IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE ANTONY DOMINIC TUESDAY, THE 22ND FEBRUARY 2011 / 3RD PHALGUNA 1932 WA.No. 52 of 2009() ------------------- AGAINST THE JUDGEMENT/ORDER IN OP.22984/2000 Dated 31/07/2008 .................... APPELLANT(S)/PETITIONER: ----------------------------------------- S.SUDARSANA BABU, 'THIRUVATHIRA' AYATHIL, KOLLAM 691 010. BY ADV. SRI.S.ARUN RAJ SMT.C.T.SUJA SRI.P.DANIEL RESPONDENT(S)/RESPONDENTS: ----------------------------------------------- 1. THE INCOME TAX OFFICER, WARD-3,KOLLAM. 2. THE COMMISSIONER OF INCOME TAX AYAKAR BHAVAN, KOWDIAR, TRIVANDRUM. ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR R THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 22/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.R. J.CHELAMESWAR, C.J. & ANTONY DOMINIC, J. =============================== W.A. NO. 52 OF 2009 ====================== Dated this the 22nd day of February, 2011 J U D G M E N T J.Chelameswar, C.J. This is an appeal aggrieved by the judgment dated 31st July, 2008 in OP No.22984/2000 by the petitioner/appellant. Aggrieved by the decision of the 2nd respondent herein as evidenced by his proceedings dated 15/5/1998 (Ext.P2), the original petition was filed with the prayers as follows:- (i) to call for the entire records of the case; declare that the payment as evidenced by Ext.P2 made by the petitioner for the year 1989-90 towards VDI Scheme is regular; issue a writ of mandamus to the second respondent to accept the declaration and disburse the certificate under Section 68(2); (ii) issue a writ of mandamus directing the second respondent to accept the declaration made by the petitioner under the VDI Scheme for the year 1989-90 by condoning the delay of one day and issue a certificate of immunity under section 68(2); (iii) to call for the records of the case leading to the issue of Ext.P3 notice, declare the same to be illegal and nonest in the eye of law and quash the same by way of issuing a writ of certiorari; WA No.52/09 : 2 : (iv) to issue a writ of prohibition restraining the respondents from proceeding further with Ext.P3 notice; 2. The facts leading to the case is as follows:- 3. By the Finance Act, 1997, voluntary disclosure of income scheme is propounded. The broad outlines of the scheme are that, any person can make a declaration in accordance with Section 65 (giving the particulars prescribed) of the said scheme in respect of any income chargeable to tax under the Income Tax Act for any assessment year for which the person either failed to furnish a return under Section 139 of the Act or in a case where a return was in fact filed, but some part of the income pertaining to the relevant year is not disclosed. Under the scheme, people falling under the above mentioned categories can invoke the benefit of the scheme, make a declaration and pay the appropriate tax depending upon the status of the declarant. The various consequences which follow from such declaration and immunity from the various legal proceedings to which such declarant would have either exposed himself to, are provided in the subsequent sections of the scheme, the details of which may not be necessary or relevant for the purpose of the present case. 4. Under Section 64, such declaration as the one WA No.52/09 : 3 : contemplated in the scheme is required to be made either on or after the date of the commencement of the scheme {(1/7/1997), the notified date in terms of Section 62(2)}. 5. Section 62(2) reads as follows:- 62.(2) It shall come into force * on such date as the Central Government may, by notification in the Official Gazette, appoint. *By Notification No.S.O. 435(E), dated June 9, 1997, the Voluntary Disclosure of Income Scheme, 1997, comes into force on 1/7/1997. Such declaration must also be made before 31st day of December, 1997. 6. Under Section 66 of the scheme, tax payable in respect of the voluntarily disclosed income is required to be paid by the declarant and proof of such payment is required to accompany the declaration. 7. Section 66 reads as follows:- 66. Time for payment of tax - The tax payable under this Scheme in respect of the voluntarily disclosed income shall be paid by the declarant and the declaration shall be accompanied by proof of payment of such tax. 8. However, under Section 67, a further facility is granted enabling the declarants to make declaration within the period specified under Section 64 without paying the tax as contemplated under Section 66 but pay the tax within a period of WA No.52/09 : 4 : three months from the date of filing of the declaration subject to the condition that such payment is accompanied with simple interest calculated at the rate of two per cent on the tax payable. Failure to make the payment of the tax entails a legal presumption that there was never any declaration as contemplated under the Scheme. 9. Section 67 reads as follows:- 67. Interest payable by declarant - (1) Notwithstanding anything contained in section 66, the declarant may file a declaration without paying the tax under that section and the declarant may file the declaration and the declarant may pay the tax within three months from the date of filing of the declaration with simple interest at the rate of two per cent for every month or part of a month comprised in the period beginning from the date of filing the declaration and ending on the date of payment of such tax and file the proof of such payment within the said period of three months. (2) If the declarant fails to pay the tax in respect of the voluntarily disclosed income before the expiry of three months from the date of filing of the declaration, the declaration filed by him shall be deemed never to have been made under this Scheme. 10. Further, under Section 68 (2), the Commissioner who is the competent authority before whom the declaration is required to be filed under Section 65(1) is obliged to issue a certificate to a declarant under the scheme setting forth the particulars of the voluntarily disclosed income and the amount of income tax paid WA No.52/09 : 5 : in respect of the same. Such certificate however is to be issued on an application made by the declarant. 11. Section 68, Clause (2) reads as follows: (2) The Commissioner shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income and the amount of income-tax paid in respect of the same. 12. In the instant case, admittedly the appellant made a declaration on 30th of December, 1997 not before the concerned Commissioner of Income Tax, but before the Assistant Commissioner of Income Tax, who is the assessing authority of the appellant, who in turn forwarded the declaration to the concerned Commissioner. The fact that the appellant filed his declaration before the Assistant Commissioner is acknowledged by the concerned Assistant Commissioner of Income Tax, Circle I Quilon by his receipt dated 30th of December, 1997. In so far as the concerned Commissioner of Income Tax is concerned, the appellant produced a receipt dated 31st December, 1997 signed on behalf of the Commissioner of Income Tax, Trivandrum. Though the receipt is dated 31st December, 1997, the recital therein is as follows:- WA No.52/09 : 6 : “Received from S. Sudarsana Babu on 30th December, 1997 declaration dated 21st December, 1997 under Voluntary Disclosure of Income Scheme, 1997.” 13. Both the dates 30th December, 1997 and 21st December, 1997 are in hand writing. As a matter of fact, printed date 31st December was corrected as above, where as at the top of the receipt, the date of the receipt is shown as 31st December, 1997. 14. The date of the receipt by the Commissioner assumes importance for more than one reason because under Section 65 of the Act, a declaration is required to be made to the Commissioner and under Section 64, such declaration is to be made on or before 31st December, 1997. Therefore, the actual date of the receipt of the declaration by the Commissioner which entitles the declarant for the benefits of the scheme. Secondly, the appellant admittedly did not pay the appropriate amount of tax payable on the income declared under the scheme on the date of the declaration. However, admittedly such amount of tax was paid by the appellant on 31st March, 1998 with interest as stipulated in Section 67. The relevance of the date of receipt of the declaration by the Commissioner in the context of such delayed payment assumes importance in view of the stipulation WA No.52/09 : 7 : made under Section 67(2) of the Scheme. As already noticed, delayed payment is required not only to be paid with interest, but also to be paid within “3 months from the date of the filing of the declaration.” 15. Respondents do not dispute the issuance of the receipt by the Commissioner's Office which bears the date 31st December, 1997. Though it is argued by the learned counsel for the respondents that, since the declaration was not directly presented to the Commissioner but filed before the Assistant Commissioner, the declaration is treated to have been filed on the 30th of December, 1997. Therefore, the period of three months contemplated under Section 67(1) is to be reckoned from that date. 16. We reject the submission of the respondents. It is a settled principle of jurisprudence of taxation that there is neither any scope for equities or inferences contrary to the language of the enactment. The law stipulates that declaration is to be made to the Commissioner of Income Tax and therefore it is the date of the receipt of the declaration by the Commissioner of Income Tax that is relevant for the purpose of settling the rights of the declarant. In the circumstances, we are of the opinion that the WA No.52/09 : 8 : declaration must be construed to have been made on 31st of December, 1997 by the appellant herein. 17. In view of the above finding, the next question would be whether the payment of tax made on 31st of March, 1998 is within the period permissible under Section 67(2) of the scheme. As already noticed, Section 67 entitles the declarant under the scheme to pay the tax with interest within a period of three months from the date of the filing of the declaration. Expression 'month' is defined under the General Clauses Act in Section 3(35) as follows:- “(35) “month” shall mean a month reckoned according to the British calendar.” 18. The question as to how the period of a month is to be reckoned fell for the consideration of the Supreme Court for more than one occasion. In the judgment reported in Bibi Salma Khatoon v. State of Bihar {(2001) 7 SCC 197}, it is held as follows:- 8. Here we are concerned with compliance with requirement of making application within the prescribed period of three months. The question arises, what is meant by the word “month”. Sub-section (34) of Section 4 of the Bihar and Orissa General Clauses Act, 1917 defines the word “month” to mean a month reckoned according to the British calendar. This means Gregorian calendar — January, February … etc. Mr Jha has drawn our attention to Section 11 of the said Act of 1917 to point out that when the word “from” is used WA No.52/09 : 9 : the first in the series of days or any other period of time has to be excluded and when the word “to” is used the last in a series of days or any other period of time has to be included but in this case the word “of” is used so that section will not apply. A perusal of Section 11 shows that it is an aid for drafting a provision rather than for interpreting the provision of the Act. Be that as it may, since the Act does not expressly exclude Sections 4 to 14 of the Limitation Act, they apply to application under Section 16(3) of the Act. Therefore, the date from which the limitation commences has to be excluded in computing the period of limitation of three months. In Halsbury’s Laws of England, 4th Edn., para 211† method of computation of month is given as follows: “211. Calendar month running from arbitrary date.— When the period prescribed is a calendar month running from any arbitrary date the period expires upon the day in the succeeding month corresponding to the date upon which the period starts, save that, if the period starts at the end of a calendar month which contains more days than the next succeeding month, the period expires at the end of that succeeding month. If a period of one calendar month includes the last day of February there must be 29 or 28 days, according as the year is or is not a leap year.” Thus computed, the application filed by the appellant on 30-4-1988 is within limitation — a period of three months of the date of the registered sale deed dated 30-1-1988. In this view of the matter, we are unable to sustain the order under challenge. We set aside the impugned order, restore the second appeal and remit the case to the High Court for disposal in accordance with law. 19. Again the question fell for the consideration of the Supreme Court in the judgment in State of Himachal Pradesh v. Himachal Techno Engineers (2010(3) KLT 575). Supreme Court once again considered the question at paras 9 to 11 and WA No.52/09 : 10 : held as follows:- 9. The High Court has held that 'three months' mentioned in S.34(3) of the Act refers to a period of 90 days. This is erroneous. A 'month' does not refer to a period of thirty days, but refers to the actual period of a calendar month. If the month is April, June, September or November, the period of the month will be thirty days. If the month is January, March, May, July, August, October or December, the period of the month will be thirty one days. If the month is February, the period will be twenty nine days or twenty eight days depending upon whether it is a leap year or not. 10. Sub-section (3) of S.34 of the Act and the proviso thereto significantly, do not express the period of time mentioned therein in the same units. Sub- s(3) uses the words 'three months' while prescribing the period of limitation and the proviso uses the words 'thirty days' while referring to the outside limit of condonable delay. The legislature had the choice of describing the periods of time in the same units, that is to describe the periods as 'three months' and 'one month' respectively or by describing the periods as 'ninety days' and 'thirty days' respectively. It did not do so. Therefore, the legislature did not intend that the period of three months used in sub-s (3) to be equated to 90 days, nor intended that the period of thirty days to be taken as one month. 11. Section 3(35) of the General Clauses Act, 1897 defines a month as meaning a month reckoned according to the British calendar. In Dodds v. Walker ((1981 2 All.E.R 609), the House of Lords held that in calculating the period of a month or a specified number of months that had elapsed after the occurrence of a specified event, such as the giving of a notice, the general rule is that the period ends on the corresponding date in the appropriate subsequent month irrespective of whether some months are longer than others. To the same effect is the decision of this Court in Bibi Salma Khatoon v. State of Bihar ((2001) 7 SCC 197). Therefore when the period prescribed is three months (as contrasted from 90 days) from a specified date, the said period would expire in the third month on the date corresponding to the date upon which the period starts. WA No.52/09 : 11 : As a result, depending upon the months, it may mean 90 days or 91 days or 92 days or 89 days. 20. It is therefore clear from the above mentioned two judgments that the period of three months in so far as the appellant is concerned would expire in the third month on the date corresponding to the date upon which the period starts. We have already found that the date on which the period starts for reckoning is 31st December, 1997, and therefore, the payment made on 31st March, 1998, in our view, is within the period of three months for the purpose of Section 67 of the Finance Act. 21. The 2nd respondent declined to grant the certificate contemplated under Section 68(2) by his communication dated 15/5/98 on the ground that the payment was not made within the period permitted by the law. Such a communication is unsustainable in view of the conclusions reached by us and the reasons recorded. We therefore set aside the impugned order of the 2nd respondent dated 15/5/98 and direct the 2nd respondent to issue the necessary certificate to the appellant. In view of the rejection of the certificate by the Commissioner, the Assessing Officer issued further notice in Ext.P3 under Section 148 of the Income Tax Act proposing to re-open the assessment for the assessment years 1989-90 based on the declaration made under WA No.52/09 : 12 : the Scheme. In view of our conclusion that the appellant is entitled for the certificate under Section 68(2) and in view of the declaration under Section 68(1) that the amount voluntarily disclosed shall not be included in the total income of the declarant for any assessment year under the Income Tax Act, Ext.P3 notice must be declared to be illegal and we declare as such. However, it is brought to our notice by the learned counsel for the respondents that during the pendency of the litigation before this Court, an assessment on the basis of Ext.P3 notice has already been made by order dated 1st January, 2002, we are of the opinion that in view of the fact that initiation of such proceedings itself is not permissible under the scheme, we declare that assessment also to be illegal. The judgment under appeal is set aside and appeal is accordingly disposed of. J.CHELAMESWAR CHIEF JUSTICE. ANTONY DOMINIC JUDGE. Rp