Circular No. 24 of 2016
Circular No. 24 /2016 was issued by the Central Board of Direct Taxes on 27 June 2016. Its subject is Circular No. 24 of 2016.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Answers a second set of questions on the Income Declaration Scheme, 2016 in Chapter IX of the Finance Act, 2016, following the fourteen answers in Circular No. 17 of 2016 dated 20 May 2016. Part payment of the tax, surcharge and penalty of 45 per cent invalidates the entire declaration — it is valid only if complete payment is made on or before 30 November 2016; there is no pro rata validity. Where a company has amalgamated or converted into a limited liability partnership, the declaration for an earlier year is to be made in the name of the amalgamated company or the partnership, for the year in which the amalgamation or conversion takes place. The Scheme is open to every person, resident or non-resident. Undisclosed income of an earlier year detected after the Scheme closes is, under section 197(c) of the Finance Act, 2016, assessed in the year in which the notice under section 148, 153A or 153C is issued, and where it is found as an investment in an asset the asset is valued under rule 3 as if acquired in that year. A person searched in April 2016 on whom no notice under section 153A had been served by 31 May 2016 is not eligible for the years for which such a notice can still be issued, the time not having expired. The valuation report must be obtained but need not be attached to Form-1, though the Principal Commissioner or Commissioner may call for it before issuing the acknowledgment in Form-2. The permanent account number must be furnished. A person is not eligible for the years for which a proceeding is pending before the Settlement Commission.
Further queries were received from the public about the provisions of the Scheme after the first set of clarifications.
Circular No. 24 of 2016
F.No.142/8/2016-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
Dated 27th of June, 2016
Clarifications on the Income Declaration Scheme, 2016
The Income Declaration Scheme, 2016 (hereinafter referred to as 'the Scheme')
incorporated as Chapter IX of the Finance Act, 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. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as 'the
Rules') have been notified. In this regard, Circular No. 17 of 2016 dated 20th May, 2016
issued by the Board provided clarifications to 14 queries. Subsequently, 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.
(Dr. T.S. Mapwal)
Under Secretary to the Government of India
Copy to:-
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
3. The Chairperson, Members and all other officers in CBDT of the rank of Under
Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax – with a request to
circulate amongst all officers in their regions/ charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr.
DGIT (L&R).
6. CIT (M&TP), CBDT.
7. Web manager for posting on the departmental website.
When reconstructing whether a year was validly covered by a 2016 declaration, or where a post-Scheme notice under section 148 or 153A brings an old year to tax in the year of the notice.
Rules it names. Rule 3 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
It mentions. Circular No. 17/2016, Circular No. 24/2016
Source: the Income Tax Department’s own published text — its page for this instrument.