The expression 'the voluntarily disclosed income' in the Voluntary Disclosure Act refers only to the income voluntarily declared under Section 3(1) and does not include declarations made under Section 14(1).

Jagannatha Shetty, J.—The following question has been referred under s. 256(1) of the I.T. Act, 1961, by the Income Tax Appellate Tribunal, Bangalore Bench :

"Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the declaration made by the assessee is under section 14 and, therefore, does not get the immunity under section 8 from being included in the total income in the assessment is right in law ?"

2. The assessee is a HUF deriving income from several partnership firms. For the assessment year 1973-74, the assessment was originally concluded on July 25, 1974, determining the total income of the assessee at Rs. 14,110. On August 30, 1974, the assessee filed a return of income disclosing a net income of Rs. 12,850. On September 29, 1975, there was a search under s. 132 of the I.T. Act in the business premises of the assessee and books of account and valuables were seized by the Income Tax authorities.

3. On October 8, 1975, the President of India promulgated an ordinance called Voluntary Disclosure of Income and Wealth Ordinance, 1975 (Ordinance No. 15 of 1975). That ordinance was replaced by the Voluntary Disclosure of Income and Wealth Act, 1976 (Act VIII of 1976) (called shortly "the Voluntary Disclosure Act").

4. In accordance with the above provisions, the assessee made a declaration of his income in Form No. B prescribed under the Voluntary Disclosure of Income and Wealth Rules, 1975.

5. On January 30, 1976, the ITO, issued a notice to the assessee under s. 148 of the Act for reopening the assessment for the year 1973-74. On March 3, 1976, the assessee filed a return including the sum of Rs. 3,120 which was disclosed under the Voluntary Disclosure Act.

6. On February 7, 1977, the assessee filed a revised return for the year 1974-75 disclosing the net income at Rs. 1,40,120 wherein he included the income of Rs. 1,27,164 which was declared under the Voluntary Disclosure Act. He urged before the assessing authority that the income declared under the Voluntary Disclosure Act should not be included for the purpose of assessment. the ITO, however, rejected that contention and included that income in the total income of the assessee and completed the assessment.

7. The above contention of the assessee has been rejected by all the authorities below. The question before us is whether the income declared by the assessee under s. 14(1) of the Voluntary Disclosure Act in Form No. B is entitled to be excluded from the total income of the assessee for the purpose of assessment.

8. The answer to the question turns on the relevant provisions of the Voluntary Disclosure Act and the Rules prescribed thereunder. Section 3(1) of the Voluntary Disclosure Act provides for charge of Income Tax on the income voluntarily disclosed.

9. Section 3(1)(c) reads :

"3. (1)...notwithstanding anything contained in the Indian Income Tax Act, 1922 (XI of 1922), or the Income Tax Act or in any Finance Act, Income Tax shall be changed in respect of the income so declared (such income being hereinafter referred to as the voluntarily disclosed income) at the rate or rates specified in the Schedule."

10. Section 4 provides for particulars to be furnished in the declaration under s. 3(1).

11. Section 5 provides for time for payment of Income Tax at the rates prescribed under the Schedule in respect of the voluntarily disclosed income.

12. Section 8 with which we are primarily concerned reads :

"8. Voluntarily disclosed income not to be included in the total income.

- (1) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian Income Tax Act, 1922.....if the following conditions are fulfilled, namely :- ..."

13. Section 9 to 12 provides for matters connected with the voluntarily disclosed income or incidental thereto.

14. Before proceeding further, we have to hark back to s. 3(2) which provides :

"(2) Nothing contained in sub-