Daffodills Pharmaceuticals Ltd. Vs DCIT (ITAT Delhi)
In Daffodills Pharmaceuticals Ltd. Vs DCIT, the ITAT Delhi allowed the appeal of the assessee and deleted an addition made in reassessment proceedings relating to income declared under the Income Declaration Scheme, 2016 (IDS-2016).
The assessee company had filed its return of income under Section 139(1) of the Income Tax Act for Assessment Year 2013-14 on 26.09.2013 declaring income of Rs.35,07,225/-. Subsequently, under the IDS-2016 Scheme, the assessee disclosed undisclosed income of Rs.2,03,17,850/- for AY 2013-14 on 28.09.2016. Under the scheme, the assessee was required to pay tax amounting to Rs.91,43,032/- on or before 30.09.2017. However, the assessee failed to deposit the tax within the stipulated time. Consequently, the Assessing Officer treated the disclosed amount as taxable income and made an addition for AY 2013-14. The CIT(A) dismissed the assessee’s appeal, following which the assessee approached the Tribunal.
Before the Tribunal, the assessee contended that under Section 197(b) of the IDS-2016 Scheme, where tax, surcharge, and penalty are not paid within the prescribed time, the undisclosed income becomes chargeable to tax in the previous year in which the declaration is made. It was argued that no jurisdiction could therefore be assumed under Section 147 for AY 2013-14 because the amount declared under IDS-2016 could not be treated as undisclosed income for that assessment year. The assessee relied upon Section 197 of the IDS Scheme dealing with removal of doubts and specifically referred to clause (b), which provides that where tax under the scheme is not paid within time, the undisclosed income shall be chargeable to tax in the previous year in which the declaration is made.
