Declarations made u/s 3(1) Income - Tax Act, 1961. - Income Tax - 1068/CBDT

INSTRUCTION NO. 1068/CBDT Dated : June 25, 1977 Section(s) Referred: 3(1) Statute: Income - Tax Act, 1961 In terms of section 13 of the Voluntary disclosure of Income and Wealth Act, 1976 undisclosed assets/assets under-stated in value representing the voluntarily disclosed income and specified in a declarations made u/s 3(1) of the said Act are entitled to exemption from wealth-tax for and upto the assessment year 1975-76. This exemption is available on due payment of income-tax, investment in 5-3/4% Bonds, 1985 and intimation of the necessary adjustment in books of account etc. to the concerned Income-tax Officer as stipulated Section 8 of the Act. 2. A person who has made a declaration u/s 3(1) has himself to ensure that the assets covered by the declaration are included in the Wealth-tax returns filed for the assessment year 1976-77 onwards. Where a declarant is not already a wealth-tax assessee but will become liable to wealth-tax for and from the assessment year 1976-77 on account of the assets disclosed in the declaration made u/s 3(1), he should, on his own , file return(s) for the relevant assessment year(s). If he fails to do so, he renders himself liable to such penal proceedings as may be warranted. 3. While the responsibility of filing wealth-tax returns(s) is of the assessee, the Department has also to ensure that the assets representing the voluntarily disclosed income are not lost sight of in the wealth-tax proceedings for and from the assessment year 1976-77, and/or on the disposal of the said assets by the declarant, profit/capital gains realised thereby are duly assessed. Further, if the declarant is not an existing assessee and the nature and value of assets specified in the declaration justify his being taken on the record of the Department, it should be possible to do so even if the declarant omits to file the requisite returns of income/wealth. 4. Intimations regarding credit of the disclosed income received by the Income-tax Officers from the declarants, may not show in all cases the particulars of the assets representing the income disclosed. It has, therefore, been decided that the Commissioner of Income-tax before whom a declaration u/s 3(1) has been made should forward a copy of the "Statement of voluntarily disclosed income" (item 5 of Form A) showing the amount of income declared, assessment year(s) to which the income relates and particulars of assets representing the disclosed income to the Income-Tax Officer/Wealth-tax Officer exercising jurisdiction over the declarant. Considering the very large number of declarations made u/s 3(1), this exercise may be restricted, to begin with to declarations in which the income disclosed exceeds Rs.50,000. The I.T.O/W.T.O. concerned should keep the copies of the statements in a separate confidential cover in his personal custody with a list of the assessees to whom the statements pertain. 5. The I.T.O./W.T.O. should scrutinise copy of each statements received by him with a view to: (i) satisfy himself with reference to the records available with him, that the declaration was validly made, i.e., it was not hit by the provisions of sub-section (2) of Section 3 of the Voluntary Disclosure of Income and Wealth Act, 1976. (Every invalid declaration should be reported to the C.I.T.) (ii) satisfy himself that the assets shown in the declaration are duly accounted for in the wealth-tax returns for and from the assessment year 1976-77 and /or on the declarant's disposing of the asset(s), any profit/capital gain realised thereby is duly assessed; (iii) initiate necessary proceedings if the declarant is not an existing income-tax/Wealth-tax assessee and the nature and value of assets specified in the declaration justify his being taken on record of the Department and the declarant himself omits to file the requisite return of income/wealth. 6. It is to be emphasised that the object of the procedure prescribed above is only to see that the persons concerned pay the due taxes in future. Care should be taken in this connection that there is no breach of any of the assurances given under the Voluntary Disclosure Scheme, 1975, and that, in particular, no roving enquiries are now launched, on the basis of the declarations, either about the past conduct or the sources of income indicated under Section 3(1) of the Voluntary Disclosure of Income Wealth Act, 1976.