Income Declaration Scheme – Failure to pay full amount of tax according to declaration – Declaration would be rendered void and non est – Part of tax already paid under scheme cannot be forfeited by Revenue authorities – Such amount must be returned to assessee

Income Declaration Scheme – Failure to pay full amount of tax according to declaration – Declaration would be rendered void and non est – Part of tax already paid under scheme cannot be forfeited by Revenue authorities – Such amount must be returned to assessee

The assessee had made a declaration under the Income Declaration Scheme, 2016 concerning the A.Y. 2016-17. However, it could not make full payment of tax according to the declaration. Therefore, the declaration had become void and non est. The petitioner therefore applied for refund of the taxes so paid under the declaration or to give adjustment or credit of the amount so paid. The application was rejected.

The petitioner filed a writ petition and challenged the order of rejection. The Bombay High Court allowed the writ petition and held as under:

‘i) Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. This would mean there must be a law, the law must authorise the tax and the tax must be levied and collected according to the law. Sub-section (3) of section 187 of the Finance Act, 2016 which deals with the Income Declaration Scheme, 2016 categorically provides that if the declarant fails to pay the tax, surcharge and penalty in respect of the declaration made u/s 183 on or before the dates specified in sub-section (1), the declaration filed by him shall be deemed never to have been made under the Scheme. This would mean that the declaration will be non est. When the scheme itself contemplates that a declaration without payment of tax is void and non est and the declaration filed by the assessee would not be acted upon [because section 187(3) says the declaration filed shall be deemed never to have been made under the Scheme], the question of retention of the tax paid under such declaration will not arise. The provisions of section 191 cannot have any application to a situation where the tax is paid but the entire amount of tax is not paid. The Scheme does not provide for the Revenue to retain the tax paid in respect of a declaration which is void and non est.

ii) The assessee was entitled to an adjustment by giving credit for the amount of Rs. 82,33,874 paid under the Income Declaration Scheme.’