Benefit of IDS wasn’t available even if search proceedings was initiated after launch of IDS

Facts:

a) The Central Government had come with an Income Declaration Scheme, 2016 (IDS) which was made effective from 1-6-2016 to 30-9-2016.

b) Assessee had faced proceedings under section 132, search warrant was issued and search was also carried out from 30-6-2016 to 2-7-2016. In the meantime before 30-9-2016, he applied for benefit of IDS.

c) Assessee contended that he was entitled to benefit of IDS since raid and search proceedings under section 132 were initiated after the launch of scheme.

d) Assessing Officer rejected the claim of assessee, aggreived-assessee filed the instant appeal before the High Court.

The High Court held in favour of revenue as under:

1) Clause 196(e)(ii) to IDS provides that the provisions of this scheme shall not apply where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under Section 133A of the Incometax Act in a previous year.

2) It was a case where the Central Government had granted benefit of IDS only to the persons who were not covered under section 132 and other proceedings. If a particulars class had been debarred to opt for IDS, such person cannot avail the benefit in any circumstances even if search had been conducted after the launch of scheme.

3) The IDS will not override the provisions of the Income Tax Act and the scheme which has come by way of limited purpose cannot prevail over the Income Tax Act 

4) Therefore, even though search proceedings was inititated after the lauch of IDS, assessee won‘t be entitled for benefit of IDS. - [2017] 81 taxmann.com 213 (Rajasthan)