ADVOCATE SRIDHARABABU (Advocate) 30 March 2010

whether a person declare his income tax from 1999-00

In a case before me, a MLA has filed Income tax returns in feb 2009 and paid taxes to the income year from 1999-00 to 2008-09. He is sitting MLA from all those years and most corrupt. My doubts needs clarification from taxation experts.

My doubts:-

1. whether he can file income returns without subjected to prosecution and penalty?

2. What is implications of VDIS dead line and its non compliance?

3. From 1999-00 he declared his income at Rs 2 lakh and above per year, what are all the legal implications in doing so?

4. Whether all such declared income can be treated as income of the year 08-09?

5. Is money laundering act applicable to the case?

6. What is the consequence if has not accounted for the asset acquired in such year without accounting it in IT returns? Does IT department seize the property?

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Vineet (Director) 30 March 2010

Any voluntary return filed in current year i.e. 2009-10 for AY 2007-08 and before are non-est and therefore cannot be relied upon by the assessee to explain any asset or expenditure detected.

However, the returns for AY 2003-04 and subsequent years can be treated as valid material on record to frame opinion that income for those years has escaped assessment and accordingly the cases can be reopened for assessment with all interest, penalty and prosecution to follow.

For Assessment years prior to 2003-04, neither the assessee nor the department can do anything. For the department no action can be taken if the income for these years is detected by whatever source. To the disadvantage of assessee, he cannot explain any asset or expenditure as sourced from this income unless he has credible evidences showing that he indeed had such income in those years.

No VDIS scheme has been announced after 1997 and there appears to be no plan in near future considering the rampant misuse of 1997 scheme.

Income Tax Act treats income of each year seperately and income of earlier yearscannot be clubbed in one year.

With given facts this is not a case of money laundering. However, prevention of corruption act can always be applied in case of corrupt public servants.