IN HIGH COURT OF JUDICATURE AT MADRAS Dated : 09.08.2019 CORAM HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN W.P.No.3223 of 2010 and M.P.No.1 of 2010 Shri Subash Chand Jain Petitioner Vs. 1. Commissioner of Income Tax 3, Gandhi Road, Salem 2 2. Income Tax Officer, Ward I(2), Salem 7 Respondents Writ Petition filed under Article 226 of Constitution of India for issuance of Writ of Certiorari to call for records of 1st respondent's order in C.No.9651(140)/2007-2008/SLM dated 08.07.2009 and quash same. For Petitioner : Mr.G.Baskar For Respondents: Mr.Jayaprathap ORDER petitioner has prayed for issuance of Writ of Certiorari, to quash order passed by 1st respondent in C.No.9651(140/2007- 2008/SLM dated 08.07.2009. 1/22 W.P.No.3223/2010 2. brief facts leading to present case as stated in affidavit filed in support of writ petition is that petitioner is partner in partnership firm by name, Bakliwal Trading Company carrying on business of 'Sago Trading'. petitioner also claims that he has income from other income sources like property interest etc., and he is regular in filing his income tax returns. petitioner claims that during financial year 1993-1994 relevant to assessment year 1994-1995, petitioner and his two minor children had received Rs.2,00,000/- each as gift from overseas, which petitioner brought it to respective accounts and added to capital account as early as 31.03.1994. He has also filed his return of income to that effect. 3. petitioner states that in mean while, Union Budget was presented on 28.02.1997 had introduced Voluntary Disclosure of Income Scheme,1997, [in short, hereinafter referred to 'VDIS'] which petitioner is entitle to avail. However, petitioner submits that he was forced to file return of income as revised return of income on 08.05.1997 by including said gift of Rs.6,00,000/- as his own income. After VDIS was notified, petitioner declared Rs.6,00,000/- as gift under VDIS and Commissioner of Income Tax, Coimbatore issued certificates 2/22 http://www.judis.nic.in W.P.No.3223/2010 under Section 68(2) of VDIS to petitioner as well as to his two minor children. While that being case, when earlier returns filed under Section 143(1) of Income Tax Act for assessment year 1994-1995 was pending before second respondent, said certificates under Section 68(2) of VIDS came to be issued and hence, Commissioner of Income Tax, Coimbatore has issued show cause notice seeking to revise order of assessment on ground that foreign gift had already been offered for taxation in return of income filed by petitioner on 08.05.1997 and in said return, such availing of VDIS was not proper and petitioner is not entitle to get benefits under Scheme, to which petitioner had filed objection. 4. It is also further stated in affidavit that Commissioner of Income Tax, Coimbatore on objection made by petitioner, passed order under Section 263 of Income Tax Act on 28.03.2001, as against which, petitioner preferred appeal before Income Tax Appellate Tribunal in I.T.A. No.676/Mds/2001, which finally came to be disposed by Appellate Tribunal on 05.10.2007. Thereafter, 1st respondent issued notice dated 11.03.2008 seeking to cancel certificate issued under Section 68(2) of VIDS to petitioner and his two sons on 3/22 http://www.judis.nic.in W.P.No.3223/2010 ground that certificates have been obtained on 'Misrepresentation of Facts'. 5. According to petitioner, he had filed his response to notice dated 11.03.2008 However, 1st respondent by order dated 08.07.2009 has cancelled / revoked certificate issued under Section 68(2) of VDIS invoking Section 21 of General Clauses Act, 1897 as against which present writ petition has been filed. 6. Mr.Baskar, learned counsel for petitioner submits that jurisdiction under Section 21 of General Clauses Act cannot be invoked by 1st respondent to revoke certificates issued under Section 68(2) of VDIS. learned counsel also submitted as there being three certificates issued independently under Section 68(2) of VDIS, all three certificates cannot be cancelled under single order made 1st respondent that too by issuing single show cause notice. 7. learned counsel for petitioner would further contend that 1st respondent has no jurisdiction to revoke certificate issued under VDIS after long gap of 10 years, delay and latches are not being properly appreciated by 1st respondent. impugned order passed by 4/22 http://www.judis.nic.in W.P.No.3223/2010 1st respondent is perse illegal. 8. learned counsel for petitioner also contended that petitioner having filed revised return to assessment year 1994-1995 to financial year 1993-1994, eventhough filed under VDIS, petitioner was forced to file same and having availed benefits of VDIS 1997, which came into effect and notified on 01.07.1997, there is nothing wrong in filing return under VDIS by disclosing said Rs.6,00,000/- received by way of gift as his own income. 9. It is represented on behalf of petitioner that there is no misrepresentation neither when returns were filed for financial year 1993-1994 in assessment year 1994-1995, nor when availing benefits under VDIS. 10. Apart from agitating above points, learned counsel for petitioner also submitted that if at all certificates are withdrawn by 1st respondent, 1st respondent ought to have refunded entire amount paid under VDIS, which till date, 1st respondent has not done 5/22 http://www.judis.nic.in W.P.No.3223/2010 so. 11. On above said grounds, learned counsel for petitioner prayed to quash impugned order passed by 1st respondent. In support to his arguments, he had relied upon following Judgments: (i) (1967) AIR 107 (SC) in Ghaurul Hasan and Others V. State of Rajasthan by Hon'ble Supreme Court of India. (ii) (1966) 61 ITR 269 (Mad) in Carborundum Universal Limited V. Union of India by Division Bench of this Court. (iii) (2002) 254 ITR 255 (Gujarat) in Vasantlal Tulsidas Agarwal V. C.I.T. by High Court of Gujarat. (iv) (2000) 241 ITR 287 (AP) in Patchala Seetharamaiah V. Commissioner of Income Tax by Division Bench of High Court of Andhrapradesh. (v) (1998) 230 ITR 536 (AP) in Shankarlal V. I.T.O. and Others by Division Bench of High Court of Andhrapradesh (vi) (2007) 295 ITR 0136 in M.Srinivasa Rao V. A.C.I.T by this Court. (vii) (2002) 253 ITR 334 C.I.T. V. Mintu Kaltia by Division Bench of High Court of Gauhati. 6/22 http://www.judis.nic.in W.P.No.3223/2010 12. In response to said averments made by petitioner, respondents had filed detailed counter rebutting all allegations made by him. 13. Per contra, Mr.Jayapratap, learned counsel for respondents submitted that petitioner for assessment year 1994 -1995 had declared total income of Rs.1,62,890/- However, in his capital account filed along with return of income, he had showed Rs.2,00,000/- for him and Rs.2,00,000/- each as loan for his two minor sons. After filing such return, petitioner sent letter to Assessing Officer dated 20.02.1997 stating that he received gift from non-resident Indian in year 1994, totaling Rs.6,00,000/-. 14. learned counsel for revenue would further submit that petitioner, in order to declare income under VDIS, filed revised return voluntarily admitting gift as income and sought for waiver of interest and penalty. Apart from that, learned counsel also submitted that notice under Section 143 (2) was initiated against petitioner for assessment year 1994-1995 to which he promptly filed his reply and only thereafter, Commissioner of Income Tax, Coimbatore had passed 7/22 http://www.judis.nic.in W.P.No.3223/2010 order under Section 263 of Income Tax Act, 1961 on 28.03.2001 and same was challenged by petitioner before Income Tax Appellate Tribunal, who has passed order dated 05.10.2007, which had become final. 15. In respect of plea put forward by learned counsel for petitioner that Section 21 of General Clauses Act cannot be invoked or respondent has no jurisdiction to invoke said Section, learned counsel for respondents would contend that Section 21 of General Clause Act is of general application and embodies Rule of Construction that can be applied, if particular statute does not give assistance in leading to any reasonable construction so as to meet his objects. learned counsel would also contend that petitioner has availed VDIS by total misrepresentation of facts and abusing Scheme. When petitioner had already declared income in response to notice under Section 148, by filing so-called revised return, disclosure under VDIS by misrepresenting facts, certificates were rightly withdrawn by 1st respondent, who has jurisdiction to do so. Under these circumstances, respondents prayed to sustain impugned order. 8/22 http://www.judis.nic.in W.P.No.3223/2010 16. Heard both learned counsel appearing for petitioner as well as learned counsel for respondents and perused materials available on record. 17. It is admitted fact that petitioner during financial year 1993-1994 relevant to assessment year 1994-1995 filed return along with Rs.6,00,000/- added to capital income accounts which was processed by 2nd respondent. It is also not in dispute by petitioner that he had filed revised return on 08.05.1997 for return filed on 14.03.1996. Only in revised return, petitioner had mentioned about Rs.2,00,000/- for himself and Rs.2,00,000/- received as gifts from NRI for each of his minor sons. However, when VDIS was notified during year 1997, petitioner once over again filed his declaration before Commissioner of Income Tax disclosing Rs.6,00,000/- as income and sought waiver of penalty and certificates dated 06.01.1998 were also issued under Section 168(2) of VDIS to petitioner and his two minor sons. 18. On perusal of records, it is also clear that for return filed belatedly on 14.03.1996 for assessment year 1994-1995, petitioner 9/22 http://www.judis.nic.in W.P.No.3223/2010 received notice under Section 143(2), which was issued on 21.01.1998 and subsequently, notice under Section 148 also came to be issued, to which petitioner had responded by filing objection to said notices and thereafter, Commissioner of Income Tax, Coimbatore passed final order dated 28.03.2001 under Section 263 of Income Tax Act. 19. Further, on Perusal of order dated 28.03.2001, this Court does not find any stand taken by petitioner for non-service of notices under Sections 143(2) and 148 of Income Tax Act, which is proposal under Section 263 of Income Tax Act. Commissioner of Income Tax, Coimbatore by order dated 28.03.2001 had given detail finding and held that as per Section 148 of Income Tax Act, notice has been issued prior to revised return filed by assessee, completion of assessment on basis of return filed by assessee on 08.05.1997 was in order and action of assessing officer in ommitting to bring tax of NRI gifts on erroneous assumption that valid declaration had been filed under VDIS is erroneous and prejudicial to interests of revenue and had set aside order dated 10.02.1999 passed under Section 143 of Income Tax Act and directed to re-do assessment in accordance with law. This order was challenged by petitioner herein 10/22 http://www.judis.nic.in W.P.No.3223/2010 before Income Tax Appellate Tribunal [ITIT] and by order dated 05.10.2007 said authority has passed following order: '4. After carefully considering rival's submissions, basic question which is important for deciding these appeals, when valid certificate is issued u/s.68(2) of VDIS, 1997, then whether immunity is available to assessee or not. We are of view that unless and until such certificate is withdrawn, immunity would be available to assessee. We specifically asked learned Departmental Representative at Bench, as to whether such VDIS certificate has been withdrawn. He could not produce any evidence that VDIS certificate has been withdrawn. Therefore, this certificate still remains alive and assessee shall be entitled to amnesty granted under VDIS, 1997. In this background of matter, we are of considered view that assessee's appeal filed against order passed u/s 263 should succeed.' 20. In meanwhile, 1st respondent had initiated proceedings by issuing proper notice to cancel certificates issued under Section 68(2) of VDIS, 1997 dated 06.01.1998 on ground that such certificates were obtained by fraud and misrepresentation. It would be appropriate to reproduce Sections 64 and 68 of VDIS and same is as follows: Section 64 Charge on tax on voluntarily disclosed income 11/22 http://www.judis.nic.in W.P.No.3223/2010 (1) Subject to provisions of this scheme, where any person makes, on or after date of commencement of this Scheme but on or before 31st Dec., 1997 declaration in accordance with provisions of S.65 in respect of any income chargeable to tax under IT Act for any assessment year - (a) for which he has failed to furnish return under Section 139 of act; (b) which he has failed to disclose in return of income furnished by him under IT Act before date of commencement of this schedule; (c) which has escaped assessment by reason of omission or failure on part of such person to make retrun under IT Act or to disclose fully and trully all materials facts necessary for his assessment or otherwise. Then, notwithstanding anything contained in IT Act or in any Finance act, income-tax shall be charged in respect of income so declared (such income being hereinafter referred to as voluntarily disclosed income) at rates specified hereunder, namely: (i) in case of declarant, being company or firm, at rate of 35 per cent of voluntarily disclosed income; (ii) in case of declarant, being person other than company or firm, at rate of 30 per cent of voluntarily disclosed income. (2) Nothing contained in sub-s. (1) shall apply in relation to- (i) income assessable for any assessment year for which notice under Section 142 or Section 148 of IT Act has been 12/22 http://www.judis.nic.in W.P.No.3223/2010 served upon such person and return has not been furnished before commencement of this Scheme; (ii) income in respect of previous year in which search under Section 132 of IT Act was initiated or requistioned under section 132A of IT Act was made, or survey under Section 133A of IT Act was carried out or in respect of any earlier previous year. Section 68: 'The amount of voluntarily disclosed income shall not be included in total income of declarant for any assessment year under Income-Tax Act, if following conditions are fulfilled, namely: (i) declarant credits such amount in books of account, if any, maintained by him for any source of income or in any other record, and intimates credit so made to Assessing Officer; and (ii) income-tax in respect of voluntarily disclosed income is paid by declarant within time specified in section 66 or section 67. (iii) Commissioner, shall on application made by declarant, grant certificate to him setting forth particulars of voluntarily disclosed income and amount of income-tax paid in respect of same.' 13/22 http://www.judis.nic.in W.P.No.3223/2010 21. On cursory reading of Section 64 (2)(i), it is clear that no person can avail scheme in relation to income assessable for any assessment year, for which notice under Sections 142 or 148 of Income Tax Act has been served upon such person and return has not been furnished before commencement of this scheme. 22. petitioner, who is fully aware that if notice under Section 148 of Income Tax Act has been served upon him, scheme would not be applicable to him or he cannot avail benefits of scheme, had filed his return of income for assessment year 1994-1995 with 2nd respondent only on 14.03.1996 belatedly, under Section 139(4) of Income Tax Act and subsequently, revised return on 08.05.1997 seems to have been served with notice under Section 148 of Income Tax Act. 23. It also clear from records that petitioner had appeared before assessing officer in response to notice issued under Section 148, which subsequently was dealt with culminating into final order being passed on 28.03.2001 under Section 263 of Income Tax Act. Thereafter, as against said order, admittedly, petitioner had preferred appeal, which came to be finally decided on 05.10.2007. When 14/22 http://www.judis.nic.in W.P.No.3223/2010 scheme restricts application of benefits under Scheme for those persons, who have been served with Notice under sections 142 or 148 of Income Tax Act, prior to notification of VDIS scheme, 1997, petitioner cannot avail benefits under scheme, he having been served with notice under Section 148 of Income Tax Act. 24. On mere perusal of records, it is clear that petitioner has misrepresented in VDIS scheme that Rs.6,00,000/- as his own income, which was not disclosed earlier. Contradicting to his own original returns filed earlier on 14.03.1996 for Assessment year 1994-1995 declaring that 6,00,000/- of Rupees was received by him as gift from overseas, revised return on 08.05.1997 has been filed under VDIS. It is clear that VDIS was notified by Central Government on 01.07.1997 only. Suppressing returns filed earlier on 14.03.1996, petitioner has filed his revised return on 08.05.1997 by including Rs.6,00,000/- as gift received from NRI. 25. This Court is unable to accept arguments put forth by learned counsel for petitioner that there was no misrepresentation in filing returns or availing benefits under VDIS and also not able 15/22 http://www.judis.nic.in W.P.No.3223/2010 to accept contention raised by petitioner's counsel that petitioner has not received any notice under Section 148 for assessment year 1994-1995. records are contradicting petitioner's argument. petitioner had participated and filed his response to show cause notice under Section 263 of Income Tax Act seeking to revise order of assessment year 10.02.1999 and thereafter, issue went up to stage of appeal before Income Tax Appellate Tribunal which passed final order on 05.10.2007 and thereby leading to cancellation of certificates by order dated 08.07.2009 by 1st respondent. However, proceedings initiated by 1st respondent in withdrawing or revoking certificates issued under Section 68(2) of VIDS is totally on ground of misrepresentation made by petitioner. 26. With regard to argument put forth by learned counsel for petitioner that 1st respondent had no jurisdiction to invoke Section 21 of General Clauses Act, and to revoke certificates issued under Section 68(2) of VDIS, it would be appropriate to see Section 21 of General Clauses Act. '21. Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye-laws Where, by any Central act, or Regulation, power to issue notifications, orders, rules or bye-law is conferred, then that power includes 16/22 http://www.judis.nic.in W.P.No.3223/2010 power, exercisable in like manner and subject to like sanction, and conditions (if any), to add to, amend vary or rescind any notifications, orders, rules or bye-laws so issued'. 27. On careful reading of above Section, it is clear that scope of Act will apply to any Central Act or Regulation and also to Constitutions, as it is Rule of interpretation which has been made applicable to Constitution in same manner as it applied to any Central Act or Regulation. No doubt, under above Act, power is vested with authority to make order which implies power to revoke or modify or vary that order at any subsequent stages, unless there is specific bar. 28. On conjoint reading of Section 68 of VDIS and Section 21 of General Clauses Act, it is clear that Scheme does not provide for any enquiry or investigation prior to issuance of certificates under Section 68(2) of VDIS, when that being so, only remedy available for respondents is to avail Section 21 of General Clauses Act, which is General application and Rule of construction that can be applied to statute does not provide any assistance for reasonable construction, so as to meet its object. In this regard also, this Court has no hesitation to reject 17/22 http://www.judis.nic.in W.P.No.3223/2010 argument of learned counsel appearing for petitioner, as authority has jurisdiction to invoke Section 21 of General Clauses Act to withdraw or revoke certificates issued Section 68(2) of VDIS. 29. With regard to citations referred by learned counsel for petitioner, this Court is of view that all citations on facts as well as on legal grounds and on their legal preposition are not applicable to present case as per details given below:- (i) (2002) 254 ITR 255 (Gujarat) in Vasantlal Tulsidas Agarwal V. C.I.T., as facts of case pertains to refund of excess amount, whereby Section 70 of Finance Act 1997 cannot be invoked to deny refund of excess amount paid by declarant over and above tax payable on declared income, under voluntary disclosure scheme, excess amount directed to refunded to petitioner together with 15% thereon. facts of case is not applicable to present case on hand. (ii) (2000) 241 ITR 287 (AP) in Patchala Seetharamaiah V. Commissioner of Income Tax here also Section 70 of Finance Act 1997 cannot have any application to situation, where tax paid beyond 18/22 http://www.judis.nic.in W.P.No.3223/2010 prescribed period and accordingly, retention of said tax department is illegal and petitioner is entitle to refund same. This case is not applicable to case on hand. case in hand pertains to refund of tax paid beyond prescribed period of VDIS scheme and not applicable. (iii) (1998) 230 ITR 536 (AP) in Shankarlal V. I.T.O. and Others, deals with Section 64(2) of Finance Act and it only denies benefit of voluntary disclosure of income that was not returned within income prescribed under notice Sections 142 or 148 and which expired before commencement of scheme, or income which is detected in search under Section 132, on requisition under 132A or in Survey under Section 133A and they would say that undisclosed income other than such detected income in relation to previous year can still be declared, and hence it is constitutionally valid, this case on hand pertains to adjustment of amount and declaration itself is not acceptable and not falling under Section 68(1) of VDIS 1997. (iii) (2007) 295 ITR 0136 in M.Srinivasa Rao V. A.C.I.T., eventhough time limit is not p20rescribed under Section 153(3) of Act, 19/22 http://www.judis.nic.in W.P.No.3223/2010 impugned proceedings initiated by respondent after lapse of 6 years cannot be allowed to continue and impunged order was quashed. But this case is pertaining to limitation and applicability to Section 153(3) of Act has no application to case on hand. 30. Under these circumstances, this Court is of view that petitioner cannot avail benefits under VDIS, having contravened Section 64(2)(1), and as notice under Section 148 of Act was issued on 22.06.1997, which is prior to notification of VDIS, wherein which petitioner declared gifts from NRI amounting to Rs.6,00,000/- and since there is prohibition under VDIS, that when amount so declared is already disclosed by assessee in return of income filed before Scheme came into operation, same cannot be stated once again by way of revised return of income. 31. In result, order passed by 1st respondent is well found and petitioner has misrepresented before authority to avail benefits under Scheme VDIS by suppressing declaration made in returns filed prior to notification of VDIS. Hence Writ Petition is dismissed. Consequently, connected miscellaneous petition is also 20/22 http://www.judis.nic.in W.P.No.3223/2010 dismissed. Consequently, connected miscellaneous petition is also dismissed. No costs. 09.08.2019 Speaking /Non speaking order Index : yes/no Internet : yes/no ssd To 1. Commissioner of Income Tax 3, Gandhi Road, Salem 2 2. Income Tax Officer, Ward I(2), Salem 7 21/22 W.P.No.3223/2010 V.BHAVANI SUBBAROYAN.J., ssd W.P.No.3223 of 2010 and M.P.No.1 of 2010 09.08.2019 22/22 Subash Chand Jain v. Commissioner of Income-tax-3, Salem / Income-tax Officer, WardI(2), Salem