A.S. Ibrahim Rawuthar vs Deputy Commissioner of Income Tax

R. Jayasimha Babu, J.—The counsel contends that notwithstanding clause 67(2) of Chapter IV of the Voluntary Disclosure of Income Scheme, 1997, a part of the Finance Act, 1997, the delay in making the payment of the tax by period of five days is not fatal to the petitioners gaining the benefit of that scheme. Clause 67(2) of that scheme reads thus :

If the declarant fails to pay tax in respect of the voluntarily disclosed income before the expiry of three months from the date of filing of the declaration, the declaration filed by him shall be deemed never to have been made under the scheme.

There is no explanation at all for the delay in making the payment. What is, however, argued is that the scheme is one which is required to be construed liberally and if so construed, clause 67(2) also is required to be interpreted liberally and all payments made before the date of the expiry of the scheme should be treated as having been made within the period set out in clause 67(2) or at any rate the sanctions set out for delayed payment be not visited upon that person.

The counsel contended that the CBDT had itself issued a circular, which indicated the need for liberal consideration of the scheme. Reference was also made to the objects of the scheme as set out in the memorandum explaining the Finance Bill, 1997, which refers to the purpose of the scheme as being one intended to mobilise resources and to channelise funds into priority sectors of the economy and to offer an opportunity to persons who have evaded tax in the past to declare their undisclosed income, pay a reasonable tax, and in future adopt the path of rectitude and civic responsibility. Counsel also relied upon the decision of the Supreme Court in the case of UCO Bank, Calcutta Vs. Commissioner of Income Tax, West Bengal, and submitted that beneficial circulars issued by the Board bind the department.

The question now raised is one, which has already been considered by this Court. I have considered this question in M. Kuphan v. CIT [2001] 118 Tax. 841 (Mad.). In that judgment the decision of the Division Bench of this Court in Commissioner of Income Tax Vs. E. Prahalatha Babu, has been adverted to. The Division Bench has described it as a correct proposition of law the submission that had before it by the revenue''s counsel. That the Voluntary Disclosure of Income Scheme is a special procedure and the payment of tax should be made in accordance with the scheme and if there is any violation of the procedure prescribed under the scheme by any person, such person cannot be given the benefit of the scheme. The decisions of other High Courts have also been adverted to in my earlier judgments.

The fact that the object of the scheme is mobilisation of funds, does not on that score or on the score that the scheme was introduced with the hope that the persons availing the benefit will in future adopt the path of rectitude and civic responsibility take away the meaning of the words actually found enacted in clause 67(2). The intention of the Parliament must be gathered from the actual language employed in the provision, the context in which it occurs and the purpose of the statute. The actual words employed show that the class of persons for whom the scheme was evolved were those who had deliberately withheld tax, deliberately failing to disclose their incomes, and that would clearly indicate that the limit of the concession extended to them is required to be construed strictly rather than liberally and in any event that no mode of construction which would do violence to the language employed was required to be adopted.

The language employed in clause 67(2) is emphatic and admits of no doubt. It cannot be construed in what the petitioner regards as a liberal manner merely because some of the other provisions were, by the Board, given a more liberal interpretation.

The heart of the scheme is the voluntary disclosure of income. It is the payment of the tax if payment on such income in all cases where tax is payable that enables the person to claim the benefit. A person who withholds the tax beyond the period within which he was permitted to pay, cannot contend that he should be given the benefit of the scheme despite that aggravating conduct. I see no merit in the petitions. The writ petitions are dismissed. Consequently, W.M.P. Nos. 16975 and 18335 of 1999 are dismissed.

Petitions dismissed.