MS. GRIHALAKSHMI FILMS Vs. JOINT COMMISSIONER OF INCOME TAX
LAWS(KER)-2017-5-49
HIGH COURT OF KERALA
Decided on May 26,2017

Ms. Grihalakshmi Films Appellant
VERSUS
JOINT COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

A.K.JAYASANKARAN NAMBIAR,J. - (1.) As both these writ petitions involve a common issue in respect of sister units, they are taken up together for consideration and disposed by this common judgment. For the sake of convenience, the reference to facts and exhibits is from W.P.(C). No.6417 of 2017.
(2.) The petitioners are assessees under the Income tax Act, engaged in the production and distribution of cinematographic films and other allied activities. The grievance of the petitioners in these writ petitions is against the refusal by the 2nd respondent - Principal Commissioner of Income Tax to process an application that was preferred by them for obtaining the benefit of the Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as 'the Amnesty Scheme') in respect of penalties that were imposed on the petitioner under Sections 271D, 271E and 272A (2) (C) of the Income Tax Act. The facts in these writ petitions would indicate that, for the assessment years 2007-2008, the petitioners had declared a Net Loss and the assessments were completed by accepting the returns filed by the petitioners. The 1st respondent Joint Commissioner of Income Tax, however, noticed that the petitioners had occasioned a violation of the provisions of Sections 269SS, 269T and 285B of the Income Tax Act by accepting loans/deposits otherwise than by way of account payee cheques and/or draft, by repaying loans/deposits, otherwise than by way of account payee cheques and/or draft and by not filing statements as required by Section 285B regarding the film production carried on by them. The notices issued to the petitioners culminated in orders of penalty that were imposed on the petitioners under Sections 271D, 271E and 272A (2) (C) of the Income Tax Act. The petitioners, aggrieved by the orders of penalty passed against them, preferred appeals before the Commissioner of Income Tax (Appeals), the 3rd respondent herein and the said appeals are stated to be pending. While so, by Ext.P4 Amnesty Scheme, the petitioners identified an opportunity to settle the disputed penalty amounts under the provisions of the Amnesty Scheme. It is pointed out that under the Scheme, a declarant, who files a declaration before the designated authority in respect of tax arrears or specified tax could, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force, settle the matter by paying, in the case of a disputed penalty, 25% of the minimum penalty levied, along with the tax and interest payable on the total income finally determined. The phrase 'tax arrear' is defined in the Amnesty Scheme as meaning the amount of tax, interest or penalty determined under the Income Tax Act or the Wealth-tax Act, in respect of which an appeal is pending before the Commissioner of Income Tax (Appeals) or the Commissioner of Wealth-tax (Appeals) as on the 29th day of February, 2016. For ease of reference the relevant provisions are extracted hereunder: "201. (1) In this Scheme, unless the context otherwise requires,- (a) xxx (b) xxx (c) xxx (d) xxx (e) xxx (f) xxx (g) xxx (h) "tax arrear" means, the amount of tax, interest or penalty determined under the Income-tax Act or the Wealth-tax Act, in respect of which appeal is pending before the Commissioner of Income-Tax (Appeals) or the Commissioner of Wealth-tax (Appeals) as on the 29th day of February. 202. Subject to the provisions of this Scheme, where a declarant files, on or after the 1st day of June, 2016 but on or before a date to be notified by the Central Government in the Official Gazette, a declaration to the designated authority in accordance with the provisions of section 203 in respect of tax arrear, or specified tax, then, notwithstanding anything contained in the Income-tax Act or the Wealth-tax Act or any other provision of any law for the time being in force, the amount payable under this Scheme by the declarant shall be as under, namely:- (I) in case of pending appeal related to tax arrear being- (a) tax and interest, (i) In a case where the disputed tax does not exceed ten lakh rupees, the whole of the disputed tax and the interest on disputed tax till the date of assessment or reassessment, as the case may be; or (ii) in any other case, the whole of disputed tax, twenty-five per cent of the minimum penalty leviable and the interest on disputed tax till the date of assessment or re-assessment, as the case may be; (b) penalty, twenty-five per cent of the minimum penalty leviable and the tax and interest payable on the total income finally determined. (II) In case of specified tax, the amount of such tax so determined."
(3.) A perusal of the Scheme also indicates that a declaration under Section 202 of the Finance Act, 2016, governing the Amnesty Scheme is to be made, by the applicant seeking the benefit of the Scheme, before the designated authority in the prescribed form and in the prescribed manner and, on the application of the declarant being considered in terms of the Scheme, the pending appeals with regard to the tax dispute would stand automatically withdrawn. Section 208 of the Finance Act, 2016, which provides for exclusions from the operation of the Scheme reads as follows: "208. The provisions of this Scheme shall not apply- (a) in respect of tax arrear or specified tax,- (i) relating to an assessment year in respect of which an assessment has been made under Section 153A or 153C of the Income-tax Act or assessment or reassessment for any of the assessment years, in consequence of a search initiated under Section 37A or requisition made under Section 37B of the Wealth-tax Act if it relates to any tax arrear; (ii) relating to an assessment or reassessment in respect of which a survey conducted under section 133A of the Income-tax Act or section 38A of the Wealth-tax Act, has a bearing if it relates to any tax arrear; , (iii) relating to an assessment year in respect of which prosecution has been instituted or before the date of filing of declaration under section 202; (iv) relating to any undisclosed income from a source located outside India or undisclosed asset located outside India; (v) relating to an assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Income-tax Act, if it relates to any tax arrear;" Thus, an overall reading of the Scheme indicates that the intention is to grant an amnesty to a declarant, who declares his details with regard to disputed tax, interest or penalty, and the amnesty is to be granted to the extent contemplated in the Amnesty Scheme.;


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