Advance Tax / Self-Assessed Tax paid can’t adjust against Tax admitted in IDS Declaration: Bombay HC [Read Judgment]

A two-judge bench of the Bombay High Court has held that the advance tax or the self- assessed tax paid by the assessee cannot be set off against tax liability arising IDS declaration for lack of specific provision in the said Scheme.

According to the Petitioner, he had already paid a sum of Rs.8,19,465/to the Income Tax Department by way of advance tax, self-assessed tax and tax deducted at source. Out of the said sum of Rs.81,54,233/, therefore, after deducting the said sum of Rs.8,19,465/the Petitioner had to pay the remaining of R.73,34,770/.

The Petitioner claimed that advance tax, self-assessed tax and TDS paid by the Petitioner prior to the filing of declaration, should be adjusted towards discharge of the Petitioner’s liability to pay tax, surcharge and penalty under the said Scheme.

The department, on the other hand, contended that such adjustment can be made only in relation to the tax deducted at source if the correlation between such TDS and the declaration of undisclosed income under the Scheme can be established.

The bench comprising Justices Akil Kureshi and M S Sanklecha observed that there is nothing in the said Scheme, refusing the adjustments of the advance tax and self-assessment tax. The Scheme granted benefit to a declarant. Such a beneficial provision should be interpreted in such a manner that the purpose of framing the Scheme is not lost.

Relying on the Delhi High Court judgment in Kumudam Publications Pvt Ltd, the bench held that “the provisions contained in the scheme enable the assessee to disclose undisclosed income. There is no provision in the scheme which requires the declarant to make a composite declaration in relation to several assessment years for which he desirous to make a declaration of undisclosed income. The scheme does not prohibit multiple declarations by the assessee, making separate declarations for different assessment years. Under these circumstances, we do not find any provision under the said scheme requiring competent authority to either accept or reject the declaration in respect of several assessment years in entirety. In other words, if the declaration of the assessee of undisclosed income for the particular assessment year fulfils all requirement of the scheme, there is no reason why such a declarant should not get the benefit of such declaration simply because, in relation to other assessment years, the declaration may fail for any reason.”