- (1.) These two Tax Appeals involve identical facts as well as same question of law and as such, they are tagged together for hearing and are heard by taking the facts of T.A No.35/2001. Both the matters are pertaining to the assessment year 199798. As per the facts of T.A No.35/2001, a survey was conducted in the premises of the appellant under section 133A of the Income Tax Act, 1961, on 16th October, 1996 and thereafter, the appellant disclosed its stock, cash etc. under Voluntary Disclosure of Income Scheme, 1997 and submitted his disclosure on 26th December, 1997 declaring his income of Rs.9,72,723/, which is undisclosed income, which includes stock, cash as well as amount of sundry debtors. As per the appellant's application, it has disclosed its undisclosed income of the years 199495, 199596 and also of the year 199697. The appellant claims that it has disclosed undisclosed stock, cash and amount of sundry debtors for previous years, which is pertaining not only to the assessment year in which survey was conducted, but also of three previous years to the date of survey, meaning thereby that, survey was conducted on 16th October, 1996, previous year for this survey is the year 199697 and assessment year pertaining to the survey year is 199798. The appellant's contention is that since disclosure was made on 26th December, 1997, whatever has been disclosed by the assessee on 26th December, 1997 was also including the stock, cash and amount of sundry debtors as on 31st March, 1996. The said stock, cash and amount of sundry debtors, which increased because of disclosure, which were available on 31st March, 1996 as closing balance, became the opening balance for 1st April, 1996, and therefore, stock, cash and amount of sundry debtors as on 31st March, 1996, is for the previous year 199596 and is the opening balance of the assessment year 199697. Learned counsel for the appellant, Ms. A.R.Choudhary, submitted that as per clause 64(2)(ii), the appellant was not entitled to the benefit of voluntary disclosure of income under clause 64(1) in relation to the income in respect of only one "previous year" to which survey under section 133A of the Income Tax Act was carried out and is entitled to benefit of the Scheme of 1997 in respect to any earlier previous years, meaning thereby that there is exclusion of the benefit of VDIS for one year only and this benefit is not taken away for any previous year to previous years. So also has been made clear by the Circular issued by CBDT and particularly Circular No.755 dated 25th July, 1997. In answer to question no.27, it has been made clear that survey under section 133A(5) of Income Tax Act will also bar a person from making a disclosure for the "previous year in which survey was carried out". Then it was further made clear in answer to question no.36 that a declaration can be made under VDIS in respect of all previous years except the previous year to the survey and it has also been made clear that even declaration can also be made for the subsequent assessment years. In addition to the above, CBDT Circular No.754 dated 10th June, 1997 made it clear in answer to question no.23 that in respect of survey under section 133A, the declarants are debarred for that previous year only. In sum and substance, contention of the appellant is that in VDIS, there are some restrictions against disclosure of undisclosed income and that has been confined to a particular year only and it has not been restricted to any previous year to previous year/years or even subsequent years' disclosure. The appellant's claim is nowhere that the appellant is entitled to any benefit of VDIS for the previous year 199697 or assessment year 199798. The appellant's contention is that whatever stock, cash and amount of sundry debtors has been accepted under VDIS by a lawful order is required to be accepted as stock, cash and amount of sundry debtors as on the closing date and also as automatic, stock, cash and amount of sundry debtors on the opening date of the subsequent year. Therefore, according to the learned counsel for the appellant, stock, cash and amount of sundry debtors, which were declared for the year 199495 and 199596, are required to be accepted to the stock, cash and amount of sundry debtors even for the assessment year 199798 because of the simple reason that the appellant's application under VDIS has been accepted and it has been accepted by the Revenue that on a particular year, the appellant had a specific amount of stock, cash and sundry debtors in hand. The benefit under VDIS is a specific liability and benefit but what is the consequence, it cannot be denied in fact situation which will depend upon the facts which stand conclusively determined by acceptance of the appellant's disclosure. The appellant is, therefore, claiming enhancement in stock, cash and amount of sundry debtors due to its disclosure of stock, cash and amount of sundry debtors of previous years, which stand increased due to assessee's voluntary disclosure and this income will continue to be in accordance with stock, cash and amount of sundry debtors of the appellant for subsequent years.
(2.) Learned counsel for the appellant, Ms. A.R.Choudhary, relied upon a Division Bench judgment of this Court delivered in the case of Sri Gyan Chand Jain Vs. Commissioner of Wealth Tax, Bihar (II), Ranchi (Tax Case No.23/1994 and connected matters) decided on 12th December, 2012 (by us) and submitted that the Division Bench, in the said judgment, after considering the judgment of Supreme Court delivered in the case of Commissioner of Wealth Tax Vs. J.K.Cotton Manufacturers Ltd. & Ors. [(1984) 146 ITR 552 (SC)], held, that after lapse of sufficiently a long period, no presumption can be raised that a secret profit earned sometime during the concerned year has continued to be held by the assessee on the valuation date. Hon'ble Supreme Court held, that once it is held that intangible property of the assessee was in existence on a particular date or period of time, which may have been a secret earned profit, then the said secret earned profit is presumed to continue in the hands of the assessee/such person for a reasonable period of time and thereafter, a presumption can be drawn of extinction of the said property. With the help of the judgment of Sri Gyan Chand Jain, learned counsel for the appellant submitted that in view of the reasons given in the above judgment, it is to be presumed that, once it has been accepted by the Revenue that in the previous years, the appellant had some undisclosed stock, cash and amount of sundry debtors, then unless it is proved by the Revenue that stock, cash and amount of sundry debtors were sold out by the appellant, the presumption is required to be taken that the stock, cash and amount of sundry debtors continued in the hands of the appellant for a reasonable period. Here in this case, the existence of stock, cash and amount of sundry debtors in the hands of the appellant is claimed only for three years from 1994 to 1997 only and there is no enquiry conducted by the Assessing Officer to hold that the appellant had sold the undisclosed stock and spent the cash and amount of sundry debtors and that has been sold by the appellant in any previous year and that is also in short period of three years.
(3.) In addition to the above issue, in T.A No.35/2001, there is one more issue that, in identical facts of the case involved in T.A No.36/2001, the Revenue has already given benefit of reduction of 5% of stock price on account of the damaged goods, which has been denied in T.A No.35/2001. It is submitted that the Assessing Officer has calculated stock value at the time of survey and took the sale price mentioned and did not calculate the stock value considering the reduction in the value of the stock on account of discount on cut pieces and discount due to outdated design or goods which were damaged.;