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HIGH COURT OF CALCUTTA
Sinha
AMARENDRA NARAYAN ROY - Appellant
Versus
COMMR. OF INCOME-TAX, WEST BENGAL - Respondent
Civil Revn. Case 3049 Of 1952
Decided On : DECEMBER 18, 1953
INCOME TAX - Voluntary Disclosure Scheme - Validity - Whether the scheme is invalid in law - Whether the assessee can agree to the quantum of liability without an assessment - Whether the assessee can waive the machinery portion of the Income Tax Act - Whether the assessee is entitled to relief under Article 226 of the Constitution.
Fact of the Case:
The petitioner, a zemindar, exchanged high denomination notes of Rs. 1,21,000/- in January 1946. The Income Tax Officer considered this amount to represent concealed income and proposed to treat it as income received during the assessment year. The petitioner filed a disclosure petition under the Voluntary Disclosure Scheme introduced by the Government of India. The I.A.C. accepted the disclosure petition and spread the amount over 8 years. The petitioner agreed to the settlement and paid Rs. 1000/- in part payment. Later, the petitioner challenged the validity of the disclosure proceedings and sought to withdraw his acceptance of the settlement.
Finding of the Court:
The Court held that the Voluntary Disclosure Scheme is not invalid in law. The assessee can agree to the quantum of liability without an assessment. The assessee can waive the machinery portion of the Income Tax Act. The assessee is not entitled to relief under Article 226 of the Constitution.
Issues: 1. Whether the Voluntary Disclosure Scheme is invalid in law? 2. Whether the assessee can agree to the quantum of liability without an assessment? 3. Whether the assessee can waive the machinery portion of the Income Tax Act? 4. Whether the assessee is entitled to relief under Article 226 of the Constitution?
Ratio Decidendi: 1. The liability to pay Income-tax depends upon the charging sections and not upon those parts of the Act which relate to the machinery of realising the tax. 2. It is open to the assessee to agree to the quantum of the liability without an assessment. 3. The assessee can waive the machinery portion of the Income Tax Act. 4. An application under Article 226 of the Constitution cannot be lightly granted. The Court will not interfere with arrangements which parties may have come to with their eyes open and fully cognizant of the consequences of their acts.
Final Decision: The Rule was discharged. The interim orders were vacated. There was no order as to costs.
( 1 ) THIS is a Rule issued upon the opposite parties, the Commissioner of Income Tax, West Bengal, the Inspecting Assistant Commissioner of Income Tax, Range V, Calcutta, and the Income Tax Officer, West Dinajpur and Malda, to show cause why a writ in the nature of certiorari should not issue directing them to bring up to this Court the entire proceedings relating to disclosure mentioned in the petition so that the same may be quashed or otherwise dealt with or why a writ in the nature of mandamus should not issue directing them to rescind the said disclosure proceedings or why such other appropriate writs should not be issued or orders made as to this Court may seem fit and proper.
( 2 ) THE facts of the case are shortly as follows: The petitioner Amarendra Narayan Roy, is a zemindar of Bulbulchandi in the district of Malda, He is the 'karta' of a Mitakshara Hindu undivided family and is assessed as such to income-tax. In due course the assessee filed a return of income-tax for the assessment year 1947-48. It was then discovered by the Income Tax Officer that in or about January 1946 (which was within the accounting period) the petitioner had exchanged high denomination notes of the value of Rs. 1,21,000/ -. It is well known that an Act was passed abolishing high denomination notes of Rs. 1000/- and upwards as legal tender. It was this enactment that compelled the petitioner to have the notes exchanged. The Income Tax Officer considered this amount to represent concealed income and proposed to treat it as income received during the assessment year. Before I proceed further, I might mention that in the declaration in the prescribed form (as submitted by the petitioner on 22-1-1946) for exchange of high denomination notes, entry No. 16 required the declarant to state the source from which the declarant came to possess the Bank notes and the time when he did so. The answer given by the petitioner was: "the exact time cannot be ascertained, we have received in exchange. "
( 3 ) ON or about 14-5-1948, the petitioner filed the statement (Annexure 'a' to the petition) showing an amount of Rs. 2,29,274/1/9 pies as accumulation in the "home Chest" account between 1300 B. B. and 1351 B. S. On 5-8-1951, the petitioner filed a petition before the Income Tax Officer, Malda, in which he gave a history of how monies were accumulated in the "home Chest" account, how a portion was taken out arid lent to the Maharaja of Cossimbazar, how monies were realised from the Cossimbazar Estate and how monies were put back into the "home Chest" account, partly through the petitioner's separate business. In that petition the petitioner stated as follows:"in the circumstances, your Honour will be pleased to treat the H/d notes exchanged as savings of the estate and not income. "on or about 19-5-1951, the Government of India introduced what is known as the "voluntary Disclosure System. " This is not based on any legislative measure. The Government of India intimated to the public that if persons made voluntary or quasi-voluntary disclosure before the specified data of their concealed income, they would be allowed certain advantages including immunity from prosecution. In imposing penalities, the Income Tax Department would take into account as mitigating circumstances the speed with which disclosures were made and the extent of co-operation received from the assessee. In such an event, the Department was also willing to consider the assessee's capacity to pay in the matter of fixing instalments or allowing time for payment. Although this was published in the Press on or about 15-6-1951, and the time limit given was 31-8-1951, it appears that the time limit imposed for disclosure was extended from time to time.
( 4 ) ON 8-3-1952 the petitioner filed a disclosure petition (Annexure 'c' to the petition ). In this petition the petitioner stated that he wanted to take advantage of the scheme. The petitioner proceeded to say as follows:"that the pe
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