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TMI Blog1966 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year showing a sum of Rs. 1,15,658 as its total income. The petitioners in the writ petition claim that a settlement was arrived at between the parties whereby the petitioner-company agreed to the inclusion of Rs. 4,49,642 provided no penalty was imposed on the petitioner-company for this non-disclosure. There is a controversy over this compromise also, and it is hardly necessary for me to go into this question. It is alleged by the petitioner-company that before the assessment order was made, it filed a declaration on 22nd March, 1965, in accordance with section 68 of the Finance Act, 1965, making a disclosure of certain concealed income. The petitioner-company also enclosed a cheque for Rs. 50,000 with the disclosure statement. It is not disputed that the disclosure statement and the accompanying letter, collectively marked annexure "D " to the writ petition, were filed with the Commissioner of Income-tax on 22nd March, 1965. The Commissioner of Income-tax, however, declined to accept the said disclosure and by his letter dated 25th March, 1965, wrote to the petitioner-company: "Please refer to your letter dated the 22nd March, 1965. The declaration sent along with your lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits or enclosed). raising loans. (b) Distinctive numbers, face value and market value of the securities of the Central Government, which have been assigned to the President of India (the application should be accom- panied by the original G. P. notes or stock certificates and the deed of assignment in favour of the President). It is necessary to recur for a moment to the date when the Act was passed, as otherwise, it may remain ambiguous as to why mention was made in the letter dated 22nd March, 1965, of the Finance Bill, 1965. As I have stated earlier, the Finance Act, 1965, was enacted on 11th May, 1965, but section 68 was enforced retrospectively from 1st March, 1965. It appears, however, that the disclosure statement was made on the publication of the Finance Bill, 1965, since clause (1) of the Bill provided that section 68 shall come into force retrospectively. Unfortunately, no reasons have been given by the Commissioner of Income-tax as to why he rejected the declaration. One has, therefore, to go into the realm of conjectures to find out what may have impressed the Commissioner to do so. Mr. Hardyal Hardy, the learned counsel for the Commissioner, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year in question. That seems to be the only possible reading of clauses (a) to (c) of sub-section (1) of section 68. Mr. K. K. Jain, the learned counsel for the petitioners, says that under section 68, the revenue is enjoined not to charge any rate other than the one specified in sub-section (3) of section 68 with respect to the disclosed income in case the disclosing party complies with any of the three conditions set out in clauses (i), (ii) and (iii) of sub-section (1) of section 68, that is: " ..... if he,- (i) pays the amount of income-tax as computed at the said rate, or (ii) furnishes adequate security for the payment thereof in accordance with sub-section (4) and undertakes to pay such income-tax within a period, not exceeding six months, from the date of the declaration as may be specified by him therein, or (iii) on or before the 31st day of May, 1965, pays such amount as is not less than one-half of the amount of income-tax as computed at the said rate or furnishes adequate security for the payment thereof in accordance with sub-section (4), and in either case assigns any shares in, or debentures of, a joint stock company or mortgages any immova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii)..... " suggest that that specification is required only where an assessee chooses to act under clause (ii) of section 68(1). My conclusion, therefore, is that no period need be specified in case an assessee decides to pay in accordance with clause (iii) of section 68(1). In the light of these facts, Mr. Jain says, that the petitioner-company rightly made the declaration on 22nd March, 1965, and the Commissioner could not reject the same on 25th March, 1965, without waiting to see whether it complied with clause (iii) of sub-section (1) of section 68 or not. Mr. Hardy, on the other hand, says that the last date for payment in this case was 22nd September, 1965, i.e., six months from the date of the declaration as provided in sub-section (1) of section 68, but the petitioner-company unequivocally declared in reply to column 8 of the disclosure statement that the amount shall be paid on or before 30th September, 1965. According to Mr. Hardy, the disclosure statement on its face disclosed that the petitioner-company was not intending to comply with the provisions of section 68. Mr. Jain, on the other hand, relies on the undertaking contained in the said letter accompanying the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in sub-section (3) is paid. It follows that in case a disclosure statement is made, but the amount not paid, the same is includible in the assessment order and, immediately the payment is made in accordance with sub-sections (1) and (3) of section 68, the statute supervenes and renders the Income-tax Officer incapable of realising more than the rate specified in sub-section (3) of section 68 under any other provision of the Income-tax Act. That seems to be the only logical way of reconciling the different sub-sections in section 68. In that view it would in no case be necessary to invoke the provisions of section 147 or 148. In the result, it must be held that the Commissioner of Income-tax acted without jurisdiction in rejecting the disclosure statement on 25th March, 1965. The impugned order of the Commissioner of Income-tax must, therefore, be quashed. Mr. Jain has asked me to quash the assessment order as well, which includes the amount disclosed. There is no justification for this prayer. As I have construed the section, the amount has to be included in the assessment order till the tax thereon is paid in accordance with sub-section (3) of section 68. On payment alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thus take the benefit of sub-section (6) of section 68. Even if such an assessee has not paid the amount before the making of an assessment order or an order under section 23A, he may still pay the amount within the period prescribed by section 68 and take recourse to such remedies by way of rectification, appeal or revision as may be available to him for exclusion of the amount from the assessment order and/or modification of the order under section 23A. In these circumstances, the order under section 23A cannot be quashed at the present stage. When I had dictated the judgment in court up to this stage, a question arose as to whether, in spite of expiry of the time fixed by section 68 for payment of tax, a writ can issue to the respondents to receive the payment now ? This is the second of the two problems mentioned by me above. The learned counsel took time to consider the matter and, after hearing them, I reserved my orders to decide this point. Mr. Jain, learned counsel for the petitioner-company, says that, since the Commissioner of Income-tax, by wrongly rejecting the declaration, disabled the petitioner-company from making the payment, a writ can issue directing the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (iii) of clause (c) of sub-section (1) of section 68. The petitioner-company nowhere alleges in the petition that it did not make the payment, because it was certain in its mind that the Commissioner would decline to accept the payment. May be that if the petitioner-company had offered the money, without prejudice to the rights and contentions of the respondents, the Commissioner may have accepted it, or may be he had not, but it is difficult to find positively that the petitioner-company did not offer to comply with sub-clause (iii) of clause (c) of sub-section (1) of section 68 due to any such belief in its mind. Under section 68, the petitioner-company was bound to pay by the specified date. I think, the petitioner-company was, therefore, bound to offer to perform its part of the obligation, unless there be any clear indication that the Commissioner would not have accepted the performance even without prejudice. The petition was filed in June, 1965, while the declaration had been rejected by the Commissioner in March, 1965. This shows that the petitioner-company took no steps to file the petition or to have it heard before 31st May, 1965. In these circumstances, it is reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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