IDS 2016 payment credits pre-notification self-assessment tax against undisclosed income; Form 4 directed

5-Second Takeaway

The court held that a voluntary self-assessment tax payment made before the IDS notification date could be credited toward the assessee’s IDS liability, even though it was paid after the assessment year and outside the normal section 140A time limit. It also directed the revenue to adjust the amount under the scheme and issue Form 4.

The assessee had disclosed undisclosed income under the Income Declaration Scheme, 2016 and stated that part of the tax, surcharge and penalty liability had already been discharged by a payment made on 23 December 2015. The balance was later paid after the scheme’s notified date, and the department declined to treat the earlier payment as part of the IDS liability.

The court focused on whether the earlier payment, made under the self-assessment tax code for the relevant assessment year, could be linked to the declared income under the scheme. It noted that there was no assessment under section 143(3), and that the payment had been made voluntarily in relation to the same transaction reflected in the assessee’s declaration.

Reading the IDS provisions alongside the scheme’s object, the court held that there was no prohibition on giving credit for such a pre-notification payment where it was relatable to the disclosed income. It accepted the assessee’s position that the amount had been properly shown in the declaration and ought to be adjusted against the IDS liability.

The respondents were therefore directed to treat the payment as part of the IDS computation, make the necessary adjustment, and issue Form 4.