TMI Blog2007 (5) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... a common partner in almost four partnership firms. Learned counsel for the petitioner, Shri Shivram on instructions from Mr. K. M. Tanna states that he is a partner of four firms and all the four firms have their office at 107-108, Super Shopping Complex, Bajaj Cross Road, Kandivali West, Bombay. There is also no dispute that the raid had taken place at those office premises and in pursuance of the said search and seizure action at the said common office premises on April 18, 1995, the petitioner thereafter had made a declaration of Rs. 1.2 crores as undeclared on-money. Thereafter, Mr. Tanna made a disclosure that it would be of some other firm. The contention of learned counsel for the respondent is that in the application for voluntary disclosure scheme made on December 26, 1996, in which he had failed to disclose all the relevant material. Over and above, the petitioner was called upon to furnish details as to the connection with regard to the firms. But even till date from Mr. Tanna all details and particulars of partnership firms are not forthcoming. Under these circumstances, we are not inclined to interfere and the petition stands dismissed." Vimal Chandra S. Dave, Ms. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and seizure action was carried out in respect of the assessee on April 18, 1997, relating to the assets declared by the assessee in the Voluntary Disclosure of Income Scheme application filed on December 30, 1997, and this fact was not disclosed by the assessee while filing the Voluntary Disclosure of Income Scheme declaration on December 30, 1997. As the assets declared by the assessee under the Voluntary Disclosure of Income Scheme, 1997, had been discovered earlier by the Income-tax Department during the course of search and seizure action, the Voluntary Disclosure of Income Scheme 1997 certificate issued under section 68(2) of the Voluntary Disclosure of Income Scheme, 1997 and as such, the certificate under section 68(2) of the Voluntary Disclosure of Income Scheme 1997 dated March 10, 1998, issued by the Commissioner of Income-tax (Central)-II is held to be null and void." The appellant contended that the said order having been passed without complying with the principles of natural justice and behind its back was illegal. A writ petition was filed before the Bombay High Court and by an order dated February 4, 2004, the matter was directed to be considered de novo by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure of Income Scheme declaration. The assessee has sought, to escape through a procedural loophole by emphasizing that no search warrant was executed in the name of M/s. Tanna and Modi and therefore there was no search and seizure action in the case of the firm, and hence the declaration made by it under the Voluntary Disclosure of Income Scheme was valid." It was further held: ". . . The Voluntary Disclosure of Income Scheme 1997, laid down certain parameters which were to be fulfilled before the assessee can take benefit of the immunity given by the scheme. The broad conditions were that the assessee should make a full and true disclosure and that the information should not be in the prior knowledge of the Department. Neither of these two conditions have been met by the assessee in this particular case. At the time of the Voluntary Disclosure of Income Scheme declaration the assessee should have informed the Commissioner of Income-tax, Central-II, that there was a search and seizure operation and that the document on which basis the declaration was being made was seized at the time of the search operation. To the contrary the assessee has deliberately tried to mislead t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was a partner of the firm being known to the Department, no further information was necessary to be supplied. Mr. Vikas Singh, learned Additional Solicitor General appearing on behalf of the respondent, on the other hand, would submit that in this case, the parties not only had a common office but what was declared by the partner of the firm was the very same amount representing the income of the firm and even the source thereof was the same and, thus, a clear case of misrepresentation and unfair disclosure has been made out. A Scheme known as the Voluntary Disclosure of Income Scheme, 1997 was made by Parliament under the Finance Act of 1997. The relevant provisions of the said Scheme, before we embark upon the rival contentions of the parties as noticed hereinbefore, may be noticed by us : "Section 63.(a) 'declarant' means a person making the declaration under sub-section (1) of section 64; Section 64. (1) Subject to the provisions of this Scheme, where any person makes, on or after the date of commencement of this Scheme but on or before the 31st day of December, 1997, a declaration in accordance with the provisions of section 65 in respect of any income chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 made rules known as the Voluntary Disclosure of Income Rules, 1997 (the Rules). Rule 10 of the Rules reads as under: "10. The particulars furnished by a declarant shall be kept secret and shall be treated as confidential. No court or any other authority shall be entitled to require any officer of the Income-tax Department or the declarant himself to produce before it any such declaration or to give evidence before it in this regard. Further, nothing contained in any declaration shall be admissible as evidence against the declarant for the purpose of any proceeding relating to imposition of penalty or launching of prosecution under the Income-tax Act, the Wealth-tax Act, the Foreign Exchange Regulation Act, 1973, or the Companies Act, 1956." It appears that as there remained certain doubts in regard to the applicability of the said Scheme, inter alia in relation to the partners of a firm vis-a-vis firm, some questions were posed which were sought to be answered by issuance of a circular letter No. 754 dated June 10, 1997, by the Central Board of Direct Taxes. Question No.5 : If the firm had concealed income, can the partners file declaration in respect of such concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Partnership Act, 1932, in a case of this nature, may have to be taken into consideration for judging the validity of action. Under the Partnership Act, a partner represents a firm. He has an implied authority in terms of section 19 thereof and, thus, any action taken by a partner of a firm vis-a-vis the firm, unless otherwise specific binds the firm itself. It is one thing to say that for the purpose of invoking the provisions of the Indian Income-tax Act and other taxation laws a firm and its partners are treated to be separate entities but while construing a statute involving immunity from certain penal actions, in our opinion, the provisions thereof should not ordinarily be judged on the touchstone of the provisions of the 1961 Act, only because the 1997 Scheme has a direct nexus therewith. It may be necessary for the aforementioned purpose to bear in mind that the immunity granted pursuant to acceptance of a declaration made under the voluntary taxation scheme or the Kar Vivad Samadhan Scheme, 1998 does not lead to total immunity. Immunity granted under the Scheme has its own limitations. The Scheme must be applied only in the event the conditions precedent laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the 1997 Scheme seeks to achieve, we are of the opinion that in the place of literal interpretation, the rule of purposive construction should be applied. In Francis Bennion's Statutory Interpretation, purposive construction has been described in the following manner: "A purposive construction of an enactment is one which gives effect to the legislative purpose by (a) following the literal meaning of the enactment where that meaning is in accordance with the legislative purpose (in this Code called a purposive-and-literal construction), or (b) applying a strained meaning where the literal meaning is not in accordance with the legislative purpose (in the Code called a purposive-and -strained construction)." In any event, it is not a fit case where we should invoke our extraordinary jurisdiction under article 136 of the Constitution of India. It is now well-settled that this court does not exercise its jurisdiction only because it is lawful to do so. It, for the purpose of doing complete justice to the parties, not only mayor may not interfere with the impugned judgment but also issue directions for the purpose of doing complete justice to the parties in terms of articl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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