The
Income Declaration Scheme, 2016 provides an opportunity to persons who have not
paid full taxes in the past to come forward and declare the undisclosed income
and pay tax, surcharge and penalty totaling in all 45% of such undisclosed
income declared.
Further
queries have been received from the public about various provisions of the
Scheme. The Board has considered the same and the following clarifications are
issued.-
Question
No.1:
If only part payment of the tax, surcharge and penalty payable on undisclosed
income declared under the Scheme
is made before 30.11.2016, then whether
the entire declaration fails as per section 187(3) of the Finance Act, 2016 or
pro-rata declaration on which tax, surcharge and penalty has
been paid remains valid?
Answer: In case of
part payment, the
entire declaration made
under the Scheme shall be invalid. The declaration under the Scheme
shall be
valid only when the complete payment of
tax, surcharge and penalty is made on or
before 30.11.2016.
Question
No.2:
In case of amalgamation or in case of conversion of a company into LLP, if
the amalgamated entity or LLP, as the case may be, wants to declare
for the year prior to amalgamation/conversion, then whether a declaration is to
be filed in the name of amalgamated entity/LLP or in the name of the
amalgamating company or company existing prior to conversion into LLP?
Answer: Since the amalgamating company or the company prior to
conversion
into LLP is no more into existence and the
assets/liabilities of such erstwhile
entities have been
taken over by
the amalgamated company/LLP, the declaration is to be made in the name of the amalgamated company or the LLP, as the case may be, for the
year in
which the amalgamation/conversion takes
place.
Question
No.3:
Whether the Scheme is open only to residents or to non-residents also?
Answer: The Scheme is available to every person, whether resident or
non-resident.
Question
No.4:
If undisclosed income relating to an assessment year prior to A.Y. 2016-17,
say A.Y. 2001-02 is detected after the closure of the Scheme, then what
shall be the treatment of undisclosed income so detected?
Answer:
As per the provisions of section 197(c) of
the Finance Act, 2016, such income
of A.Y. 2001-02 shall be assessed in the year in which the
notice under section 148 or 153A or 153C,
as the case may be, of the Income-tax
Act is issued by the Assessing Officer. Further, if such
undisclosed income is detected in the form
of investment in any asset then
value of such asset shall be as if the asset has been acquired or
made in the year in which the notice under
section 148/153A/153C is issued
and the value shall be determined in accordance with rule 3 of
the Rules.
Question
No.5:
Whether a person on whom a search has been conducted in April, 2016 but
notice under section 153A is not served upto 31.05.2016, is eligible
to declare undisclosed income under the Scheme?
Answer: No, in such a case time for issuance of notice under section
153A has
not expired. Hence the person is not
eligible to avail the Scheme in respect of
assessment years for which notice under section 153A can be issued.
Question
No.6:
As per Circular
No.17 of 2016, question No.14, it is not mandatory to attach the valuation report. But
Form-1 states “attach valuation report”. How to interpret?
Answer: It is necessary for the declarant to obtain the valuation
report but it is
not mandatory for him to attach the same
with the declaration made
in Form-1. However, the
jurisdictional Pr. Commissioner/Commissioner in order to
ascertain the correctness of the value of the asset quoted in Form-1 may require the declarant to file the
valuation
report before issuing the acknowledgment in
Form-2. In such a circumstance, it will be necessary for the declarant to make
the report
available to the Pr.
Commissioner/Commissioner.
Question
No.7:
Is it mandatory to furnish PAN in the Form of declaration?
Answer: Yes, PAN is the unique identifier for all direct
tax purposes. This is also necessary in order to claim the benefits and
immunities available under the Scheme.
Question
No.8:
If any proceeding is pending before the Settlement Commission, can a person be
considered eligible for the Scheme?
Answer: No,
a person shall
not be eligible
for the Scheme
in respect of assessment years for
which proceeding is pending with Settlement Commission.
Question No.9: Land is acquired by the
assessee in year 2001 from assessed income and is regularly
disclosed in return of income. Subsequently in the year 2014,
a building is
constructed on the
said land and
the
construction cost is not disclosed by the assessee. What shall be the fair
market value of such building for the purposes of the Scheme?
Answer: Fair market
value of land
and building in
such a case
shall be computed in accordance with Rule 3(2) by allowing proportionate deduction in respect of asset acquired from assessed income.
Question
No.10:
Whether cases where summons
under section 131(1A)
have been issued by
the Department or letter under the Non-filer Monitoring System
(NMS) or under section 133(6) are issued are eligible for the Scheme?
Answer: Cases where summons under section 131(1A) have been issued by the
department or letters for enquiry under NMS or under section 133(6) are issued but no notice under section 142 or 143(2) or 148 or
153A or
153C [as specified in section 196(e)] of
the Finance Act, 2016 has been issued are
eligible for the Scheme.
Question No.11: If notices
under section 142, 143(2) or 148 have been issued after 31.05.2016 and assessee
makes declaration under the Scheme then what shall be the fate of these
notices?
Answer:
As clarified vide Explanatory Circular No.
17 dated 20.5.2016 , a person shall not be eligible for the Scheme in respect
of the assessment year for which a notice under section 142, 143(2) or 148 has
been received by him on or before 31.5.2016. In a case where notice has been
received after the said date, the assessee shall be eligible to make a
declaration under the Scheme for the said assessment year. Such declaration
shall be valid if it has not been made by suppression of facts or
misrepresentation and the amount payable under the Scheme has been duly paid
within the specified time. On furnishing by the declarant the certificate
issued by the Pr. Commissioner/Commissioner in Form-4 to the Assessing Officer,
the proceedings initiated vide notice under section 142, 143(2) or 148 shall be
deemed to have been closed.
