COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

Delhi HC notice on VDIS probe

The Delhi high court today issued showcause notices to the revenue department of the central government and the Central Board of Direct Taxes on a plea seeking quashing of a recent circular which paved the way for investigation even against those disclosing their income under the Voluntary Disclosure of Income Scheme.

A division bench consisting of Acting Chief Justice Mahinder Narain and Justice S K Mahajan also issued notices to one of the member of CBDT, A K Batabyal, and directed the Centre and the CBDT to reply to the notices within two days.

The further hearing on the petition filed by the chamber of chartered accountants through its counsel Rajiv K Garg would be on December 19.

The petition challenged the November 25 circular on the grounds that it was against provisions of the statutory VDIS scheme, the aims and objectives of which were to accept the declaration on the face value without any objection, inquiry, investigation, scrutiny or assessment as spelt out in the Section 68, 71 and 72 of the Finance Act 1997.

The petitioner said that through the circular the government intended to strip off the declarant off immunity or secrecy.

Senior advocate A Raghuvir contended that the scheme was introduced with the purpose of harnessing 'black money for productive purposes.'

In order to achieve that objective individual were coaxed to voluntarily disclose the undisclosed income and pay tax thereon, under statutory immunity from any coercive step against the declarant and of secrecy, Raghuvir submitted adding that the introduction of the fresh circular defeats this very purpose.

The basis of the scheme was that if a declarant discloses his past income, cash or in the form of asset, and pays the cash at the rate prescribed by the scheme, he would be immune from prosecution and penalty, no inquiry will be instituted and the declaration would be treated as 'confidential', the petition added.

The purpose and objective of the scheme has been to 'harness black money' for productive purposes, Raghuvir contended.

The tenor and language of the circular thus runs against the provisions of the scheme and is thus outside the powers of the central government as stated in section 76 of the act.

The letter issued by the CBDT is beyond its jurisdiction as the power of removal of difficulty vest only with the central government, the petition stated.

The letter was also hit by the doctrine of promissory estoppel as it has prompted the tax payers to declare their undisclosed income on the basis of the statutory promise to their own detriment, the petition said.

EARLIER INTERVIEWS:
N K Singh, revenue secretary, government of India
V M Muthuramalingam, chief commissioner, Income Tax, Bombay

UNI