Gujarat High Court
Vasantlal Tulsidas Agrawal vs Commissioner Of Income-Tax on 5 October, 1999
Equivalent citations: [2002]254ITR255(GUJ)
Author: P.B. Majmudar
Bench: P.B. Majmudar
JUDGMENT B.C. Patel, J.
1. Both these petitions are raising a common question and admitted facts being common are disposed of by this common judgment.
2. The facts narrated in Special C. A. No. 4825 of 1998, are exactly similar in the other petition, viz., Special C. A. No. 4827 of 1998. They are as under :
The Voluntary Disclosure of Income Scheme, 1997 (VDIS for short), was made operative and it was to remain in force till December 31, 1997. For seeking the benefit under the Scheme, one was required to tender a form as prescribed under Sub-section (1) of Section 65 of the Finance Act, 1997, a copy of which is produced at exhibit A-1. In Clause 5 of the said form, the assessee was required to disclose the amount of income declared in figures and words. He was also required to disclose the assessment year to which the income relates. In Clause 6, the total amount of voluntarily declared income was required to be mentioned ; while in Clause 7, the tax payable thereon was required to be mentioned calculated at the rate of 30 per cent, in the case of other than companies and firms. Again in Clause 9, the balance tax payable was required to be mentioned. This would apply in a case, if the tax is paid as mentioned in clause 8. In the instant case, the petitioner submitted a form disclosing Rs. 5,00,000 as the amount of income declared under the Scheme. In the form so far as the tax payable thereon is concerned, it was specifically stated that Rs. 1,50,000 is the tax payable at the rate of 30 per cent, on the sum of Rs. 5,00,000 as the total voluntarily disclosed income. In clause No. 9, an amount of Rs. 1,50,000 is shown. It appears that by mistake the petitioner deposited a sum of Rs. 5,00,000. Interestingly, the receipt issued by the Commissioner of Income-tax, Surat, is produced at annexure B which is dated January 29, 1998, also clearly indicates that the petitioner declared a sum of Rs. 5,00,000 as the amount of income for the assessment years 1988-89 to 1997-98. In Clause 6, the tax payable on the income declared has been specifically mentioned as Rs. 1,50,000. Against Clause 7, the amount of tax paid, it is mentioned as Rs. 5,00,000. The petitioner, realising that he has committed a mistake in making over payment, immediately addressed a letter exhibit C to the Commissioner of Income-tax, Surat, on January 2, 1998, pointing out the relevant clauses of the scheme and stating that he has paid an excess amount of Rs. 3,50,000 and, therefore, the same should be refunded. On behalf of the Commissioner of Income-tax, Surat, a letter was written to the petitioner on March 25, 1998, informing that the request of the petitioner cannot be accepted as the language of the scheme does not envisage to allow refund of any tax in pursuance of the declaration made under the Scheme. By writing these four lines letter the authorities rejected the application of the petitioner.
3. Mr. Shah, learned counsel appearing for the petitioner, submitted that the petitioner under a mistake made the payment of Rs. 5,00,000 instead of Rs. 1,50,000. Exhibit A-1 filled in by the petitioner clearly indicates that the amount of income declared by the petitioner was Rs. 5,00,000 and tax to be paid thereon was Rs. 1,50,000. Even, exhibit B the receipt clearly reveals the said aspect. According to him under a bona fide belief a sum of Rs. 5,00,000 was paid. But it does not mean that the Revenue can come out with a version that the amount is not refundable in view of Section 70 of the Scheme. He submitted that apart from the Scheme, whenever there is a bona fide mistake, the respondent-Department is required to take a corrective measure so that the mistake is corrected and a citizen is not required to suffer.
4. It appears that in the instant case, the petitioner by mistake paid a sum of Rs. 5,00,000 and the officer has also accepted the same. It was specifically mentioned that the tax payable on the income declared is Rs. 1,50,000. However, it appears that in the proximity of the closure of the Scheme whatever amount was tendered has been accepted by the respondent-Department. If the amount would not have been paid by the declarant, then in view of Section 67 the declarant would be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period beginning from the date of filing the declaration and ending on the date of payment of such taxes. Thus if there is delayed payment, the declarant was required to pay 24 per cent, interest on the said amount.
5. On behalf of the Revenue reliance was placed on Section 70 while writing a letter to the petitioner. For the purpose of convenience, we reproduce here-under Section 70 and Section 64(1)(a), (b) and (c) which are as under (see [1997] 225 ITR (St), 144, 141) :
"70. Any amount of tax paid in pursuance of a declaration made under Sub-section (1) of Section 64 shall not be refundable under any circumstances."
"64. (1) Subject to the provisions of this scheme, where any person makes, on or after the date of commencement of this Scheme but on or before the 31st day of December, 1997, a declaration in accordance with the provisions of Section 65 in respect of any income chargeable to tax under the Income-tax Act for any assessment year--
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the Income-tax Act or in any Finance Act, income-tax shall be charged in respect of the income so declared (such income being hereinafter referred to as the voluntarily disclosed income) at the rates specified hereunder, namely :--
(ii) in the case of a declarant, being a person other than a company or a firm, at the rate of 30 per cent, of the voluntarily disclosed income."
Thus on reading Section 70 it appears that it must be read with Section 64(1)(c)(ii). Reading the clause it appears that income-tax is to be charged at the rate of 30 per cent, in the instant case and reading Section 70, it appears that the amount of tax paid in pursuance of the declaration made under Subsection (1) of Section 64 is not refundable. Thus, in the instant case, if an application was made for refund of the tax which was paid at the rate of 30 per cent, of the disclosed income, the Revenue may be justified in invoking Section 70. Section 70 refers to an amount of tax which is paid in pursuance of a declaration made. Section 70 cannot be invoked when there is a question of refund of amount other than the tax. The declarant never claimed that the amount of Rs. 1,50,000 which he was required to pay as tax or any part thereof be refunded to him. What he requested was that whatever excess amount he has paid over and above Rs. 1,50,000 should be refunded to him. It appears that the Revenue has withheld the amount by wrongly interpreting Section 70. Mr. Shah, learned counsel, drew our attention to a decision reported in Bharatiya Engineering Corporation P. Ltd. v. R. G. Deshpande, Addl. CIT [1981] 130 ITR 442 (Bom). Mr. Shah has requested to rely upon the said decision not only for the purpose for claiming refund but for the purpose of requesting the court to see that the amount of interest is also awarded.
6. It appears that initially when the amount of Rs. 5,00,000 was tendered it can be said that it was the duty of the officer not to accept the said amount. When the Scheme was likely to be closed, every one was in a hurry and the petitioner under a bona fide mistake made the payment. However, when the attention was drawn, it was necessary for the Commissioner of Income-tax, Surat, to refund the amount. It was his moral obligation when a request was made to refund the excess amount. Even on a prima facie reading of the return and the receipt, one would know that the petitioner has disclosed Rs. 5,00,000 as the amount of income on which he was required to pay 30 per cent of tax. We are of the view that the petitioner has been denied his legitimate claim and, therefore, the amount of Rs. 3,50,000 should be refunded to the petitioner together with 15 per cent, interest thereon. It is directed that the amount of refund together with interest shall be paid within a period of two months from the date of receipt of this order, failing which the Department shall pay 24 per cent, interest on the refund amount. The interest will be paid from January 2, 1998, on which date the petitioner has claimed for the refund of the amount. Rule is made absolute in both the matters. No order as to costs.
7. A copy of this judgment may be kept in the other matter also.