TMI Blog1994 (11) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the Income-tax Officer was justified in reopening the assessment under section 147(b) when the Income-tax Officer had purported to reopen the assessment specifically under section 147(a) ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that what was disclosed by the applicant in the course of the original assessment proceedings in respect of the two jackpot amounts of Rs. 78,799 and Rs. 8,66,040 was not a full and true disclosure within the meaning of clause (a) of section 147 of the Income-tax Act in view of the decisions of the Supreme Court in CIT v. Burlop Dealers Ltd. [1971] 79 ITR 609 and ITO v. Madnani Engineering Works Ltd. [1979] 118 ITR 1 ? 4. Whether having regard to the information and evidence concerning the amounts of Rs. 78,799 and Rs. 8,66,040 supplied by the applicant in the original assessment proceedings, the Tribunal was right in law, in an appeal from the reassessment under section 147(a)/143(3), to reconsider the said items and give a finding contrary to or inconsistent with the one in the original assessment proceedings following an order of the Tribunal in the case of another assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r valuable articles or things belonging to him had been seized as a result of search under section 132 of the Income-tax Act, to make a disclosure on or after the date of commencement of the said Act but before the first day of January, 1976, by a declaration in accordance with sub-section (2) thereof in respect of any income relating to the previous year in which such search was made or in any earlier previous year which he had failed to disclose in the return of income furnished by him under the Income-tax Act before the commencement of the said Act or which had escaped assessment by reason of omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise. In pursuance of the provisions of section 14(1) of the said Ordinance, the assessee made a declaration on December 31, 1975, wherein she disclosed an undisclosed income for the assessment year 1971-72 of Rs. 25,000 on account of investment in furniture, fixtures and fittings in a flat in Empire Estate and two air-conditioners in Tardeo Air-conditioned Market in Flat No. 28, Shakti Sadan. Similarly, disclosures w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Voluntary Disclosure Ordinance (later Act) which specifically says that information contained in any declaration made under the said Act may be taken into account for the purpose of proceedings relating to assessment or reassessment of income. The Tribunal, on consideration of the facts and circumstances of the case and section 14(4) of the Voluntary Disclosure Ordinance, held that the Income-tax Officer was justified in reasonably believing that the assessee's income chargeable to tax had escaped assessment within the meaning of section 147(a) of the Act and initiating proceedings under that section accordingly. The Tribunal also considered on the merits the correctness of the addition of the sum of Rs.10 lakhs by the Income-tax Officer as unexplained investment in purchase of jackpot winnings. The Tribunal referred to its own decision in the assessee's husband's case where on consideration of various jackpot winnings of the husband as also of the assessee, it had held by its order dated April 7, 1977, that the jackpot winnings were not by the assessee or by her husband but were purchases of such winnings from the actual winners on payment of premium and, therefore, the estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Income-tax Officer to re-examine the same on the basis of any information coming to his possession subsequently as it would amount to a mere change of opinion. According to learned counsel, the assessee having disclosed the income in its return, it was for the Income-tax Officer to examine at the time of assessment, the truthfulness or correctness of the same and if he failed to do so at that time, he cannot do so later by taking resort to proceedings under section 147(a) of the Act. It was also submitted that jackpot winnings were not the specific subject-matter for reopening and hence the same cannot be considered for the purpose of reassessment in pursuance of the notice issued by the Income-tax Officer under section 148 of the Act. We have carefully considered the above submissions. From the statement of the case, we find that the Income-tax Officer in the course of proceedings for wealth-tax assessment for the years 1971-72 and 1972-73 noticed certain investments in immovable property, the nature and source of which the assessee failed to explain despite letters from the Income-tax Officer asking her to do so. The Income-tax Officer also received a copy of the declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income by persons in cases of search and seizure. In such cases also, a declaration may be made by an assessee and tax paid on such declared income at the rates specified in the Schedule to that Act. Sub-section (4) of section 14 requires the Commissioner to forward a copy of the declaration made by the declarant under sub-section (1) of section 14 of the Act to the Income-tax Officer. It also provides that information contained therein may be taken into account for the purposes of proceedings relating to assessment or reassessment of the income of the declarant under the provisions of the Acts mentioned in sub-section (1) of the said Act which includes the Income-tax Act. Section 14, so far as material, is set out below : " 14. Disclosure of income in cases of search and seizure.--(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 or section 37A of the Wealth-tax Act and such person (hereafter in this section referred to as 'the declarant') makes, on or after the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. . . . " Evidently, the Legislature thought it fit to make it clear to the assessees making disclosure of income that in cases of search and seizure, copies of the declarations made by them and the information furnished therein would be forwarded to the Income-tax Officer and such information might be taken into account for the purpose of proceedings relating to assessment or reassessment of the income of the declarant. The assessee who makes a declaration gets immunity only in respect of the amount declared by him/her but the immunity extends no further. The amount so declared is not includible in the normal assessment of the assessee. It is assessable at the special rate prescribed by the Voluntary Disclosure Act. It is not one of those voluntary disclosure schemes which contemplates reopening of the original assessment to include income declared by an assessee in the income already assessed for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o levy tax on the entire income that had escaped during the previous year. The Income-tax Officer in the course of the proceedings under section 147 of the Act may bring to charge items of income which had escaped assessment other than or in addition to the item or items which relate to the issuance of notice under section 148. So far as the disclosure of the jackpot winnings by the assessee in Part IV of the original return is concerned, the Income-tax Officer will have the jurisdiction under section 147(a) of the Act despite such disclosure if he is of the opinion that such disclosure was not a full and true disclosure. The submission of learned counsel for the assessee that the Income-tax Officer having examined the said disclosure in the original return, could not take resort to section 147 of the Act even if he comes into possession of any information to the effect that the said declaration was not true as it would amount to a change of opinion, cannot be accepted in view of the clear pronouncement of the Supreme Court in the case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456, where interpreting the expression "true and full disclosure" appearing in section 147 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Phool Chand Bajrang Lal's case [1993] 203 ITR 456. The facts of the case are glaring. The claim of jackpot winnings during the year was based on jackpot slips alleged to be in the name of the assessee for which cheques had been obtained from the race club. In her statement dated July 4, 1973, the assessee stated that she did not remember the names of the horses which won her Rs. 8,66,040. Her claim was that she was going to the races for the past ten years. She claims to have won jackpots totalling Rs. 9 lakhs within a fortnight on two occasions. The Income-tax Officer in the course of the wealth-tax assessment noticed disproportionate immovable properties in her name. In the statement recorded at the time of search operations under section 132 in October, 1974, the assessee did not make any mention of her having won any jackpot of such thumping amount. When she was asked what was the maximum win she had made in the races, she stated that she had won about Rs. 1 lakh. The assessee was not even able to say in what manner she collected this amount, whether it was by cheque or cash. When she was asked if she had any bank account, she said that she had no bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer was justified in holding that the amount claimed to be received by the assessee at the races from jackpot winnings did not represent genuine race winnings. There was nothing improper on the part of the Income-tax Officer in relying on circumstantial evidence in such case for the purpose of arriving at the above finding inasmuch as no direct evidence in a transaction like this is ever possible. Learned counsel for the assessee submitted before us that the finding of the Income-tax Officer is based purely on supposition and surmises. His main grievance appears to be that the Income-tax Officer failed to bring on record any direct evidence to rebut the contention of the assessee that the amounts in question were jackpot winnings of the assessee. According to learned counsel, the jackpot slip and the cheque were the direct evidence produced by the assessee. We find it difficult to accept this submission because the Income-tax Officer is entitled under section 143(3) of the Act to ask an assessee to produce further evidence in support of the contention made in the course of the assessment proceedings. The Income-tax Officer is entitled to take into consideration the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X
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