Hari Swarup, J.:— This reference has been made at the instance of the assessee in respect of the assessment year 1967-68. The question of law referred for our opinion is:
“Whether, on the facts and in the circumstances of the case, the assessee had discharged the onus which lay on it to explain the source of the deposits of Rs. 15,000 introduced in the business in the accounting year 1967-68?”
2. In the account of the partnership fund, an amount of Rs. 10,000 was found credited in the account of Smt. Indra Devi and another amount of Rs. 5,000 in the account of Sri Prem Wati. These two ladies are the wives respectively of the two partners in the firm. The assessee was required to explain these two cash credits. The assessee filed affidavits of the two ladies as also their own to the effect that the money belonged to the ladies. They also produced the evidence to show that the ladies had disclosed these amounts in pursuance of the voluntary disclosure scheme set out in the Finance (No. 2) Act of 1965 and that tax had been paid by the two ladies on these two amounts under that scheme. The Income-tax Officer held that the explanation given by the assessee was not satisfactory within the meaning of section 68 of the Income-tax Act, 1961.
3. The assessee went up in appeal. The Appellate Assistant Commissioner of Income-tax held that the acceptance of the disclosure petitions by the Commissioner meant the acceptance of the fact that the amounts belonged to the ladies which they had disclosed under the scheme. On that basis the Appellate Assistant Commissioner held that the source of the cash credits had been explained by the assessee. The appeal was accordingly allowed and the assessment was reduced by a sum of Rs. 15,000. The department went up in appeal before the Tribunal. The Tribunal set aside the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer. According to the Tribunal the assessee had failed to explain the source of the deposits. So far as the disclosures made by the two ladies under the Finance (No. 2) Act of 1965 were concerned, the view of the Tribunal was that they were of no relevance. So far as the affidavits filed by the ladies were concerned, the Tribunal was of the view that the vague statements contained therein that the amount belonged to them was not acceptable, as the ladies had failed to prove any material to establish the source from which they derived the money. The Tribunal did not believe the assessee's version that the money had been received from these two ladies.
4. As the question referred to us is not as to whether the Tribunal was right in rejecting the affidavits filed in the case, the rejection of the affidavits by the Tribunal has to be taken as final. The question referred to us will thus have to be considered only with respect to the Tribunal's finding that the disclosures made by the two ladies could not amount to a proof that the amount belonged to them and ipso facto could not discharge the onus which lay on the assessee of explaining the cash credits.
5. Section 24 of the Finance (No. 2) Act of 1965 (Act No. 15 of 1965), permitted the making of voluntary disclosure in respect of the amount representing income chargeable to tax under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961, for any assessment year commencing on or before the 1st day of April, 1964. On such disclosure being made, the amount was to be charged to income-tax in accordance with sub-section (3) of section 24 of the Act, taking the disclosed income as the taxable income of the declarant. The voluntary disclosure scheme only permitted the bringing forward of income for being taxed; it did not require the investigation of the claim of the declarant. If a person made a declaration, the Commissioner was under obligation to assess the same to tax. The only thing which was to be decided by the Commissioner was that the amount was disclosed voluntarily and had not already been detected by the department. The declaration and assessment under the Finance (No. 2) Act of 1965 did not involve any investigation into the correctness of the declaration or any determination that the amount belonged to the declarant.
6. The Tribunal was also right in holding that the mere charge of tax on the amount declared under the voluntary disclosure scheme could not have the effect of converting the money into the income of the declarant if in fact it did not belong to her. The Finance (No. 2) Act of 1965 only permitted to bring forth for taxation of undisclosed income by persons to whom it belonged, and neither intended nor had the effect of converting the income belonging to the persons behind the screen into the income of the declarant. The disclosure made by the two ladies and the tax paid thereon was thus of no relevance in establishing either that the money belonged to them or that it did not belong to their respective husbands, who had brought it into the accounts of the assessee-firm. The circumstance was, therefore, not relevant for discharging the burden which lay on the assessee under section 68 of the Income-tax Act, 1961, of explaining the cash credits.
7. As the affidavits had been discarded and the circumstances of disclosure under the Finance (No. 2) Act, 1965, and the payment of tax on the amounts disclosed was not relevant to prove the ownership of money, we are of the opinion that the Tribunal was right in holding that the assessee had failed to discharge the onus which lay on him to explain the source of the deposits. We, accordingly, answer the question in the negative and against the assessee. The Commissioner of Income-tax will be entitled to his costs which we assess at Rs. 200.
8. Question answered in the negative.
Comments