All citizens should file tax returns, court observes
SHILLONG: Pending the final order on the matter related to payment of income tax, the High Court of Meghalaya, in a recent order, said that the Income Tax Department can insist upon filing of income tax returns by all the citizens (tribals and non-tribals) and can also ask for information from the local banks about the details of amount in each account.
“The Income Tax Department shall file a detailed affidavit, inter alia, on this issue as well,” the High Court Division Bench comprising Chief Justice Uma Nath Singh and Justice S.R. Sen said in the order.
The matter will come up for hearing on October 26.
During the last hearing, V.K. Jindal, senior counsel for the petitioner, made a submission that under Sections 138 and 143 of the Income Tax Act, despite a claim of tax exemption under Section 10(26), there can be direction to file Income tax returns. He also submitted that the demand and payment of income tax is different from filing of income tax returns.
He further observed that irrespective of pending final arguments and debates on the provisions of Income Tax Laws, the Income Tax Department can collect information about the status of income of local population for the benefits of the Central and State Governments in formulating welfare policy/schemes and generation of self-employment among others.
“Even the District Councils, the local self government bodies of tribal population, which always claim to be short of funds, may also think of requesting the affluent class of tribes to part with certain percentage of their earnings for the welfare of poor and under privileged members of their community.”
Moreover, the State Government can also ask the government servants to file income tax returns in the Income Tax office and to apply for PAN cards for their benefits as well as for keeping tabs on their wealth and activities, he added.
Earlier on May 26, 2015, S. Sharma, counsel for Income Tax Department, had submitted that there are certain conditions prescribed for grant of benefits of exemption to the local tribal population of the State. According to him, one of such conditions is the domicile of tribal area in question.
“Therefore, all such persons who were, are, or have been staying in the European Ward of Shillong (admittedly earmarked as non-tribal area for the settlement of mixed and general population) and have earned or are earning income from the sources situated therein shall not be exempted from the payment of income tax,” he said.
In response, Jindal, had also submitted that no person who is staying in the European Ward of Shillong and earning income from the sources situated therein is exempted from the payment of income tax.
“On June 16, 2015, this Court had asked the Chairman, Central Board of Direct Taxes to file affidavit so as to clarify the position as to on what basis and authority of law, the Income Tax Department can discriminate between the non-tribal and tribal citizens in charging income tax when sources of earning of both are situated in municipal area of Shillong,” the Division Bench observed.
According to the Court, besides, most of such tribes are also the resident of that area and are said to amass and possess maximum wealth, and control almost 90 per cent of sources of income of Meghalaya to the disadvantage of poor natives settled in the semi-urban and rural area.
It was also said that even the benefits of central funds and the state natural resources are confined only to the hands of a very few elite members of the population and the rest are finding it difficult even to make their both ends meet.
On July 21, 2015, in its order, the Court also required the Department to submit its views on the special category of creamy layer among the tribals having the advantage of getting maximum benefits out of the exemptions and special status provided to the local tribes, without making any contribution, financial or otherwise, for any charitable purpose (like construction of school building, community centre and hospitals etc) and uplifting the underprivileged members of their tribes.
“Now, towards the aforesaid orders, S. Sharma, counsel for the respondents, on the basis of comments received from the Central Board of Direct Taxes, submits that the Income Tax Department in the absence of suitable amendment in Income Tax Act is not competent to go beyond the provisions of Section 10(26) of the Income Tax Act,” the order said.
However, according to Jindal, even though there is a claim of exemption from paying income tax under Section 10(26) of the Income Tax Act,” at least the income tax returns should be filed by all.
The High Court, further, ordered that the Income Tax Department should insist on filing the income tax returns by all.
