Naresh Chandra Agrawal Vs Income Tax Department And Others (Madhya Pradesh High Court)
The Madhya Pradesh High Court dismissed a writ petition challenging scrutiny notices issued under Section 143(2) of the Income-tax Act, 1961, and an order passed under Section 144A, holding that income declared under the Voluntary Disclosure of Income Scheme, 1997 (VDIS) does not bar the Income Tax Department from examining whether higher income has escaped assessment.
The petitioner, a partnership firm engaged in trading of tractors, motorcycles, and spare parts, had failed to file income-tax returns for certain assessment years within the prescribed time. Subsequently, the firm made a declaration under Section 64 of the VDIS, 1997, disclosed certain business income, obtained a certificate from the Commissioner of Income Tax, and paid tax accordingly. Upon examination, the Assessing Officer found significant differences between the income disclosed under VDIS and the income reflected in the firm’s accounts and returns, indicating possible under-declaration.
Based on these discrepancies, the Assessing Officer initiated proceedings by issuing notices under Sections 148 and 143(2) to scrutinise the income for relevant assessment years. Multiple notices were issued fixing dates for appearance and production of records. The petitioner objected, contending that once income was declared under VDIS, it could not be subjected to further scrutiny or assessment, and that the notices violated CBDT instructions. The petitioner also challenged the order under Section 144A by which the supervisory authority rejected its request to halt the scrutiny proceedings.
