659/CBDT. - Income Tax - 659/CBDT

INSTRUCTION NO. 659/CBDT Dated : Febuary 14, 1974 Attention is invited to Board's Circular No. F-7/6/66-W.T. dated the 13th March, 1968. It was observed in this circular that the tax liability in respect of the income voluntarily disclosed is incurred u/s 68 of the Finance Act, 1965 and not at any point of time prior to 1st March 1965. Hence no liability to tax on the disclosed income should be deducted from the gross wealth on any of the valuation dates prior to 1st March, 1965. 2. The Board are now advised that a modification of these instructions is called for. A Single Bench of the Kerala High Court in the case of C.K. Babu Naidu 982 ITR 410) had supported the view held by the Department. However, this decision was reversed by a Division Bench of the same High Court vide (Writ Appeal Nos. 279 280 of 1971). In a large number of cases of voluntary disclosures u/s 68 of the Finance Act, 1965, the assessees had indicated spread over of the disclosed income over certain assessment years. The spread over was accepted by the Department and concealed income attributed by the assessees themselves for particular assessment years was added to the not wealth of the assessees for valuation dates relevant to those assessment years. Thus the Department accepted the statement of the assessee that the disclosed income constituted the income and assets of the assessees for those particular years. If that is so, the Board are advised that there is no adequate justification for refusing a deduction in respect of income-tax which was payable by the party on the particular income which was added to their net wealth. Consequently once spread-over claimed by the party is accepted, the consequential deduction of tax payable on the said income should be allowed as a deduction. 3. A similar deduction would be available in the Estate assessments as well if the income in question forms parte estate liable to duty.