Immunity under Income Declaration Scheme Available Only To the Declarant; Can’t Be Extended To another Assessee

Case: Deputy Commissioner of Income Tax (Central) Circle 1(2) versus M/s MR Shah Logistics Private Ltd

Coram: Justices UU Lalit and S Ravindra Bhat

Case No.: Arising Out Of Special Leave To Appeal (C) No. 22921/2019

Court Observation: “..the declarant was Garg Logistic Pvt Ltd and not the assesse.Facially, Section 192 affords immunity to the declarant: “…nothing contained in any declaration made under section 183 shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty…” Therefore, the protection given, is to the declarant, and for a limited purpose. However, the High Court proceeded on the footing that such protection would bar the revenue from scrutinizing the assessee’s return, absolutely”.

“This court is, therefore, of the opinion that the High Court fell into error,in holding that the sequitur to a declaration under the IDS can lead to immunity (from taxation) in the hands of a non-declarant”.

“Another aspect which should not be lost sight of is that the information or “tangible material” which the assessing officer comes by enabling re-opening of an assessment, means that the entire assessment (for the concerned year) is at large; the revenue would then get to examine the returns for the previous year, on a clean slate – as it were. Therefore, to hold- as the High Court did, in this case, that since the assessee may have a reasonable explanation, is not a ground for quashing a notice under Section 147. As long as there is objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice”

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Keywords

Income Declaration Scheme