TMI Blog1993 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... on 132 of the Income-tax Act, 1961, was conducted by the Commissioner of Income-tax, Bombay City-1 (the third respondent). During the search, which continued from time to time until the end of December, 1975, cash, jewellery, diamonds and books of account were seized. On 31st December, (October ?) 1975, the appellants made a disclosure under section 3(1) of the said Ordinance/Act for the assessment years 1965-66 to 1975-76. A copy of the appellants' declaration in this behalf has been placed before us. The appellants disclosed thereby for the said assessment years en bloc an income of Rs. 1.41 crores thus, Rs. 1.20 crores being the value of silver bars, silverware, diamonds, set jewellery and other ornaments Rs. 20 lakhs in cash and Rs. 1 lakh being the value of miscellaneous assets, including furniture and fixtures. On 21st November, 1975, the third respondent informed the appellants that since cash, jewellery, diamonds and books of account had been seized from the appellants before the declaration was filed, it was not in order under the terms of section 3(2)(ii).He added that the declaration ought to be filed under section 14(1). The appellants made a request for review of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents, money, bullion, jewellery or other valuable articles or things belonging to the person making the declaration under sub-section (1) (hereafter in this section, in sections 4 to 13 and in the Schedule referred to as the declarant) 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. (3) In addition to the amount of income-tax to be paid under sub section (1), the declarant shall invest a sum equal to five per cent. of the amount of the voluntarily disclosed income in such securities as the Central Government may notify in this behalf in the Official Gazette. " Section 4 required the declaration to be in such form as was pre scribed by the rules. It also set out how it was to be signed. Section 14, so far as it is relevant, reads thus :"14.(1) Subject to the provisions of this section, 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 a search under section 132 of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the declarant under the provisions of any of the Acts mentioned in sub-section (1) of section 8 or the Wealth-tax Act. (5) The immunity provided under sub-section (1) shall not be available to the declarant unless the tax chargeable in respect of the income of the previous year or years for which the declaration has been made is paid by the declarant in accordance with the provisions of section 5 " Shri A. B. Divan, learned counsel for the appellants, submitted that section 3(1) did not and could not apply in respect of income for any assessment year subsequent to the assessment year 1975-76 because there could be no failure to file a return in respect of the assessment year 1976-77, the previous year whereof being 1975-76, and for subsequent years having regard to the period for which the said Ordinance/Act was to operate, viz., between October 8, 1975, and December 31, 1975, as the obligation to file the return had yet to arise. There was, therefore, no question of not disclosing income in a return or not filing a return so that sub-clauses (a) and (b) in sub-section (1) of section 3 did not apply. Further, there was no question of income escaping assessment under sub clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shorn of verbiage, states that where 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 a search under section 132 of the Income-tax Act, 1961, and such person makes, between the period October 8, 1975, and December 31, 1975, a declaration in respect of any income relating to the previous year in which such search was made or in respect of any earlier previous year for which he has either failed to furnish a return or which he has failed to disclose in the return which he has filed or which has escaped assessment by reason of his omission or failure to disclose fully and truly all material facts necessary for his assessment or otherwise, then the amount of income so declared shall not be taken into account for payment of interest under section 139 or section 215 or section 217 of the Income-tax Act, 1961, or the corresponding provisions of the earlier Act, for the imposition of penalty, except under section 221 of the Income-tax Act, 1961, or the corresponding provisions of the earlier Act, and for the prosecution of the declarant under any of the provisions of these Acts. The case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax. A declaration of concealed income made after books of account or other documents or valuable assets have been seized cannot be said to be a voluntary disclosure ; it is made because the books, documents and assets seized would disclose to the assessing authority the concealment of income. Such concealment could have been in respect of the previous year in which the seizure was made or in respect of any previous year prior thereto. The provisions of sub section (2), therefore, must be read as substantive provisions which debar an assessee who has declared concealed income for a previous year during which a seizure of his books, documents or valuable assets has been made or for any previous years prior thereto from getting the advantage of the concessional rates of tax set out in the Schedule. Such assessee is, however, not entirely excluded from the ambit of the legislation for he may file a declaration under section 14 and obtain the comparatively limited-but still substantial-benefits prescribed therein. We do not find ourselves in agreement with Mr. Divan's submission that sub-section (2) of section 3 should be construed as if it were a proviso to sub-section (1) and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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