Court Rejects Plea for Extension of Time in Income Declaration Scheme Case

Case Name:

The case law name is not explicitly mentioned in the article. However, it appears to be a writ petition filed by Meena Rastogi in the Delhi High Court.

Key Takeaways:

1. The court upheld the strict adherence to payment schedules in tax amnesty schemes like IDS 2016.

2. Personal reasons such as old age or forgetfulness are not considered valid grounds for extension of time in such schemes.

3. The court emphasized the importance of timely compliance in tax matters.

4. The judgment sets a precedent for similar cases involving requests for extensions in tax payment schemes.

Issue:

Should the court grant an extension of time for payment of the third installment under the Income Declaration Scheme 2016 based on the petitioner's personal circumstances?

Facts:

1. Meena Rastogi declared undisclosed income of Rs. 2,98,04,595 under the Income Declaration Scheme 2016.

2. The total tax, surcharge, and penalty due was Rs. 1,34,12,069, payable in three installments.

3. Rastogi paid the first two installments of Rs. 33,53,018 each but failed to pay the third installment of Rs. 67,06,033 due on September 30, 2017.

4. She wrote to the CBDT on October 9, 2017, seeking an extension, citing her age (70 years) and ill health as reasons for the delay.

5. The CBDT rejected her request on November 29, 2017.

6. Rastogi then filed a writ petition in the Delhi High Court seeking an extension of time.

Arguments:

Petitioner's Arguments:

1. Rastogi claimed that her age (70 years) and ill health hindered her day-to-day work.

2. She argued that the six-month gap between the second and third installments caused her to forget about the payment.

3. She had already paid 50% of the total tax due on time and would have paid the remainder if she had remembered.

Respondent's (CBDT) Arguments:

1. Declarants were well aware of the installment schedule when filing declarations under IDS 2016.

2. The staggered payment schedule provided sufficient time for compliance.

3. Failure to pay due to reasons attributable to the declarant does not justify relaxation of payment deadlines.

Key Legal Precedents:

The judgment refers to an order under section 119 of CBDT dated 28.03.2017 (F. No. 225/86/2017-ITA-II), which stated that delay due to any reason attributable to the declarant while making payment of the first installment was not considered fit for condonation.

Judgement:

1. The court dismissed Rastogi's writ petition.

2. It found that her reasons (age, ill health, and forgetfulness) did not justify interfering with the CBDT's order or granting an extension.

3. The court emphasized that the time period fixed was mandatory and had to be adhered to.

4. It noted that accepting such excuses would lead to routine extensions in other cases as well.

5. The court clarified that the dismissal would not bar Rastogi from filing a fresh writ petition seeking adjustment or refund of the amounts already paid.

FAQs:

Q1: Can I get an extension for tax payments under schemes like IDS 2016 due to personal circumstances?

A1: Generally, no. The court has emphasized strict adherence to payment schedules in such schemes.

Q2: What happens if I miss a payment deadline in a tax amnesty scheme?

A2: Missing a payment deadline can invalidate your declaration under the scheme, potentially exposing you to penalties and legal action.

Q3: Can I challenge the provision that states no refund can be claimed under IDS 2016?

A3: Yes, the court clarified that a separate writ petition could be filed to challenge this provision.

Q4: Does this judgment apply to other tax amnesty schemes as well?

A4: While this judgment specifically relates to IDS 2016, it may set a precedent for similar cases in other tax amnesty schemes.

Q5: Can forgetfulness or old age be considered valid reasons for extending tax payment deadlines?

A5: No, the court has clearly stated that these are not considered valid grounds for extension in such schemes.

The appellant, Zapp India Ltd., argued that the Adjudicating Authority admitted the application without issuing any notice to them, which they claimed was a violation of the rules of natural justice. However, the respondents disputed this claim and stated that notices were indeed issued to the appellant on two occasions, first on 30th June, 2017 and then on 10th July, 2017.

Additionally, the appellant contended that the notice under sub-section (1) of section 8 was not issued by the operational creditor but by the advocate on behalf of the operational creditor. The appellant argued that the notice was not issued by the operational creditor themselves, but by an advocate claiming to represent the operational creditor.

The case also refers to a previous judgment in the matter of “Uttam Galva Steels Limited vs. DF Deutsche Forfait AG & Anr.” where it was held that an advocate/lawyer, chartered accountant, or company secretary, in the absence of any authority of the Board of Directors and holding no position with or in relation to the operational creditor, cannot issue any notice under Section 8 of the I&B Code.

Based on the arguments and considerations, the Appellate Tribunal set aside the impugned order dated 20th July, 2017, and allowed the appeal. The appointment of the Interim Resolution Professional, order declaring moratorium, freezing of accounts, and all other orders passed by the Adjudicating Authority were declared illegal. The appellant was released from the rigour of the law and allowed to function independently through its Board of Directors with immediate effect. The Adjudicating Authority was directed to determine the fee of the Interim Resolution Professional, which the appellant would be required to pay for the period he has worked.

In conclusion, the appeal was allowed, and the company petition was dismissed.

Writ petitioner Meena Rastogi is wife of Dal Chandra Rastogi and mother of Siddharth Rastogi.

2. Dal Chandra Rastogi and Siddharth Rastogi had filed Writ Petitions for identical and similar relief, i.e., for extension of time for payment of third or last installment on the undisclosed income under the Income Declaration Scheme Rules, 2016, introduced vide Finance Act, 2016. By common order dated 5th February, 2018, we have dismissed W.P.(C) 1069/2018 filed by Siddharth Rastogi and W.P.(C) 1070/2018 filed by Dal Chandra Rastogi. The present writ petition would also meet the same fate.

3. Meena Rastogi had filed declaration of undisclosed income of Rs.2,98,04,595/- under the Income Declaration Scheme Rules, 2016 in terms of the Finance Act, 2016.

4. Total amount payable by the petitioner towards tax, surcharge and penalty on the aforesaid declaration was Rs.1,34,12,069/-.

5. The petitioner paid the first two installments of Rs.33,53,018/- each, at the rate of 25% of the total tax, surcharge and penalty payable. In other words, the petitioner had paid 50% of the total amount payable.

6. The petitioner did not pay the third installment, which was the remaining 50% of the liability, amounting to Rs.67,06,033/-, due and payable on or before 30th September, 2017.

7. The petitioner, vide letter dated 9th October, 2017 to the Chairman, Central Board of Direct Taxes, had sought and prayed for extension of time to pay the third installment. Relevant portion of the said letter reads:-

“I Meena Rastogi W/o Sh D.C. Rastogi R/o B-53, Sarvodaya Enclave, New Delhi (senior citizen) having PAN No. AACPR2387K submitted the declaration under Section 183 of The Finance Act 2016. The declaration was duly acknowledged vide Form 2 dated 29.09.2016 showing undisclosed income of Rs.2,98,04,595/- (copy enclosed). The total tax, surcharge and penalty due on this income payable in three instalments was as under:

Tax : 8941379/-

Surcharge : 2235345/-

Penalty : 2235345/-

I paid the following first two installments as under:

On 30.11.2016 : 3353018/-

On 29.03.17 : 3353018/-

The third installment of Rs. 67060331/- was payable on or before 30.09.2016. This installment could not be paid due to the reason that I am 70 years old lady having ill health which became hurdle in my day-to- day work. Since, there was a gap of 6-months between 2nd and 3rd installment to deposit the tax, it slipped from my mind to deposit the same. I have already paid 50% of total tax due in time and would have deposited the same, had I remember. Under these circumstances, I request you that I may be allowed to deposit the balance 50% tax and my declaration may please be accepted.

8. The letter, it is stated, was followed by a reminder dated 3rd November, 2017. The reasons given by Meena Rastogi in the aforesaid letter were similar to the reasons given by Dal Chandra Rastogi and Siddharth Rastogi.

9. By letter dated 29th November, 2017, request for extension of time for payment/deposit of third installment of tax, surcharge and penalty payable under the Income Tax Declaration Scheme, 2016 was rejected. We would quote the letter dated 29th November, 2017 which reads:

“Subject: Your request dated 09.10.2017 for allowing to deposit third instalment of tax payable under IDS-2016 beyond the due date – reg. Kindly refer to your application dated 09.10.2017 on the above mentioned subject.

2. In this regard, your request for granting permission to deposit the third instalment of tax/surcharge/penalty payable under IDS-2015, beyond the due date has been considered by the Board. It is pertinent to mention that declarants while filing declaration under IDS-2016 were well aware of the instalment schedule for payments of corresponding dues. Further, the payment schedule, being staggered, provided them sufficient time to plan their affairs accordingly so as to ensure compliance in a timely manner. Hence, failure to pay the third instalment for a reason which is solely attributable to you does not justify grant of any relaxation in the payment after due date.

3. In view of the above, your request dated 09.10.2017 to grant permission to deposit third installment of IDS-2016, beyond the due date on ground of inadvertence is ' hereby rejected. This is consistent with the order under section 119 of CBDT dated 28.03.2017 vide F. No. 225/86/2017- ITA-I1 wherein delay due to any reason attributable to the declarant while making payment of first installment was not considered fit for condonation.

4. This issues with the approval of Member (IT&C).”

10. We have considered and examined the grounds and reasons given by the petitioner in her letters seeking extension of time. The reasons given by the petitioner do not make out a case to interfere with the impugned order and grant extension of time. The ground taken by the petitioner, that she is 70 years of age and suffering from ill health which had become a hurdle in her day-to-day work, cannot be a ground to seek an extension of time. Assertion that the petitioner merely forgot to pay the third installment is unbelievable and a lame excuse. Such declarations are unique and made after due deliberation and thought. Amount payable towards the third installment was substantial. Clearly, the petitioner was unable to pay the amount, and thereafter has pleaded and attributed it to loss of memory. The time period fixed was mandatory and had to be adhered to. The petitioner has not made out an extraordinary case which would have justified invoking writ jurisdiction and grant of extension beyond the stipulated time, even assuming that the fixed period of time stipulated under the Scheme could be extended by the Board under Section 119(2) of the Income Tax Act, 1961. If such excuses were to be accepted, then extension of time would have to be granted as a routine in other cases as well.

11. Accordingly, we do not find any good ground and reason to issue notice in the present writ petition.

12. Learned counsel for the petitioner submits that the petitioner would like to file a separate writ petition seeking adjustment or refund of the amounts paid. She would like to challenge the provision which stipulates that no refund can be claimed. We clarify that we have not commented on the question of refund or adjustment of the amount paid. Dismissal of the present writ petitions would not operate as constructive res judicata and bar the filing of fresh writ petition on these aspects.

13. With the aforesaid observations, the writ petition is dismissed. No order as to costs.

SANJIV KHANNA, J.

CHANDER SHEKHAR, J.

FEBRUARY 09, 2018