KUMUDAM PUBLICATIONS PVT. LTD. ACTING THROUGH ITS MANAGING DIRECTOR MR. P. VARADARAJAN Vs. CENTRAL BOARD OF DIRECT TAXES AND ORS.

JUDGEMENT

(1.) The petitioner impugns an order dated 16th Sept. 2016 of the third respondent which failed to give credit for advance tax deposited for AY 2010-2011 and AY 2016-2017 and tax deducted at source (TDS) to a total extent of Rs. 16.49 crores.

(2.) The petitioner-company incorporated under the Companies Act, has its registered office at Chennai. It has been filing its Return of Income till the financial year 2008-09, i.e. AY 2009-10. Serious disputes amongst its directors, ex-directors and certain shareholders, which arose in financial year 2008-2009, resulted in litigations against the company and its directors etc. from the financial year 2009-2010. As a consequence, the petitioner could not appoint any statutory auditor. Accounts could not be made ready for subsequent years in deference to the disputes and pending litigation. The disputes related to the petitioner's share capital. Resultantly, in the absence of audited accounts, no return of income was filed from financial year 2009-10, i.e. assessment year (AY) 2010-11 till date. The petitioner avers that despite its inability to file income tax returns, it paid advance tax through various amounts, on 23 occasions in the past 5 years or so; details thereof are furnished in a tabular chart, which reveals that a total sum of Rs.14,98,30,000.00 was paid through advance tax. The petitioner says that in addition, a total sum of Rs. 1,50,93,433.00 was paid on its account, for the same period. Thus a total sum of Rs. 16,49,23,433.00 has been paid towards income tax liabilities by or on behalf of the petitioner.

(3.) Anticipating that proceedings may be initiated by the Income Tax Department for the Petitioner's failure to file returns required under Sec. 139 of the Income Tax Act, the petitioner applied under Sec. 119(2)(b) of the Income-Tax Act on 7th July, 2016 to the Revenue seeking permission to file the Return of Income "based on the unaudited accounts or in any other manner" in view of compelling circumstances. The Revenue issued a notice of hearing dated 22.09.2016 posting the application for hearing on 17.10.2016, but that notice was subsequently cancelled. As on date, the application has not been decided. In the meanwhile, the Income Declaration Scheme, 2016 (IDS) [hereafter referred to variously as "IDS" or "the Scheme"] was notified in May 2016 by the Central Government with effect from 1st June, 2016. Thereafter, by Circular No. 25 of 2016 dated 30th June, 2016 issued by the Union Ministry of Finance issued certain clarifications, on matters relating to the IDS. Pending the disposal of the petitioner's application under Sec. 119(2)(b), it also made a declaration in Form 1 dated 15.09.2016 under the scheme, for all the assessment years. The income so disclosed under the scheme in terms of the unaudited accounts was disclosed as Rs. 455 crores. The total tax payable including interest and penalty as under the Scheme was Rs. 19.60 crores, against which advance tax paid by the petitioner and TDS deducted to its benefit was Rs. 16.49 crores, leaving the net tax payable of Rs. 11 crores. These details had to be mentioned in the Form 1 at serial No.11 and were duly disclosed (by the Petitioner) in its application. In this background, the petitioner received the impugned order from the Principal Commissioner of Income-Tax, (PCIT) in response to its declaration in Form 1, demanding a tax of Rs. 19.60 crores.