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TMI Blog1996 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners in different firms of the Muthoottu group and their main source of income is the share income from these firms. Under section 132 of the Income-tax Act, 1961, the firms were searched in pursuance of the seizure in accordance therewith. On October 8, 1975, the Voluntary Disclosure of Income and Wealth Act, 1976, came into force. Section 3 of the said Act required any person, before January 1, 1976, to make a declaration in accordance with the provisions of section 4 thereof in respect of any income chargeable to tax under the Income-tax Act, 1961, for any assessment year, provided in regard to the said income, such person had failed to furnish a return under section 139 of the Income-tax Act or which he failed to disclose in any return of income furnished by him under the Income-tax Act, before the commencement of this Act or in regard to such income assessment is escaped by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose the same fully and truly with reference to all material facts necessary for the assessment or otherwise. When such person satisfies these situations, the provision enacts that in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the certificate issued by the Commissioner, the Income-tax Officer rectified the various assessment orders on the basis of this certificate excluding the income the amount as disclosed under section 3(1). The discussion continued that subsequently the Income--tax Officer issued notice under section 154 of the Act, that under section 182 of the Act, the amount in the hands of the partner as his share is also assessable. The first appellate authority considered that there is no provision in the Income-tax Act, 1961, by which income covered by the Voluntary Disclosure Act, 1976, can be taken up for assessment by the income-tax authority under the provisions of the Income-tax Act, 1961. The first appellate authority placed reliance on section 8 of the Voluntary Disclosure Act, 1976, to mean that the amount of the disclosed income shall not be included in the total income of the declarant for any assessment year under the Income-tax Act, 1961, if the conditions mentioned therein are satisfied. The discussion further proceeds to state that the certificate under section 8(2) of the Act confers immunity on the declarant. The first appellate authority has further emphasised that at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectification or modification in exercise of the powers under section 154 of the Act. We have heard learned senior standing counsel for taxes. He contended that a mere reading of the statutory provisions of the Voluntary Disclosure Act, 1976, would create no difficulty whatsoever, in regard to the situation that the income has to be included in the concerned assessment year. With vehemence at his command, learned counsel showed us his anxiety that the two appellate authorities have reached the conclusions without perusing the statutory provisions. Learned counsel further contended that the statutory provisions of the Voluntary Disclosure of Income and Wealth Act, 1976, would lead to only one and one conclusion in his favour. Learned counsel took us through the statutory provisions, especially sections 3, 4, 8 and 14. At the other end, we have also heard learned counsel for the assessees, the team led by Sri Chacko, learned senior counsel. Sri Chacko also took us through the statutory provisions and particularly brought to our attention the provisions of the Voluntary Disclosure of Income and Wealth Rules, 1975. In the first instance, the submission of learned counsel was that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s opening the door which was jammed and closed. Alternatively, learned counsel submitted that even though any other view is possible and learned counsel reinforced his submission by referring to the approach of the two appellate authorities that the question is a debatable one, learned counsel emphatically attempted to emphasise that exercise of the power under section 154 of the Act would not be available because when a question is debatable, the error could not be styled as error apparent on the face of the record. In this manner, after hearing learned counsel for both sides, we must express that we were at pains that the two appellate authorities at least from the contents of the two orders, are seen to have taken no trouble to go through the text of the statute. Had they, the result would have been otherwise, on the plain language of the statute. In the process of consideration of the question involved before us, a plain analysis of section 3 becomes inevitable. The provision speaks of "any person" to make a declaration as required according to the provisions of section 4. Such a declaration is in respect of any income ordinarily chargeable to tax under the Income-tax Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) have been seized as a result of any search under section 132 of the Income-tax Act or under section 37A of the Wealth-tax Act, the income in respect of the previous year in which such search was made or any earlier previous year." It would thus be clear at once that pending proceedings under the Income-tax Act, 1961, have also been taken outside the purview of what is understood as "income" that could be legitimately the income in regard to which a declaration can be made by any person. Apart therefrom, section 3(3) enacts a further requirement of investment of a sum equal to five per cent. of the amount of the voluntary disclosure. This aspect is not really necessary in the matter under consideration. Section 4 deals with the particulars and the persons who can present the application under the signature. Section 8 of the Act has a marginal note "Voluntarily disclosed income not to be included in the total income". This would normally mean that the income which is shown in proceedings of the Voluntary Disclosure Act, 1976, is not to be included in the total income and it is so stated in section 8(1) of the Act. However, the situation is not wholly unconditional. The three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f "any person" who is thought of as a declarant under the Voluntary Disclosure of Income and Wealth Act. A bare look at these provisions would show that no debate is necessary to know that any person keeping books of account, knowing the source of income, cannot be considered to be the person in the mind of the legislative provision of the Act--Voluntary Disclosure of Income and Wealth Act, 1976. The two provisions are crystal clear that they are applicable to a person in regard to the income to be disclosed which is not in any way near about the records of the Income-tax Department on the one hand and also the record of accounts of the concerned assessee. The provisions of the Act also are crystal clear that such person who is the declarant is not also required to disclose the source of income. All that he has to do is to make a declaration to satisfy the requirements of section 3 of the Act in regard to which the Commissioner of Income-tax would grant a certificate. Section 8(1)(i), (ii) and (iii) of the Act make it abundantly clear that if such a person knows the source of the amount, shows the same in the books of account maintained by him, such a person would not be entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing in force", that nothing contained in any declaration would be admissible. There it is obvious that in regard to the proceedings under the Act and consequence in regard to the person and the income covered by the proceeding under the Act, the contents of the certificate would be of conclusive character. It is so also on the basis of intrinsic material in the language of section 8 itself. Section 8(1)(i), (ii) and (iii) provide ample-aid to the situation. What is required is that income-tax is paid and the amount is invested. These are conclusive situations. In our judgment, the language of section 8, as stated above, is more than clear. This takes us to consider the statutory provisions of section 14 of the Act. The factual matrix of these references shows that under section 132 of the Income-tax Act, 1961, the firms were searched and documents were seized. These are partnership firms and are not different from its partners. The law of partnership, though elementary, tells us that partnership is only in the nature of a contract amongst persons who are partners in relation to the agreed activity and in the sense are not different from the firm in any sense of the term. In fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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