Vishnu Trimbak Thakur Vs PCIT (Bombay High Court)
The writ petition before the Bombay High Court concerned the failure of the tax authorities to issue Form No. 4 under the Income Declaration Scheme, 2016 (IDS), despite the petitioner having ultimately paid the entire tax, surcharge, and penalty payable under the Scheme within the extended time granted by law. The petitioner had originally filed a declaration in Form 1 on 26 September 2016, declaring undisclosed income of ₹3,51,10,300, with a total liability of ₹1,57,99,635 payable in three instalments. While the first two instalments were paid belatedly, the third instalment could not be paid on time due to financial distress. As a result, the declaration was initially treated as invalid and Form 2 was cancelled.
Consequently, by operation of Section 197(b) of the Finance Act, 2016, the undisclosed income became taxable under the Income-tax Act, 1961 for Assessment Year 2017–18. Acting bona fide, the petitioner filed a revised return for AY 2017–18, offered the undisclosed income to tax, claimed credit for the two instalments already paid under the Scheme, and paid self-assessment tax of ₹45,00,000. The revised return was accepted in scrutiny assessment, but credit for taxes paid under the Scheme was not allowed by the system, resulting in a substantial tax demand.
