1981 (12) TMI 73 - AT - Income Tax

Summary

Issues Involved:
1. Whether the amount disclosed by the assessee under the Voluntary Disclosure of Income and Wealth Act, 1976, should be excluded from the income for purposes of computing chargeable profits for levying surtax under the Companies (Profits) Surtax Act, 1964.

Issue-wise Detailed Analysis:

1. Contention of the Revenue:
The primary contention of the revenue was that the Commissioner (Appeals) erred in directing the ITO to exclude Rs. 2,50,000, disclosed by the assessee under the Voluntary Disclosure of Income and Wealth Act, 1976, from the total income of Rs. 15,96,160 for the purpose of computing chargeable profits for surtax. The revenue argued that section 8 of the Voluntary Disclosure Act, which the Commissioner (Appeals) relied upon, was not applicable to disclosures made under section 14 of the Act, which was the case here. The revenue emphasized that section 8 applies only to disclosures under section 3, and the amount disclosed under section 14 should be included in the total income for surtax purposes.

2. Assessee's Argument:
The assessee contended that section 8 of the Voluntary Disclosure Act did not explicitly exclude declarations under section 14 from its scope. The assessee argued that both section 3 and section 14 disclosures are termed "voluntary disclosures" in the prescribed forms, and hence, the disclosed amount should be treated as "voluntarily disclosed income" under section 8. The assessee further argued that ambiguities in tax laws should be resolved in favor of the taxpayer, as held by the Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192.

3. Analysis and Findings:
The Tribunal analyzed the definitions and provisions of the Voluntary Disclosure Act. It noted that the term "voluntarily disclosed income" is defined in section 3 and pertains to income declared under section 3(1). Section 8, which provides that voluntarily disclosed income shall not be included in the total income for surtax purposes, specifically applies to income declared under section 3. The Tribunal pointed out that section 14 disclosures are made under different circumstances, often following a raid, and are not covered by the same immunities as section 3 disclosures. The Tribunal emphasized that the legislative intent was clear in distinguishing between the two types of disclosures, and the broader immunities of section 8 were not meant for section 14 disclosures.

4. Conclusion:
The Tribunal concluded that the Commissioner (Appeals) was incorrect in excluding the amount disclosed under section 14 from the assessee's total income for surtax purposes. The Tribunal restored the ITO's order, which included the disclosed amount in the total income.

Judgment:
The appeal filed by the revenue was allowed, and the order of the Commissioner of Income-tax (Appeals) was set aside. The Tribunal restored the ITO's order, thereby including the Rs. 2,50,000 disclosed under section 14 in the total income for the purpose of computing chargeable profits for surtax.