TMI Blog1978 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax, Mysore, Bangalore, declaring a total amount of Rs. 11,67,008 distributed over several previous year as his income which had not been disclosed in his returns before March 1, 1965, and which had escaped assessment before that date. The said disclosure was made under s. 68 of the Finance Act of 1965. On the basis of the said disclosure, the assessee paid on May 10, 1965, an amount of Rs. 7,00,205, being 60% of the disclosed amount. Thereafter, the WTO issued notices under s. 17 of the Wealth-tax Act, in respect of the assessment years 1958-59 to 1964-65, on the basis of the information furnished by the assessee in the statement accompanying the disclosure made by him on April 26, 1965. During the assessment years 1958-59 to 1964-65, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar under consideration ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income-tax liability in respect of the income disclosed in the disclosure application of April 26, 1965, could not be deducted in arriving at the net wealth of the appellant on the relevant valuation date ? " The reference made in respect of these years are registered as T.R.C. No. 5 of 1974 to T.R.C. No. 10 of 1974 on the file of this court. T.R.C. No. 11 of 1974 relates to the assessment year 1965-66 and the only question referred to by the Tribunal in that case for the opinion of this court at the instance of the assessee is similar to the second question referred to above. In so far as the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the income-tax payable under s. 68 of the Finance Act, 1965, could not be considered as a debt which could be deducted under s. 2(m) of the W.T. Act for purposes of determining the net wealth. It has to be observed at this stage that the above decision of the Kerala High Court has been reversed in appeal by a Division Bench of the Kerala High Court in C. K. Babu Naidu v. WTO[1978] 112 ITR 341. Section 2(m) of the W.T. Act, 1957, defines the expression " net wealth " as follows : " 2. (m) ' Net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date including assets required to be included in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 68 of the Finance Act, 1965, was not a debt owed by the assessee on the valuation date for the purpose of determining the net wealth under the W.T. Act. The reason given by the learned judge is not at all in conformity with the language of s. 68 of the Finance Act, 1965. Section 68 of the Finance Act, 1965, provides that where any person makes a declaration in accordance with sub-s. (2) thereof, any amount representing income which he has failed to disclose in a return of income for any assessment year filed by him before the 1st day of March, 1965, or which has escaped assessment for any assessment year for which an assessment has been made before the 1st day of March, 1965, or for the assessment of which no proceeding either under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the revenue, drew our attention to the decision of the Gujarat High Court in CWT v. Ahmed Ibrahim Sahigara [1974] 93 ITR 288 in which a view similar to the view taken in the case of C. K. Babu Naidu [1971] 82 ITR 410 had been expressed. The learned judges of the Gujarat High Court have depended upon three circumstances to distinguish the amount payable under s. 68 of the Finance Act, 1965, from the income-tax payable either under the Indian I.T. Act, 1922, or under the I.T. Act, 1961 : (i) that the charge under the I.T. Act is on the total income of the previous year and not on any particular item of income, but the tax referred to in sub-s. (1) of section 68 cannot be construed to mean charge of income-tax ; (ii) payment of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular year and the fact that certain deductions which can normally be claimed when the assessment is under the regular I.T. Act are not allowed, would not in any way make the tax payable under s. 68 anything other than income-tax, that being a tax on the income already earned. It can, however, be as in this case, income which has been earned in the several previous years on which tax is paid as per a single Finance Act. It is very clear that the charge under s. 68 is not at all a new charge, but it is a charge which is imposed under the I.T. Act, though at a rate different from the usual rates prescribed by the relevant Finance Act. As observed in Bansidhar Podday's case [1978] 112 ITR 957 (Cal), s. 68 of the Finance Act does not impos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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