1978 (2) TMI 76 - HC - Income Tax

Acquisition Of Property To Prevent Evasion Of Tax, Acquisition Proceedings, Appeal To High Court, Voluntary Disclosure Of Income And Wealth Ordinance

Summary

Issues Involved:

1. Finality of acquisition proceedings under Chapter XX-A of the Income-tax Act, 1961.
2. Applicability of the Voluntary Disclosure of Income and Wealth Act, 1976, and the related press note.
3. Validity of the orders refusing to drop acquisition proceedings despite voluntary disclosure.

Detailed Analysis:

1. Finality of Acquisition Proceedings:

The court examined whether the acquisition proceedings initiated under Chapter XX-A of the Income-tax Act, 1961, had reached finality. The petitioner contended that the proceedings had not become final due to the pending appeal under section 269H of the Act. The respondents argued that the orders under section 269F(6) had become final upon their issuance. The court clarified that the finality of acquisition proceedings is determined by the provisions of Chapter XX-A, specifically sections 269F, 269G, and 269H. The court emphasized that the proceedings would only become final after the resolution of all objections and appeals. The court concluded that the order under section 269F(6) had not attained finality due to the pending appeal, thus the acquisition proceedings were still open.

2. Applicability of the Voluntary Disclosure of Income and Wealth Act, 1976, and the Related Press Note:

The court analyzed the impact of the Voluntary Disclosure of Income and Wealth Act, 1976 (Act No. 8 of 1976), and the related press note issued by the Government of India. The press note clarified that acquisition proceedings under Chapter XX-A would be dropped if the transferee made a declaration disclosing the difference between the apparent consideration plus 15% and the fair market value, and met other specified conditions. The petitioner complied with these requirements by making the necessary disclosure, depositing the tax, and filing the required affidavit. The court noted that the issuance of the certificate under section 8(2) of Act No. 8 of 1976 by the Commissioner indicated compliance with the press note. The court held that the acquisition proceedings should have been dropped as per the press note and Act No. 8 of 1976, given the petitioner's compliance.

3. Validity of the Orders Refusing to Drop Acquisition Proceedings Despite Voluntary Disclosure:

The petitioner challenged the orders dated 24th August 1976 and 8th October 1976, which refused to drop the acquisition proceedings. The respondents argued that the proceedings had become final and could not be dropped. The court found that the position taken by the department was ultra vires the provisions of Chapter XX-A and in conflict with Act No. 8 of 1976 and the press note. The court ruled that the orders refusing to drop the proceedings were invalid. The court quashed the orders and directed that the acquisition proceedings be deemed dropped, as the petitioner had fulfilled the conditions of the voluntary disclosure scheme.

Conclusion:

The court accepted the petition, quashed the impugned orders, and directed that the acquisition proceedings be deemed dropped due to the petitioner's compliance with the voluntary disclosure scheme. The court awarded costs of Rs. 300 to the petitioner.