Allahabad H.C : Whether the provisions of s. 147(a) of the IT Act are applicable when the assessee had already made a disclosure of income under Voluntary Disclosure of Income and Wealth Act, 1975 for the relevant year ?

High Court Of Allahabad

Shyam Sunder Jalan vs. CIT

Sections 147(a), 148

S.L. Saraf & R.K. Agrawal, JJ.

IT Ref. No. 195 of 1982

15th April, 1999

Counsel Appeared

Vikram Gulati, for the Applicant : Govind Krishna, for the Respondent

ORDER

BY THE COURT :

We have heard Shri Vikram Gulati, the learned counsel for the applicant and Shri Govind Krishna, the learned counsel for the opposite party.

The following questions of law have been referred for opinion of this Court:

“Whether the provisions of s. 147(a) of the IT Act are applicable when the assessee had already made a disclosure of income under Voluntary Disclosure of Income and Wealth Act, 1975 for the relevant year ?

Whether there was any material before the Tribunal to hold that the income computation by the Department aggregating to Rs. 53,054 in respect of the three years under consideration was justified ?”

2. Shri Vikram Gulati appearing for the assessee submits that since the assessee has made disclosure of income under the Voluntary Disclosure of Income and Wealth Act, 1975, the issuance of notice under s. 147(a) of the IT Act, 1961 (‘the Act’) is illegal and untenable and the reassessment made under the aforesaid provisions, should be declared void. For the purpose of this argument, we quote the following sections, viz., ss. 3 and 8 of the Voluntary Disclosure of Income and Wealth Act, 1975 which are as under : “3. Charge of IT on voluntarily disclosed income.—Subject to the provisions of this Act, where any person makes, on or after the date of commencement of this Act but before the 1st day of January, 1976, a declaration in accordance with the provisions of s. 4 in respect of any income chargeable to tax under the Indian IT Act, 1922 (11 of 1922) or the IT Act for any assessment year— (a) for which he has failed to furnish a return under s. 139 of the IT Act, or (b) which he has failed to disclose in a return of income furnished by him under the IT Act before the date of commencement of this Act, or (c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Indian IT Act, 1922 (11 of 1922), or the IT Act, or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the Indian IT Act, 1922 (11 of 1922), or the IT Act or in any Finance Act, income-tax shall be charged in respect of the income so declared (such income being hereinafter referred to as the voluntarily disclosed income) at the rate or rates specified in the Schedule. (2) Nothing contained in sub-s. (1) shall apply in relation to— (i) the income assessable for any assessment year for which a notice under s. 139 or s. 148 of the IT Act has been served upon such person and the return has not been furnished before the commencement of this Act; (ii) where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to the person making the declaration under sub-s. (1) (hereafter in this section, in ss. 4 to 13 and in the Schedule referred to as the declarant) have been seized as a result of any search under s. 132 of the IT Act or under s. 37A of the WT Act, the income in respect of the previous year in which such search was made or any earlier previous year. (3) In addition to the amount of income-tax to be paid under sub-s. (1), the declarant shall invest a sum equal to five per cent of the amount of the voluntarily disclosed income in such securities as the Central Government may notify in this behalf in the Official Gazette. 8. Voluntarily disclosed income not to be included in the total income.—(1) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian IT Act, 1922 (11 of 1922), or the IT Act, or the Excess Profits Tax Act, 1940 (15 of 1940), or the Excess Profits Tax Act, 1947 (21 of 1947), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), if the following conditions are fulfilled, namely : (i) the declarant credits such amount in the books of account, if any, maintained by him for any source of income or in any other record, and intimates the credit to be made to the ITO; (ii) the IT in respect of the voluntarily disclosed income is paid by the declarant; and (iii) the amount required to be invested in the securities referred to in sub-s. (3) of s. 3 is so invested by the declarant. (2) The CIT shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income, the amount of income-tax paid in respect of the same, the amount of investment made in the securities referred to in sub-s. (3) of s. 3 and the date of payment and investment.”

3. From the reading of the aforesaid section harmoniously, we find that the amount of voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian IT Act, if the certain requisite conditions as mentioned under the relevant section are fulfilled. The aforesaid section is not bar for reopening of the assessment under s. 147A for voluntarily disclosed income which is made before the authority concerned, the said Scheme is not bar to issue notice under s. 148 if the disclosure made was not total. If only part of the disclosure is made, in that event, the ITO/authorities are entitled to issue notice under s. 148 of the Act for making reassessment under s. 147. In the facts and circumstances of the present case, it appears that the assessee had not disclosed fully and truly the entire escaped income and had made voluntarily disclosure of part of escaped income. In that view of the matter, we are of the opinion that the authorities concerned were very much entitled to apply the provisions of s. 147 or 148 and make reassessment of the actual escaped income. As such both the questions referred to us are answered in affirmative, i.e., in favour of the Department and against the assessee.

[Citation : 254 ITR 596]

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