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TMI Blog1981 (12) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... ax payable was determined at Rs. 1,54,949 by the ITO's order dated14-1-1980. 3. Against the above assessment, the assessee filed an appeal before the Commissioner (Appeals), in which it was contended that the computation of chargeable profits made by the ITO was wrong, inasmuch as, he had not deducted, from the total income of Rs. 15,96,160, as determined for the purpose of the income-tax assessment, a sum of Rs. 2,50,000, representing the amount voluntarily disclosed by the assessee under the Voluntary Disclosure Act and which was included in the above total income. The assessee contended that the said amount of Rs. 2,50,000 was not to be included in the chargeable profits by virtue of the provisions of section 8 of the Voluntary Disclosure Act. By a very brief order, the Commissioner (Appeals) held that the contention of the assessee is a clearly valid one, inasmuch as, under the provisions of section 8 of the said Act, such voluntarily disclosed income should have been excluded from the computation of chargeable profits. It is against this decision of the Commissioner (Appeals), that the revenue has filed the present appeal before the Tribunal. 4. The learned departmental re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 8 of the Voluntary Disclosure Act to show that a declaration under section 14 is excluded from its operation and that it applies only to a declaration under section 3. He referred to sub-section (2) of section 14, wherein it is laid down that the declaration under sub-section (1) shall be made to the Commissioner in such form and verified in such manner as may be prescribed by Rules made by the Board. He then took us through Form 'A' relating to a disclosure under section 3(1) and through Form 'B' relating to a disclosure under section 14(1) and submitted that the heading given in both these forms was, "Voluntary Disclosure". Thus, he submitted that the disclosure, whether under section 3 or under section 14, is described in these forms as voluntary disclosure. He then referred to sub-section (3) of section 14 and said that a declaration under section 14 shall be signed by the person specified in sub-section (2) of section 14, as if the declaration had been made under that section. He then referred to sub-section (5) of section 14 and said that the tax chargeable in respect of the income of the previous year or years for which the declaration has been made, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being, "hereinafter referred to as the voluntarily disclosed income" (sic). Thus wherever there is a reference to "voluntarily disclosed income" in the Act, it means income disclosed under section 3(1). Section 8 deals with the treatment to be given to "voluntarily disclosed income". Read along with section 3, it clearly means that section 8 applies only to a declaration under section 3. Any other interpretation, it was pointed out by the learned departmental representative, would lead to absurd results. If, accepting the plea of the learned counsel for the assessee, it is held that section 8 would apply to a declaration under section 14, it would follow that the amount so declared should not be included in the total income of the assessee for the relevant assessment year. But, such an interpretation would be diametrically opposed to the Explanation to section 14, which clearly directs that the amount declared under section 14 should be aggregated along with the total income or the assessee for the relevant year for purposes of determining the tax payable on the amount declared by the assessee. An amount declared under section 3 is not to be aggregated with the total income, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclose in a return of income furnished, by him under the income-tax 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 Income tax Act, 1922 (11 of 1922), or the Income-tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax 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-section (1) shall apply in relation to--- (i) the income assessable for any assessment year for which a notice under section 139 or section 148 of the Income-tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome is paid by the declarant ; and (iii) the amount required to be invested in the securities referred to in sub-section (3) of section 3 is so invested by the declarant. (2) The Commissioner 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-section (3) of section 3 and the date of payment and investment." If the meanings assigned to the expressions "voluntarily disclosed income" and "declarant" are substituted in this section, sub-section (1) would read as under : "(1) The amount of the income declared in accordance with the provisions of section 4, that is, declared under sub-section (1) of section 3, shall not be included in the total income of the person making the declaration under sub-section (1) of section 3 for any assessment year under the Indian Income-tax Act, 1922, etc., etc." It will then have no application, at all, to any person making a declaration under section 14. 8. No doubt sub-section (3) of section 14 lays down that the declaration unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, or section 37A of the Wealth-tax Act. Incriminating or damaging materials in relation to his assessments to income tax or wealth-tax are already in the possession of the department. It is when he is so concerned and may be described as being in a state of siege that he comes forward with a declaration under section 14. To call such a declaration, a "voluntary" disclosure, or to describe the income so declared as a "voluntarily disclosed income", would be a mockery of the language. That is why the Act has also provided separate immunities for declarations under section 3 and under section 14. For a person making a declaration under section 3, the immunities are broader and larger than those provided for a person making a declaration under section 14. Sub-clause (ii) of sub-section (2) of section 3 specifically rules out the operation of sub-section (1) to incomes in respect of the previous year, in which a search under section 132 of the Income-tax Act or section 37A of the Wealth-tax Act has been carried out, and any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to the assessee have been seized. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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