted the benefit under the scheme only to the persons who are not covered under Section 132 of Act and other proceedings. If the class which has been debarred under the scheme and any person acquiring the same debar during the scheme can be granted the benefit of the scheme, the answer in is ‘No’. The terms are not which are prohibited by law prior to launching of the scheme. If anybody acquired any disqualification during the scheme, has to be treated equal otherwise that will create two class.

9. In our considered opinion, the scheme of 2016 will not override the provisions of the Income Tax Act and the scheme which has come by way of limited purpose cannot prevail over the Income Tax Act.

10. In that view of the matter, the order passed by designated authority is just and proper. We are in complete agreement with the view taken by the learned Single Judge. No interference is called for.

11. Hence, the appeal being devoid of merit deserves to be dismissed and the same is hereby dismissed.

12. At this stage, Counsel for the appellant has asked for a certificate under Section 134A of the Act. In our considered opinion, it is not a matter of general importance and has a very limited clause and interpretation put forth by us will cover the field. In that view of the matter, the certificate is rejected.

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