9911796707
TMI Blog1994 (11) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of the assessee-firm under the head "Income from other sources" by rejecting the explanation of the assessee in regard to the source thereof. The question of law that arises for consideration relates to the powers of the income-tax authorities to examine the genuineness of the deposit in the firm's books in view of the declaration made by the partner, Dhanji Bhavanji, under the Voluntary Disclosure Scheme, 1976. The material facts relevant for determination of the question, briefly stated, are as follows: One of the partners of the assessee-firm, Shri Dhanji Bhavanji, withdrew a sum of Rs. 25,000 from the agents of the assessee-firm, Messrs. R. Ratilal and Co., Bombay, and purchased a draft of Rs. 25,000 out of the same for the purpose of payment of capitation fee for admission of his son in the medical college at Solapur. This was done on June 22, 1971. During the previous year corresponding to the relevant assessment year 1972-73, the assessee-firm credited the agents, Messrs. R. Ratilal and Co., with an amount of Rs. 25,000. Obviously no amount was received by the firm for which credit could have been given by it to the said agents inasmuch as the amount had been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal by which it had held that the sum of Rs. 25,000 was rightly added to the income of the assessee as income from undisclosed sources. The second question proposed by the assessee pertained to the finding of the Tribunal that the declaration having been made by one of the partners of the assessee-firm, the immunity provisions of the Voluntary Disclosure Act, 1976, were not applicable to the assessee-firm. The Tribunal did not refer the first question. It has, however, referred the controversy raised in the second proposed question to this court by the present reference. Mr. Bhujle, learned counsel for the assessee, however, wants to challenge before us in this reference both the findings of the Tribunal including the findings regarding the correctness of the addition made by the Income-tax Officer. We have considered the submission. We have perused the statement of the case and the order of the Tribunal and other orders. We find that the Tribunal has recorded a categorical finding of fact that there is no material to support the contention of the assessee-firm that the sum of Rs. 25,000 standing in its account to the credit of Messrs. R. Ratilal and Co. was a payment from its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities referred to in sub-section (3) of section 3 and the date of payment and investment. " It is clear from a reading of the above section that it prohibits inclusion of the voluntarily disclosed income in the total income of the "declarant" for any assessment year under the Income-tax Act. The immunity is thus available only to the "declarant" and to none else. The declaration in the instant case was made by the partner of the assessee-firm as an "individual" and not by the assessee-firm. The declarant is, therefore, the partner concerned and not the assessee-firm. Hence, no immunity is available to the assessee-firm under section 8 of the Act in relation to the income voluntarily disclosed by its partner. It may be expedient at this stage to observe that to remove all doubts in regard to availability of the benefits of this Act to persons other than "the declarant", the Legislature itself has specifically declared in section 18 of the said Act that "nothing contained therein shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under the Act". This section reads: " For the removal of doubts, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The immunity under section 24 of the Act was conferred on the declarant only, and there was nothing to preclude an investigation into the true nature and source of the credits. The Income-tax Officer was, therefore, justified in treating the cash credits in the books of account of the assessee in the names of the creditors as unexplained cash credits. " The legal position was summed up thus (at page 259): " There was, therefore, nothing which prevented the Income-tax Officer from investigating into the nature and source of the sums credited in the books of account of an assessee and reject his explanation to the effect that the sums belonged to the persons who had made declarations about them under section 24 of the Act. " Pathak J. (as he then was) reiterated the same position when he said (at page 260): " I am of the opinion that the making of an assessment against a declarant on his disclosure statement under section 24 of the Finance (No. 2) Act, 1965, cannot deprive an Income-tax Officer of jurisdiction to assess the same receipt in the hands of another person if, in a properly constituted assessment proceeding under the Income-tax Act, the receipt can be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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