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TMI Blog2007 (4) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the estimation of income from alleged Hawala business? 2. Whether assessee is entitled to claim any benefit of VDIS disclosure in block assessment period cases to avoid assessment in respect of the income which according to him he had already disclosed in VDIS as admittedly the estimated income did not exceed the disclosure made in VDIS?" Hon'ble High Court of Madhya Pradesh observed that this issue is considered by the Tribunal in para 8A which reads as under: "8A. Ground No. 5-In support of this ground the learned Authorised Representative draws our attention to the contents of page Nos. 36 and 37 of the paper book which are certificates under s. 68(2) of the Voluntary Disclosure of Income Scheme, 1997 respectively in the case of Shri Ramanand Tapadia (HUF) and the assessee, so far disclosure in the case of assessee is concerned. as apparent from the certificate it has been made against the investment in the immovable properties and nothing to do with money in question. This ground is thus rejected." The Hon'ble High Court considering the matter in detail ultimately remanded the matter to the Tribunal by setting aside the order of the Tribunal. This Tribunal, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter to the AO by affording opportunity to cross-examine the persons vide para 6.2 as regards the addition of Rs. 8 lacs is concerned. Similarly, in the Departmental appeal in IT(SS)A No. 7/Ind/2001 deletion of addition of Rs. 12 lacs was also set aside and the matter restored to the AO. 7. It is submitted that the assessee had taken an alternative plea in its appeal in IT(SS)A No. 5/Ind/200l that without prejudice, the learned CIT(A) ought to have considered the availability of the amount which was disclosed under VDIS and as such should have held that this money is already with the assessee and is not taxable. However, the Tribunal in para 8A as referred to the above, did not accept the contention of the assessee. 8. The learned counsel for the assessee in view of the above facts submitted that the issue of Hawala commission of Rs. 20 lacs and addition for investment in shares and profit at Rs. 3,70,000 is the subject-matter with regard to the claim of benefit of amount declared under VDIS for which the assessee has taken ground No. 7 in the original appeal. The learned counsel for the assessee further submitted that the matter when set aside to the AO with regard to commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 18,12,525 was shown for these years, income declared under VDIS should be treated as income allegedly earned on commission from Hawala. The learned counsel for the assessee submitted that though he would be disputing Hawala transaction in regular appeals, but at the moment it may be taken that the amount is available with the assessee as declared under VDIS in explaining the additions made in the block assessment. The learned Departmental Representative, however, relied upon the orders of the authorities below and submitted that no amount is available to the assessee for set off in the block assessment because the amount declared under VDIS has no nexus with the investment made in the properties. 12. We have considered the rival submissions and the material available on record. 13. The relevant provisions of Voluntary Disclosure of Income Scheme, 1997 are reproduced as under: "Chapter IV of The Finance Act, 1997-the Central Government appoints 1st day of July 1997 as the date on which the VDIS, 1997 shall come into force. 62. Short title and commencement.-(1) This Scheme may be called the Voluntary Disclosure of Income Scheme, 1997. (2) It shall come into force on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year. 65. Particulars to be furnished in declaration.-(1) A declaration under sub-s. (1) of s. 64 shall be made to the CIT and shall be in such form and shall be verified in such manner as may be prescribed. (2) The declaration shall be signed,- (a) where the declarant is an individual, by the individual himself; where such individual is absent from India, by the individual concerned or by some person duly authorised by him in this behalf; and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf; (b) where the declarant is an HUF, by the Karta, and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family; (c) where declarant is a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to sign the declaration or where there is no managing director, by any director thereof; (d) where the declarant is a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign the declaration, or where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or any amount of tax paid hereon, to reopen any assessment or reassessment made under the IT Act or the WT Act or claim any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment." 14. Certain clarifications were issued by CBDT on VDIS, 1997 in Circular No. 754, question No. 6 reads "Where search and seizure action has taken place in financial year 1995-96, the block periods is 1985-86 to 1995-96, can disclosure under the present scheme be made by the persons searched for an assessment year prior to 1985-86? Answer: No, in respect of a case where search has taken place in any financial year, the person cannot make a declaration in respect of any previous year prior to the previous year in which search has taken place. Question No. 23: The scope of the Scheme should be expended so as to include cases where: (a) action under ss. 132, 133A has been taken. (b) Appeal is withdrawn as this will reduce litigation., Answer: This is not possible. In respect of survey under s. 133A, the declarants are debarred for that previous year only. 15. Scope of s. 64 of the VDIS, 1997 indicated by the Act is a charging section ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii), persons who are third parties to the search, in whose case notice under s. 158BD is taken will be the person who will be denied the benefit of the scheme. 16. The condition under s. 68(1)(i) subject to which disclosure is made is that amount disclosed should be credited in the books of account or in any other record. It is duty of the assessee to intimate to the AO about the credit. 17. It is made clear under s. 69 of the Act, by providing that the declarant shall not be entitled to reopen any assessment or reassessment under the IT Act, or the WT Act, and it has also been made further clear that no set off or relief will be available in respect of any appeal, reference or other proceedings in relation to such assessment or reassessment in appeal, reference or other proceedings relating to such assessment or reassessment. It would therefore be clear that the matter pending in appeal or reference is shut out from the scheme. But, the words "other proceedings" in relation to any such assessment or reassessment are vide enough to cover other proceedings. 18. It is not in dispute that assessee opted for VDIS prior to search under s. 132 of IT Act, therefore, prohibition contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource." 20. Considering the proposition of law decided in the above cases, it is clear that the undisclosed income assessed is real income and could be available to the assessee as the book profits could be a source of explaining undisclosed investment. In the present case, the search is conducted on 19th Dec., 1997 and on the basis of certain statements and the material, income of the assessee from Hawala commission and investment in shares was computed in a sum of Rs. 20 lacs and Rs. 3,70,000. The assessee prior to search on 17th Dec., 1997 had already declared undisclosed income in a sum of Rs. 18,12,525 in VDIS which was accepted by the CIT on to 20th Dec., 1997. Therefore, the amount declared under VDIS was available to the assessee being real income for the purpose of explaining the additions made in the block assessment. The case of the assessee in the present facts and circumstances is OR the better footing because the scheme declared under VDIS is approved by the Department of Revenue and as per the scheme, once a certificate is granted, the same cannot be questioned in subsequent regular assessment proceedings. The learned counsel for the assessee is, therefore, justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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