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TMI Blog2002 (8) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said amount. The stocks so declared represented the concealed income of the firm and the proportionate tax liability of K. Periaswamy was deducted from his share of the income disclosed under the Voluntary Disclosure Scheme and necessary entries were also made in the account books of the firm. The accountable person in the estate duty proceedings of K. Periaswamy claimed that the proportionate amount of tax paid by the firm under the Voluntary Disclosure Scheme in relation to K. Periaswamy's share should also be taken into account in determining the principal value of the estate of the deceased. The Assistant Controller rejected the claim of the accountable person on the ground that the tax liability arose after the death of the decea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, submitted that K. Periaswamy died before the disclosure under the Voluntary Disclosure Scheme was declared and he was not even aware of the disclosure made by the firm and the liability under the Voluntary Disclosure Scheme came long after the death of K. Periaswamy and the liability was created by the accountable person, who inherited the property without any charge and, therefore, the liability is not deductible. Mr. T. C. A. Ramanujam relied on the decisions of the Supreme Court in the cases of Nawab Mir Barkat Ali Khan Bahadur v. CED [1996] 222 ITR 612 and P. Leelavathamma v. CED [1991] 188 ITR 803, the decision of the Punjab and Haryana High Court in Kashmiri Lal Talwar v. CED [1997] 223 ITR 747 and also the decision of this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Talwar v. CED [1997] 223 ITR 747. Learned counsel for the Revenue also relied on the decision of this court in Smt. K. N. Sita v. CED [1999] 239 ITR 108 where this court considered the deductibility of the provision for maintenance expenses for the wife and unmarried daughters and for marriage expenses of unmarried daughters. This court held that in the absence of any evidence to show that the estate of the deceased was burdened with any debt or incumbrance by reason of the failure of the deceased to act up to his statutory obligation, the amount set apart as a provision was not deductible. The decision in the case of Smt. K. N. Sita [1999] 239 ITR 108 (Mad) is distinguishable as it was held that in the absence of a charge on the estat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f levy of estate duty. We are of the opinion that once the declaration was accepted, it meant that the Department has accepted the position that the income was earned during the previous years during the period in which that income was earned, but was omitted to be returned. Consequently, the liability to tax on the concealed income would arise at the end of the previous years in question in which the income accrued as the declaration itself was made in recognition of the pre-existing liability. We are of the opinion that no new liability is created under the Voluntary Disclosure Act but the income which accrued and the statutory liability that arose under the Income-tax Act was declared under the provisions of the Voluntary Disclosure Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealed income but the liability was held to be deductible as a debt. The decision of the Allahabad High Court was approved by the Supreme Court in Ahmed Ibrahim Sahigra Dhoraji v. CWT [1981] 129 ITR 314 wherein it was held that the liability to tax on concealed income disclosed under the Voluntary Disclosure Scheme is the same as income-tax and it constitutes a debt on the valuation date under the Wealth-tax Act and is deductible in the computation of the net wealth of the assessee. The following observation of the Supreme Court is relevant for the purpose of this case: "The declaration contemplated under section 68 of the Finance Act, 1965, is a declaration in respect of income of earlier years which had been concealed and on which tax w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the benefit of other procedural rights. The voluntary character of the declaration cannot, therefore, alter the character of the tax." The Supreme Court in CWT v. Sheo Kumar Gupta [1993] 201 ITR 324 has held that the amount of tax paid by a partner in the firm towards the share of the tax payable on the income voluntarily disclosed by the firm under the Voluntary Disclosure Scheme would be deductible as "debt owed" in computing the net wealth of the partner on the relevant valuation date. The Calcutta High Court in CWT v. Rama Shankar Bajoria [1992] 194 ITR 132 applied the principles laid down in Ahmed Ibrahim Sahigra Dhoraji v. CWT [1981] 129 ITR 314 (SC) and held that there are no distinguishable principles in section 68 of the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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