TMI Blog1980 (1) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... al. For the assessment year 1962-63, relevant to the previous year, Ramnavami year 2018, the Income-tax Officer ("ITO" for short), noticed the following cash credit entries in the assessee's books of account : Rs. 1. In the account of B. S. Jhunjhunwalla-1 On 24-5-61 Cash 3,000 On 3.4-62 Cash 25,000 ------------- 28,000 2. In the account of Smt. Swati Devi Jhunjhunwalla-2 On 11-8-61 Cash 15,000 3. In the account of Smt. Parameswari Devi Cash 2,000 4. In the account of Dhanajay Majumdar Cash 1,700 5. In the account of Sohanlal Brahman Cash 1,400 6. In the account of Dalamchand Maheswari Cash 17,685 7. In the account of Dwarka Prasad Agarwalla Cash 1,000 ------------ 66,785 The aforesaid B. S. Jhunjhunwalla-1 is the son of the assessee, given in adoption to his father-in-law. Swati Devi-2 is the assessee's mother-in-law. Shrimati Bhagwati Devi is the wife of the assessee. The ITO called upon the assessee to explain the sources of the aforesaid entries. The assessee stated that the credit in the name of B. S. Jhunjhunwalla had been made out of gift made to him by his adoptive mother (Swati Devi); the latter confirmed it in a separate let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 1965, nor s. 24 of the Finance (No. 2) Act, 1965, required the Commissioner to make any enquiry whatsoever, touching or concerning the sources of the income disclosed or any matter connected therewith. It held that there was no provision in the Acts as alluded, imposing any obligation on the Commissioner to make any enquiry when such disclosures were made, to find out as to the correctness of the sources of the income or whether the incomes were those of the declarants or not. It held : " Therefore, the mere fact that Smt. Swati Devi Jhunjhunwalla disclosed the amount of Rs. 28,000 which is entered in the books of the assessee in the name of B. S. Jhunjhunwalla or that Smt. Bhagwati Devi Tibrewalla in her declaration mentioned the amounts standing in the books of the assessee in the names of Smt. Swati Devi and other firm (sic) persons, it does not mean that these amounts did not belong to the assessee or that the assessee had discharged the onus. " Regarding the question of onus it relied on several decisions of the Supreme Court and held that the burden was on the assessee to explain the credit entries in his account, to show their nature and sources, and, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case and to refer the question to this court for its decision. The petition was allowed; the Tribunal being directed by this court, stated the case and referred the above question for eliciting the opinion of this court. On a perusal of the statement of the case, it appears to us that the Tribunal held that the assessee had failed to explain the sources of the deposits. It considered the claims of the ladies concerned. It held the claims to be vague, discrepant; the statements of the ladies did not establish that the amounts belonged to them, the assessee and/or the ladies had failed to establish the sources from which they had derived the money and accordingly rejected the assessee's version that the assesses had received the money from the two ladies. In the result, the question referred to us shall have to be viewed only with respect to the Tribunal's findings that the disclosures made by the ladies could not and did not amount to proof that the amount belonged to them and merely on the basis of the disclosure petitions the assessee could not discharge the onus of explaining the cash credit entries. The points that fall for our consideration are: (i) What is the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. Sub-section (1) permitted a person to make a declaration in respect of amounts representing income chargeable to tax for any assessment year commencing on or before April 1, 1964, for which he had failed to furnish a return within the time allowed or failed to disclose in any return of income filed by him on or before August 19, 1965, or which had escaped assessment by reason of the omission or failure on the part of such person to make a return. Sub-section (2) requires that the declaration should be made to the Commissioner containing the name, address and signature of the person making the declaration and incorporating full information, inter alia, of the amount of income declared, where available and when so earned and also the place and name in which it was held. On such declarations being made the amounts so disclosed were chargeable to income-tax in accordance with sub-s. (3). Sub-s. (3) reads : " (3) Income-tax shall be charged on the amount of the voluntarily disclosed income (a) where the declarant is a person other than a company, at the rates specified in Paragraph A, and... of Part I of the First Schedule to the Finance Act, 1965 (10 of 1965), as if such amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1940, Business Profits Tax Act, 1947, Super Profits Tax Act, 1963, and Companies (Profits) Surtax Act, 1964, if he had credited such amounts in the books of account, if any, maintained by him or in any other record [vide sub-s. (10)]. Sub-s. (11) provides that notwithstanding anything contained in the Act or in any other law for the time being in force, "nothing contained in any declaration made under this section shall be admissible as evidence against the declarant for the purpose of any assessment proceeding or any proceeding relating to imposition of penalty or for the purpose of prosecution under any of the Acts mentioned in sub-section (9) or the Wealth-tax Act, 1957, in respect of any amount specified in an order made by the Commissioner under sub-section (4) or, if such amount is altered by an order of the Board under sub-section (6), then, such altered amount". Declarations or the records of any proceedings are treated as confidential under sub-s. (12)(a). Sub-section (13) provides that s. 154 of the I.T. Act, 1961, is applicable for rectification of any mistake in any order under the Act. It will be seen that the Commissioner was required to make an order in writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so much so that it cannot be questioned before any court of law or before any authority. The amount declared by a declarant by a fiction of law is treated as "the total income of the declarant". Similarly by the deeming provision the voluntarily declared income has been made "the earned income" of the declarant. In any view of the matter there is nothing in the Act that such declarations or certificates are final or conclusive and are not subject to scrutiny in respect of proceedings against persons who are not declarants. The immunities granted to the declarants are specified in sub-ss. (9), (10) and (11). Under sub-s. (10), the voluntarily disclosed income is not liable to be included in the total income for any assessment year provided the declarant has credited the amount in his books and has intimated the credits so made to the ITO. None of the exceptions, concession or protection afforded to the declarants put an embargo on the revenue to investigate the true nature and sources of the voluntarily disclosed income, when the proceeding relates to persons other than the declarants. We are of the opinion that if an assessee sets up a claim that the credit entries reflected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of item No. 1 the person in whose name the deposits have been shown, namely, Shri B. S. Jhunjhunwalla, does not claim the amount. Similarly, the persons in whose names the entries 2 to 7 have been shown do not claim that they were the depositors. On appreciation of evidence the Tribunal found the explanation of the assessee to be untenable. The conclusions arrived at are questions of fact and based on appreciation of evidence made available to the Tribunal. As a result of the foregoing discussion, we arrive at the conclusion that the concessions, privileges or protection afforded to the declarants u/s. 24 of the Finance (No. 2) Act, 1965, are provided in sub-ss. (9) to (11) of s. 24. The concessions or protections neither preclude an investigation as to the nature and source of the voluntarily disclosed income nor are the concessions available to persons claiming that the credit entries appearing in his books of account in the name of the declarants represented money earned by the declarants. The certificate granted u/s. 24(15) does not preclude the revenue from examining the correctness of the explanation given by the assessee in respect of the credit entries in his books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the first creditor (Shri Sagarmal Passari), who had made a disclosure of the same under the Finance (No. 2) Act, 1965, hereinafter referred to as "the Finance Act". Similarly, as regards the third creditor, the assessee claimed that the money really belonged to Shri Mahabir Prasad Tibrewalla who had made a similar disclosure under the Finance Act. As regards the fourth creditor it was claimed that the money really belonged to one Jugal Kishore Tibrewalla who had made a similar disclosure. The ITO held that the disclosures so made did not preclude him from examining the genuineness of the transaction and further held that the cash credits remained unexplained and added them all as the income of the assessee from undisclosed sources. The assessee appealed. The AAC, in so far as the first item was concerned, held that the creditor, Shri Sagarmal, had enough funds to provide the loan. In so far as the other items were concerned, the AAC held that they had been disclosed in the disclosure petitions under the Finance Act and allowed the appeal. The revenue appealed to the Tribunal. The Tribunal considered the financial capacity of Shri Sagarmal and concluded that he could have saved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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