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1998 Supreme(Cal) 500
High Court Of Calcutta
Y. R. Meena
NILESH HEMANI - Appellant
Versus
COMMISSIONER OF INCOME-TAX - Respondent
W. P. 878 Of 1998
Decided On : 11/26/1998
The benefit of the Voluntary Disclosure of Income Scheme, 1997 is not available to an assessee who discloses concealed income after the initiation of search proceedings under Section 132 of the Income-tax Act, 1961.
Headnote:
INCOME TAX - VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 - SECTION 64(2)(II) - SEARCH INITIATED UNDER SECTION 132 - DISCLOSURE OF CONCEALED INCOME - WHETHER PETITIONER ENTITLED TO BENEFIT OF SCHEME - INTERPRETATION OF SECTION 64(2)(II) OF THE SCHEME.
Fact of the Case:
Petitioner challenged the notice issued under Section 158BC of the Income-tax Act, 1961, seeking to tax concealed income disclosed under the Voluntary Disclosure of Income Scheme, 1997 (Scheme). Petitioner claimed that the concealed income was disclosed prior to the initiation of search proceedings under Section 132 of the Act and hence was entitled to the benefit of the Scheme.
Finding of the Court:
1. Petitioner failed to prove that he disclosed the concealed income before the initiation of proceedings under Section 132 of the Act. 2. Search warrants issued in the case of the petitioner on October 3, 1997, were in continuation of search proceedings initiated on October 1, 1997, in the case of Dhirajlal. 3. Clause (ii) of Sub-section (2) of Section 64 refers to concealed income, and the order issued on October 1, 1997, under Section 132(3) in respect of concealed income, initiated the proceeding under Section 132 on October 1, 1997. 4. Petitioner cannot be allowed to disclose concealed income, on October 3, 1997, of his father, against whom the search proceedings were initiated on September 30, 1997. 5. The impugned notice nowhere refers to Rs. 1,35,00,000; it only requires that the petitioner should file the true and correct return of his income for block assessment years 1988-89 to 1997-98.
Issues: 1. Whether the petitioner is entitled to the benefit of the Voluntary Disclosure Scheme, 1997? 2. Whether the petitioner can disclose the concealed income of his father against whom search is being conducted?
Ratio Decidendi: 1. The benefit of the Scheme is not available to the petitioner as he failed to disclose the concealed income before the initiation of search proceedings under Section 132 of the Act. 2. The petitioner cannot disclose the concealed income of his father against whom search proceedings were initiated.
Final Decision: Petition dismissed.
( 1 ) BY this petition, the petitioner has challenged the notice issued under Section 158bc of the Income-tax Act, 1961, and prayed that the notice be quashed and further prayed that the amount of Rs. 1,35,00,000 be returned to the petitioner.
( 2 ) THE case of the petitioner is that the petitioner has been carrying on business as importer and also carrying on business of dealing in shares for the last several years. In 1997, a Voluntary Disclosure Scheme (hereinafter called "the Scheme"), came into force with effect from July 1, 1997. Under that Scheme any person could make a declaration in respect of any income chargeable to tax under the Income-tax Act, 1961 (hereinafter referred to as "the Act"), which has not been subject to tax earlier. Section 67 (1) of the Scheme provides that the declarant could file a declaration without paying the tax but such tax has to be paid within three months from the date of filing of the declaration with simple interest at the rate of 2 per cent, per month for the period from the date of filing of the declaration to the date of payment of tax and document in proof of such payment is to be filed within the said period of three months.
( 3 ) THE petitioner filed the declaration on October 3, 1997, disclosing the amount of Rs. 1,35,00,000 which was not taxed earlier. The case of the petitioner is that the said amount of Rs. 1,35,00,000 is lying in locker No. 175 of the Allahabad Bank, Peddar Road Branch, Mumbai, and that he requested the Departmental authority to adjust the tax payable on the said amount, out of the amount lying in the said locker of the bank, but the request has not been accepted regarding adjustment of tax out of money in the locker. Thereafter, the petitioner managed the tax amount on his own and paid the tax within three months as required under the Scheme.
( 4 ) THE case of the petitioner that once he disclosed the concealed income under the Scheme, no notice under Section 158bc of the Act should be issued to tax that income once again, ignoring the provisions of the Scheme. Therefore, the case of the petitioner is that notice should be quashed and the amount found in the said locker should be returned to the petitioner.
( 5 ) COUNSEL for the Revenue submits that there was a search under Section 132 of the Act at the residence of the petitioner, which is shared by the other members of the family of the petitioner, on October 1, 1997. During search it came to the notice of the authorised officer that the locker No. 175 stands in the names of Dhirajlal J. Hemani, Smt. Manjula D. Hemani, Nilesh D. Hemani and Smt. Meena N. Hemani. Therefore, four more search warrants were issued. Dhirajlal did not disclose the locker No. 175 of the Allahabad Bank before it came to the notice of the search party.
( 6 ) HE further submitted that a prohibitory order under Section 132 (3) has been passed on October 1, 1997, itself, by the authorised officer, prohibiting Dhirajlal J. Hemani, Smt. Manjula D. Hemani, Nilesh D. Hemani, Meena N. Hemani, Parag D. Hemani and Smt. Babita D. Hemani from removing, parting with or otherwise dealing with the articles lying in any locker of the bank. One more order under Section 132 (3) of the Act was passed specifically in respect of locker No. 175 of the Allahabad Bank and served on the bank manager on the same date. It could not be served on October 2, as it was a holiday. This order could not be served on the petitioner and other members of his family as they were not available for service of that order.
( 7 ) THE grievance of the petitioner is that when the concealed income is disclosed under the Voluntary Disclosure of Income Scheme, 1997, the petitioner is entitled to the benefit of the provisions of the Scheme, 1997.
( 8 ) WHETHER the petitioner is entitled for benefit under the Voluntary Disclosure Scheme ? Counsel for the petitioner heavily placed reliance on the opinion expressed on an application of the petitioner, by the Mem
