2003 Supreme(Cal) 51

High Court Of Calcutta
D. K. SETH, RAJENDRA NATH SINHA
COMMISSIONER OF INCOME-TAX - Appellant
Versus
BIMAL KUMAR DAMANI - Respondent
IT Reference 39  Of  1997
Decided On : 02/10/2003

A voluntary disclosure is a disclosure of undetected concealed income without any compulsion to disclose the income concealed.

Headnote:

INCOME TAX - Voluntary disclosure scheme - Conditions for availing amnesty - Detection of concealed income - Meaning of - Disclosure made before detection - Whether voluntary - Element of voluntariness - Full and true disclosure - Meaning of - Co-operation in enquiry - Meaning of - Non-payment of tax under Clause (b) of the scheme - Whether disentitles assessee from benefit of scheme - Claim for deduction - Whether disentitles assessee from benefit of scheme.

Fact of the Case:

The assessee was intercepted by customs authority and US $ 47,700 and Indian currency of Rs. 1,500 were recovered. A proceeding under Section 135 (1) of the Customs Act was initiated against the assessee for possessing and dealing with smuggled currency. The customs authority had passed on the information to the Income-tax Department. The Income-tax Department did not take any steps. On October 9, 1986, the assessee filed a return seeking immunity under the voluntary disclosure scheme. The assessee denied the ownership but made out an alternative case, if found otherwise, for deduction of the amount confiscated by the customs authority as business loss. This was not accepted by the Assessing Officer, the Commissioner (Appeals) as well as the learned Tribunal.

Finding of the Court:

The disclosure was made before the detection of concealed income. The disclosure was not voluntary as the assessee denied the ownership of the amount disclosed and made an alternative claim for deduction as business loss. The disclosure was not full and true as the assessee did not disclose the nature of the amount of the concealed income. There was no co-operation in the enquiry as the assessee denied the ownership of the amount disclosed. The non-payment of tax under Clause (b) of the scheme did not disentitle the assessee from the benefit of the scheme as there was an arguable claim for deduction. The claim for deduction did not disentitle the assessee from claiming voluntary disclosure or from claiming amnesty from payment of tax under Clause (b) of the scheme.

Issues: Whether the disclosure was made before the detection of concealed income. Whether the disclosure was voluntary. Whether the disclosure was full and true. Whether there was co-operation in the enquiry. Whether the non-payment of tax under Clause (b) of the scheme disentitles the assessee from the benefit of the scheme. Whether the claim for deduction disentitles the assessee from claiming voluntary disclosure or from claiming amnesty from payment of tax under Clause (b) of the scheme.

Ratio Decidendi: The detection of concealed income is a positive action something more than mere receipt of information. A disclosure made before the detection of concealed income is a voluntary disclosure. An element of voluntariness is essential for a voluntary disclosure. The question of voluntariness arises when an income is disclosed without any compulsion. The compulsion of the assessee would arise only when the Income-tax Department would start investigation on the basis of the scrutiny or examination of the material before them. A full and true disclosure means that the income disclosed was the income of the assessee, which he was disclosing. There cannot be any element of chance. Co-operation in the enquiry means to work together or in conjunction or to help each other for the same end, a fair contest. The non-payment of tax under Clause (b) of the scheme does not disentitle the assessee from the benefit of the scheme if there is an arguable claim for deduction. A claim for deduction does not disentitle the assessee from claiming voluntary disclosure or from claiming amnesty from payment of tax under Clause (b) of the scheme.

Final Decision: The reference is answered in the negative in favour of the Revenue. The matter is remanded to the learned Tribunal for deciding the question on the merits as to whether the penalty under Section 271 (1) (a), (c) and Section 273 (1) is imposable on the assessee or not.