Credit of Advance Tax paid can be claimed under IDS 2016

The provision of Section 182 itself states that for the purposes of the IDS, undefined terms and expressions shall be in terms of the Income Tax Act, by incorporating those into the Finance Act and the scheme. “Undisclosed income” which is the foundational provision to be invoked by declarants, thus is based on the definition under the Income Tax Act (Section 132 (1) (c)) the provision reading as to include “money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property [which has not been, or would not be, disclosed] for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property)”. Undisclosed income is also defined in Section 158B (for the purposes of the chapter in which that provision is located) and Section 271 (for the purposes of that section). That apart, the only bar discernable under the scheme in question is evident from Section 189 is that no person declaring under the Act shall not be entitled to “claim any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment.” Also, under that provision the person so declaring shall not be entitled to ” to re-open any assessment or reassessment made under the Income-tax Act or the Wealth-tax Act, 1957 (27 of 1957) “. Therefore, the court is of the opinion that there is no bar for an assessee or declarant to claim credit of advance tax amounts paid previously relative to the assessment years or periods for which it seeks benefits under the scheme. This interpretation is in no way inconsonant with the ratio of th e Suprem e Court’s rulings, relied upon by the Revenue.

Full Text of the Judgment

1. The petitioner impugns an order dated 16^thSeptember 2016 of the third respondent which failed to give credit for advance tax deposited for AY 2010-2011 and AY 2016-2017 and tax deducted at source (TDS) to a total extent of ` 16.49 crores.

2. The petitioner-companyincorporated under the Companies Act, has its registered office at Chennai. It has been filing its Return of Income till the financial year 2008-09, i.e. AY 2009-10. Serious disputes amongst its directors, ex-directors and certain shareholders, which arose in financial year 2008-2009, resulted in litigations against the company and its directors etc. from the financial year 2009-2010. As a consequence, the petitioner could not appoint any statutory auditor. Accounts could not be made ready for subsequent years in deference to the disputes and pending litigation. The disputes related to the petitioner’s share capital. Resultantly, in the absence of audited accounts, no return of income was filed from financial year 2009-10, i.e. assessment year (AY) 2010-11 till date. The petitioner avers that despite its inability to file income tax returns, it paid advance tax through various amounts, on 23 occasions in the past 5 years or so; details thereof are furnished in a tabular chart, which reveals that a total sum of `14,98,30,000/- was paid through advance tax. The petitioner says that in addition, a total sum of ` 1,50,93,433/- was paid on its account, for the same period. Thus a total sum of ` 16,49,23,433/- has been paid towards income tax liabilities by or on behalf of the petitioner.

3. Anticipating that proceedings may be initiated by the Income Tax Department for the Petitioner’s failure to file returns required under Section 139 of the Income Tax Act, the petitioner applied under Section 11 9(2)(b) of the Income-Tax Act on 7^th July, 2016 to the Revenue seeking permission to file the Return of Income “based on the unaudited accounts or in any other manner” in view of compelling circumstances. The Revenue issued a notice of hearing dated 22.09.20 16 posting the application for hearing on 17.10.2016, but that notice was subsequently cancelled. As on date, the application has not been decided. In the meanwhile, the Income Declaration Scheme, 2016 (IDS) [hereafter I6}6II6U toHvaIiously as “IDD^R oI “t\6 Dc\6m6^R Lwas notified in May 2016 by the Central Government with effect from 1 ^st June, 2016. Thereafter, by Circular No. 25 of 2016 dated 30^th June, 2016 issued by the Union Ministry of Finance issued certain clarifications, on matters relating to the IDS. Pending the disposal of the petitioner’s application under Section 119(2)(b), it also made a declaration in Form 1 dated 15.09.20 16 under the scheme, for all the assessment years. The income so disclosed under the scheme in terms of the unaudited accounts was disclosed as ` 43.55 crores. The total tax payable including interest and penalty as under the Scheme was ` 19.60 crores, against which advance tax paid by the petitioner and TDS deducted to its benefit was ` 16.49 crores, leaving the net tax payable of ` 3.11 crores. These details had to be mentioned in the Form 1 at serial No.11 and were duly disclosed (by the Petitioner) in its application. In this background, the petitioner received the impugned order from the Principal Commissioner of Income-Tax, (PCIT) in response to its declaration in Form 1, demanding a tax of ` 19.60 crores.

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