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TMI BlogThe Voluntary Disclosure of Income and Wealth Ordinance, 1975 -- Explanatory notes on the provisions of.X X X X Extracts X X X X X X X X Extracts X X X X ..... heme.-- The Scheme will apply to declaration of income and wealth made on or after the 8th October, 1975, up till December 31, 1975. [Sections 3, 14 and 15 (part) of the Ordinance] 4. Coverage.-- The Scheme will cover all categories of taxpayers, whether corporate or non-corporate. It will, however, not apply in the case of persons who have been detained, or for whose detention orders have been issued, under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA). Persons in respect of whom orders of detention under the aforesaid Act have been issued will not, however, be denied the benefits of the Scheme in the following types of cases:-- (i) where no declaration under section 9 or 12A of COFEPOSA has been made, the order of detention has been revoked on the report of the Advisory Board under section 8 of that Act or before the receipt of such report; (ii) where a declaration under section 9 of COFEPOSA has been made, the order of detention has been revoked before the expiry of the time for, or on the basis of, the review under section 9(3) of that Act, or on the report of the Advisory Board under section 8, read with section 9(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, apply in relation to-- (i) income for any assessment year which has not been disclosed in a return of income furnished on or after 8th October, 1975; (ii) income for any assessment year for which a notice under section 139 or section 148 of the Income-tax Act, 1961, has been served on the declarant but the return for that year has not been filed by him before the 8th October, 1975; (iii) in a case where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to the declarant have been seized as a result of any search under section 132 of the Income-tax Act, 1961, or under section 37A of the Wealth-tax Act, 1957, the income in respect of the previous year in which such search was made or any earlier previous year. It will be seen that in a case where any books of account, other documents, money, bullion, jewellery or other valuable articles or things have been seized, there is no bar on the declaration of undisclosed income for any previous year falling after the previous year in which the search was made and, accordingly, a person whose books of account, other documents, etc., have been seized will be entitled to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. The verification includes a solemn declaration by the declarant that income of other persons in respect of which he is chargeable to tax, as also income accruing or arising from assets held by him through other persons, has been shown in the declaration in respect of the year or years for which the declaration is made, to the extent such income was not disclosed or assessed earlier. The declarant has to further declare that income of any other person in respect of which he is not chargeable to tax has not been included in the declaration. The underlying object is to secure that while income from assets held by the declarant in benami names, as also any income of other persons in respect of which he is chargeable to tax, does not escape assessment, the declarant does not declare income of other persons in respect of which he is not chargeable to tax. The declaration has to be signed by the person who is empowered under section 140 of the Income-tax Act, 1961, as amended by the Taxation Laws (Amendment) Act, 1975, to sign the return of income in the case of the declarant. [Section 4 (part) of the Ordinance] 11. Only one declaration permitted.-- The Ordinance provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to such interest. Accordingly, the provisions of section 288B (relating to rounding off of interest) and rules 118, 119, and 119A (relating to levy and calculation of interest) of the Income-tax Rules, 1962, will apply in relation to the interest payable under the Ordinance as they apply in relation to the interest payable under section 220(2) of the Income-tax Act, 1961. [Section 6 of the Ordinance] 15. Concessions and immunities.-- The declarant will be entitled to the following concessions and immunities in respect of the voluntarily disclosed income:-- (i) There will be no assessment proceedings in respect of the voluntarily disclosed income and the tax liability in respect of such income will be finally settled on payment of the tax under the Scheme and investment in notified Government securities. (ii) The voluntarily disclosed income will not be included in the total income of the declarant for the purpose of assessment for any year under the Indian Income-tax Act, 1922, the Income-tax Act, 1961, the Excess Profits Tax Act, 1940, the Business Profits Tax Act, 1947, the Super Profits Tax Act, 1963, or the Companies (Profits) Surtax Act, 1964. Since such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, not be excluded from such assessment. The above concession will be available only if the requirements as to payment of tax, investment in notified Government securities and making of entries in the books of account referred to in (ii) above are complied with. (v) All particulars contained in a declaration under section 3(1) of the Ordinance shall be treated as confidential and no court or any other authority will be entitled to require any public servant or the declarant to produce before it any such declaration or any part thereof or to give any evidence in respect thereof. This provision will override any other provision in any other law for the time being in force. Public servants will also be debarred from disclosing any particulars contained in such declaration except to income-tax and wealth-tax authorities and Officers appointed by the Board or the Comptroller Auditor-General of India to audit income-tax receipts or refunds. 16. It should be noted that the immunities provided under the Ordinance will be available only in relation to the voluntarily disclosed income and do not cover any other income which may have escaped assessment. Income declared under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax under that Act. No penalty under section 221 of the Income-tax Act, 1961, will, however, be exigible for default in making investment in notified Government securities. [Section 7 of the Ordinance] Provisions relating to disclosure of income in cases of search and seizure. 20. Income which can be declared.-- Where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to a person have been seized as a result of any search made under section 132 of the Income-tax Act, 1961, or under section 37A of the Wealth-tax Act, 1957, such a person can make a declaration under section 14(1) of the Ordinance in respect of the income of the previous year in which such search was made or any earlier previous year, where such income falls under any of the following categories:-- (a) income for which he has failed to furnish a return under section 139 of the Income-tax Act, 1961; or (b) income which he has failed to disclose in a return of income filed by him under the Income-tax Act, 1961, before the 8th October, 1975; or (c) Income which has been under-assessed or has escaped assessment by reason of the omission or fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larant in accordance with the provisions of section 5 of the Ordinance. [Section 14(1), (5)(part) and (7) of the Ordinance] 22. Particulars to be furnished in the declaration.-- The declaration under section 14(1) of the Ordinance is required to be made to the Commissioner of Income-tax concerned. It should be made in duplicate in Form B prescribed under the Voluntary Disclosure of Income and Wealth Rules, 1975, and should be verified in the manner prescribed therein. The verification includes a solemn declaration by the declarant on the lines mentioned in paragraph 10 of this Circular. The declaration has to be signed by the person who is empowered under section 140 of the Income-tax Act, 1961, as amended by the Taxation Laws (Amendment) Act, 1975, to sign the return of income in the case of the declarant. [Section 14(2) and (3) of the Ordinance] 23. Copy of declaration to be forwarded to Income-tax Officer --A copy of the declaration will be forwarded by the Commissioner of Income-tax to the Income-tax Officer and the information contained therein may be taken into account for the purposes of proceedings relating to the assessment or reassessment of the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 14 of the Wealth-tax Act, 1957, provided no notice under that section or under section 17 has been served on him before the 8th October, 1975, for furnishing the return of net wealth for that year: or (b) the value of the assets which has not been disclosed, or the value of the assets which has been understated, in any return of net wealth for any assessment year. The provisions of (b) above will not, however, apply in relation to so much of the value of assets as has been assessed in any assessment for the relevant assessment year made by the Wealth-tax Officer before the date on which the declaration is made. 27. Immunity provided in respect of declared net wealth, etc.-- The net wealth or, as the case may be, the value declared in a declaration under section 15(1) of the Ordinance will not be taken into account for the purposes of any proceedings relating to imposition of penalty on the person making the declaration or for the purposes of his prosecution under the Wealth-tax Act, 1957. This immunity is conditional on the fulfilment of the conditions regarding payment of wealth-tax on the amount declared and the investment of the requisite amount in notified Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne assessment year, a sum equal to two and a half per cent. of the net wealth declared under section 15(1)(a) of the Ordinance, or, as the case may be, the value declared under section 15(1)(b) of the Ordinance in respect of the last of such assessment years. [Section 15(6) of the Ordinance] 30. Particulars to be furnished in declaration.-- The declaration under section 15(1) of the Ordinance is required to be made to the Commissioner of Wealth-tax concerned. It should be made in duplicate in Form C prescribed under the Voluntary Disclosure of Income and Wealth Rules, 1975, and should be verified in the manner prescribed therein. Where a declaration is made in respect of net wealth, or includes any declaration in respect of net wealth, for any assessment year or years, the declaration has to be accompanied by a return of net wealth for such year or years in the form of return prescribed under section 14 of the Wealth-tax Act, 1957. The verification in Form C includes a solemn declaration by the declarant that the value of all assets held by him through other persons, as also the value of assets held by other persons which are to be included in computing his net wealth, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance. 35.Representative assessees.-- The provisions of Chapter XV of the Income-tax Act, 1961, and Chapter V of the Wealth-tax Act, 1957, relating to liability in the case of representative assessees will apply in relation to the proceedings under this Ordinance as they apply in relation to the proceedings under the respective Acts. [Section 16 of the Ordinance] 36. Scope of benefits, etc., under the Ordinance.-- It has been specifically provided that nothing contained in the Ordinance will be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration. Accordingly, where any income or wealth is disclosed by a person under the Ordinance and subsequently it is found that the income or, as the case may be, the wealth disclosed by the declarant did not, in fact, belong to him, there will be no bar to the inclusion of the income or the wealth in the assessment of the real owner. [Section 17 of the Ordinance] 37. Power to remove difficulties.-- The Central Government has been empowered to remove any difficulty which may arise in giving effect to the provisions of the Ordinance. [Section 18 of the Ordinance] 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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