V.K. Singhal, J. - (1.) THESE references under Section 256(1) of the Income-tax Act, 1961, have been made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. Since the question of law involved in all these cases is common, they are disposed of by this common judgment. The question of law framed by the Income-tax Appellate Tribunal is as under: "Whether, on the proper interpretation and construction of the Voluntary Disclosure of Income and Wealth Act, 1976, the Tribunal was correct in holding that the provisions of Sections 9 and 10 would not apply to a case of disclosure made under Section 14 of the said Act ?"
(2.) THE brief facts of the case are that the firm, Madira Kraya Vikraya Sangh, Kota, was carrying on the business of sale and supply of country liquor. THE assessment of the firm was completed under Section 143(3) of the Income-tax Act, 1961, and, while assessing the firm, the Income-tax Officer had allowed refund in respect of the tax which was deposited under the Voluntary Disclosure of Income and Wealth Act, 1976 (hereinafter to be referred to as "the Act, 1976"). A declaration has been submitted under the Act of 1976 by the assessee as one of the partners of the firm had deposited the tax due in accordance with the provisions of the said Act. This refund has arisen on account of allowing the deduction of loss. Subsequently, the Income-tax Officer initiated proceedings under Section 154 read with Section 251 against the assessees who were the partners of the firm on the ground that the Act of 1976 does not provide for refund of the tax which has been paid and, accordingly, the assessment order was rectified and the demand was created. Against these assessment orders, the matter was challenged before the Appellate Assistant Commissioner of Income-tax who has upheld the orders passed by the assessing authority and has held that Section 9 itself imposed an unqualified restriction on set-off of loss or relief granted to the assessee in any appeal in respect of voluntary disclosure of income and, therefore, the appellant is not entitled to set-off of losses or grant of refund. THE assessees challenged this matter before the Income-tax Appellate Tribunal, Calcutta Bench 'D', Camp at Jaipur. THE Income-tax Appellate Tribunal has held that the provisions of Sections 8 and 10 of the Act of 1976 were intended to apply to disclosures made under the provisions of preceding Sections and the intention of the framers of the Act could not be that Section 10 would apply to disclosures made under any of the provisions of the Act, even though they were in accordance with the provisions found in the latter Sections. It was held that there was nothing in Sections 9 and 10 of the Voluntary Disclosure of Income and Wealth Ordinance by which the refund could be denied to the appellants. According to the Tribunal, the provisions of Sub-section (1) of Section 3 and Section 14 have used different phraseology inasmuch as Section 14(6) of the 1976 Act requires that where any tax is paid by the declarant in accordance with the provisions of Section 5 read with Sub-section (5) of this section, credit therefor has to be given to the declarant in the assessment made under the Indian Income-tax Act, 1922, or, as the case may be, the Income-tax Act, 1961, in respect of his total income of the previous year or years and assessment has to be made accordingly. For the purpose of appreciating the arguments of both learned counsel, the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976, are reproduced and discussed hereunder. This Act replaced the Ordinance and in the Statement of Objects and Reasons, it was provided in the Bill that "the President promulgated the Voluntary Disclosure of Income and Wealth Ordinance, 1975, on October 8, 1975, to provide for voluntary disclosure of the income and wealth and for matters connected therewith or incidental thereto. The scheme of voluntary disclosure contained in the Ordinance offered an opportunity to persons who had evaded tax in the past to declare their undisclosed income and wealth, pay tax thereon on a reasonable basis and return to the path of civic responsibility in future. The operation of the scheme is restricted to declarations made during the period from October 8, 1975, to December 31, 1975. In order to enable persons to disclose their concealed income or wealth represented by gold and articles or ornaments made of gold and with a view to removing certain practical difficulties experienced in the operation of the scheme of voluntary disclosure contained in the Ordinance of October 8, 1975, the President promulgated on November 29, 1975, another Ordinance, namely, the Voluntary Disclosure of Income and Wealth (Amendment) Ordinance, 1975". According to the scheme of this Act, a charge was created of income-tax on the voluntarily disclosed income under Section 3 of the Act. A declaration was required to be submitted and the particulars were provided under Section 4 of the Act. Section 8 of the Act provided that the amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Income-tax Act and certain conditions were also prescribed for not including the income so disclosed in the total income of the declarant. Section 9 of the Act provided that the declarant shall not be entitled, in respect of the voluntarily disclosed income or any amount of income-tax paid thereon, to reopen any assessment or reassessment made under any of the Acts mentioned in Sub-section (1) of Section 8 or claim any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment. In Section 10, it was provided that any amount of income-tax paid in pursuance of a declaration made under Sub-section (1) of Section 3 shall not be refundable under any circumstances. Under Section 14, where any books of account or documents, money, bullion, jewellery or other valuable articles or things belonging to a person have been seized in a search and such person makes, on or after the date of commencement of this Act but before January 1, 1976, a declaration in respect of any income relating to the previous year in which such search was made or any earlier previous years for which the declarant has failed to furnish a return under Section 139 or has failed to disclose in a return of income furnished by him or the income has escaped assessment by reason of the 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, then, notwithstanding anything contained in Section 8(1) of the Act, the amount of income so declared shall not be taken into account for the purposes of payment of interest by the declarant under Sub-section (8) of Section 139 and Section 215/217 and for imposition of penalty under the Income-tax Act except under Section 221 of the Income-tax Act. This section is applicable to cases of search and seizure. It has further been provided in Section 14 that the declaration shall be made to the Commissioner and shall be forwarded to the Income-tax Officer and the information contained in the declaration could be taken into account for the purpose of proceedings relating to assessment or reassessment of income of the declarant under the Income-tax Act. The provisions of Sub-sections (5), (5A), (5B), (6) and (7) of Section 14 are reproduced hereunder : "(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. Explanation.--For the purposes of this sub-section and Sub-section (5A), tax chargeable in respect of the income of any previous year for which the declaration is made shall be,-- (a) where the declarant has not furnished a return in respect of the total income of that year and no assessment has been made in respect of the total income of that year, the tax payable on the income declared under Sub-section (1) for that year as if such income were the total income ; (b) where the declarant has furnished a return in respect of the total income of that year and no assessment has been made in pursuance of such return; the tax payable on the aggregate of the total income returned and the income declared under Sub-section (1) for that year as if such aggregate were the total income, as reduced by the tax payable on the basis of the total income returned ; and (c) where an assessment in respect of the total income of that year has been made, the tax payable on the aggregate of the total income as assessed and the income declared under Sub-section (1) for that year as if such aggregate were the total income, as reduced by the tax payable on the basis of the total income as assessed. (5A) A declarant who has not paid, in accordance with the provisions of Section 5, the tax chargeable in respect of the income of the previous year or years for which the declaration has been made shall, notwithstanding anything contained in Sub-section (5), be entitled to the immunity provided under Sub-section (1) if before the 1st day of January, 1978, the declarant, -- (i) pays the amount of such tax remaining unpaid ; and (ii) pays simple interest at the rate of twelve per cent. per annum on the amount of such tax remaining unpaid on the 31st day of March, 1976, from the 1st day of April, 1976, to the date of payment of such tax. (5B) The provisions of the Income-tax Act and any rules made thereunder shall, so far as may be apply, to the interest payable under Sub-section (5A) as if such interest were interest payable under Sub-section (2) of Section 220 of that Act. (6) Where any tax is paid by the declarant in accordance with the provisions of Section 5, read with Sub-section (5) or, as the case may be, in accordance with the provisions of Sub-section (5A), credit therefor shall be given to the declarant in the assessment made under the Indian Income-tax Act, 1922, or, as the case may be, the Income-tax Act, 1961, in respect of his total income of the previous year or years. (7) Nothing in Sub-section (1) shall apply in relation to any income which has been included in the total income of the declarant in any assessment made by the Income-tax Officer before the date on which the declaration under that sub-section is made." From a perusal of the provisions of Sub-section (1) of Section 14, it is evident that it is intended to apply to such persons where there was a search under Section 132 of the Income-tax Act, 1961, and certain items mentioned in Sub-section (1) were seized. The said person has been given the benefit of submitting the declaration if he has not furnished the return or if the return was submitted, but has not disclosed the income in the return before October 8, 1975, or the income has been underassessed or escaped assessment by reason of omission or failure on the part of such person to furnish a return or to disclose fully and truly all material facts necessary for his assessment or otherwise. In a case where certain items have been seized as a result of search, then the declaration could not have been made in accordance with the provisions of Section 3 and, therefore, this provision has been made under Section 14 for the benefit of such persons where a search was conducted and the items mentioned in this section were seized. This section is, however, not applicable in respect of any income for any assessment year which has not been disclosed in the return furnished after October 8, 1975, or for which the assessment has already been made by the Income-tax Officer before the date on which the declaration was made. The years in dispute have been shown at the top of this order against the number of reference itself, from which it would be evident that, in all these cases, the return was submitted before the coming into force of the Act of 1976.
(3.) UNDER Section 3(1) of the Act of 1976, a person can declare his income liable to tax for any assessment year up to 1975-76. This section is not a bar in respect of any undisclosed income for any previous year falling after the previous year in which the search was made. The provisions of Section 3 and Section 14 are applicable in respect of different fields. Section 14 is applicable for declaration of income in respect of the previous year in which the search was made or any earlier previous year thereto while the provisions of Section 3 are applicable in a case of search and seizure of account books, documents, money, bullion, jewellery or other valuable articles or things for the period subsequent to the previous year in which the search was made. Section 8 provides that the income voluntarily disclosed shall not be included in the total income of the declarant for any assessment year whereas Sub-section (4) of Section 14 provides that the copy of the declaration made under Sub-section (1) of this section has to be forwarded by the Commissioner to the Income-tax Officer and the information contained therein has to be taken into account for the purpose of proceedings relating to assessment or reassessment of the income of the declarant under the Income-tax Act, 1961. Section 10 provides that any amount of income-tax paid in pursuance of a declaration made under Sub-section (1) of Section 3 shall not be refundable in any circumstances. If the declaration is made under Section 3(1), then the amount of income-tax paid cannot be refunded. There is no such restriction in respect of the income-tax paid in pursuance of the declaration made under Sub-section (1) of Section 14. ;