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Judgment
PER SUDHIR KUMAR, JM :
This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi [“Ld. CIT(A)”], dated 20.8.2025 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2013-14.
Brief facts of the case are that the assessee is a company which had furnished a return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred as “Act”) for the assessment year 2013-14 on 26.9.2013 declaring income of Rs. 35,07,225/-. As per the information available in this case for the financial year 2012-13 relevant to the assessment year 2013-14, the assessee has disclosed an amount of Rs. 2,03,17,850/- for AY 2013-14 under the IDS-2016 Scheme on 28.09.2016. The assessee had to pay the tax of Rs. 91,43,032/- on its undisclosed income upto 30.09.2017. The assessee has failed to deposit the tax within this stipulated time. The AO made the addition of the total income which was disclosed by the assessee for the assessment year 2013-14. In appeal, Ld. CIT(A) dismissed the appeal of the assessee. Aggrieved, assessee is in appeal before the tribunal.
We have heard the rival contentions and perused the records. The main objection of the Ld. AR is that the as per Section 197(b) of Income Declaration Scheme-2016 (IDS-2016), no jurisdiction could have been assumed u/s. 147 of the year under consideration as the amount declared under the IDS(2016) cannot be treated as undisclosed income for the year under consideration. We may gainfully refer here the Section 197 of the Act as under:-
“Removal of doubts
197.For the removal of doubts, it is hereby declared that –
(a)save as otherwise expressly provided in sub-section (1) of section 183, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme;
(b)where any declaration has been made under section 183 but no tax, surcharge and penalty referred to in section 184 and section 185 has been paid within the time specified under section 187 the undisclosed income shall be chargeable to tax under the Income Tax Act in the previous year in which such declaration is made;
(c)where any income has accrued, arisen or receive or any asset has been acquired out of such income prior to commencement of this Scheme, and no declaration in respect of such income is made under this Scheme,-
(i)such income shall be deemed to have accrued, arisen or received, as the case may be; or
(ii)the value of the asset acquired out of such income shall be deemed to have been acquired or made, in the year in which a notice under section 142, sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income Tax Act is issued by the Assessing officer, and the provisions of the Income Tax Act shall apply accordingly.”
Ld. AR further submitted that Department has accepted the version of the aforesaid Act in the assessment order dated 30.3.2026 in the case of Kuldip Singh Sethi & Gagan Goyal (PAN: AAJFK8905H) (AY 2017-18), copy of which has been placed on record, wherein, assessee had made declarations under Income Declaration Scheme (IDS) 2016 of Rs. 200,00,000/- for AY 2013-14 and 2014-15. In this case the assessee has failed to deposit the tax within the stipulated time, thus the disclosed income was charged to tax for the previous years under which such declaration has been made. Ld. DR relied upon the orders of the authorities below.
We find that the assessee company furnished a return of income u/s. 139(1) of the Act for the AY 2013-14 on 26.9.2013 declaring income of Rs. 35,07,225/- and as per the information available in this case for the financial year 2012-13 relevant to assessment year 2013-14, the assessee has disclosed an amount of Rs. 2,03,17,850/- for AY 2013-14 under the IDS-2016 Scheme on 28.9.2016. The assessee had to pay the tax of Rs. 91,43,032/- on its undisclosed income upto 30.9.2017. the assesse was required to deposit the tax under the IDS Scheme within the designated date. The assessee failed to make full payment in accordance with IDS-2016 hence, the income was treated as undisclosed for the AY 2013-14 and the application filed by the assessee under IDS-2016 was rejected. Hence, the income chargeable to tax to the aforesaid extnty of RS. 2,03,17,850/- had escaped assessment in the case of the assessee for the assessment year 2013-14. Subsequently the case was reopened u/s. 147 by issuing notice u/s. 148 of the Act on 30.3.2021, after recording reasons as per requirement of the statute and after obtaining requisite sanction u/s. 151 of the Act from the competent authority. In response to the notice u/s. 148, the assessee furnished a return of income for the year 2016-17 on 13.4.2021 showing total income of Rs. 2,38,25,080. The AO observed that assessee has shown the said amount of Rs. 2,03,17,850/- under the head ‘income from other sources’ for AY 2013-14, that had been disclosed under the IDS-2016 Scheme and made the assessment u/s. 143(3) read with section 147 read with section 144B of the Act at a total of Rs. 2,38,25,080/- vide order dated 21.3.2022 and in appeal, Ld. CIT(A) confirmed the action of the AO. In view of the aforesaid factual matrix and keeping in view of the IDS-2016 Scheme, the AO has to make the income chargeable to tax under the Income Tax Act in the previous year in which such declaration is made, however, in the present case the AO has made the same in the assessment year 2013-14, which is not sustainable in the eyes of law, hence, the addition in dispute is hereby deleted and accordingly, the ground of appeal is allowed.
In the result, the appeal of the assessee is allowed.