Reassessment on invalid VDIS disclosure and unexplained jewellery upheld where the assessee failed to rebut section 69A presumption.

A declaration under the Voluntary Disclosure of Income Scheme, 1997 does not protect disclosed assets where the tax due under the scheme is not paid; in that situation, the declaration may be treated as unavailable for scheme protection and can form material for reopening assessment under sections 147 and 148. Reassessment on that basis was upheld. The analysis also restates that, under section 69A, if an assessee is found to own jewellery or other valuables and gives no satisfactory explanation of their nature and source, the value may be deemed income of the year in which the asset is found. The statutory presumption is rebuttable, but the burden lies on the assessee to explain acquisition satisfactorily.

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Issues: Whether reassessment under sections 147 and 148 of the Income-tax Act, 1961 could be initiated on the basis of a declaration under the Voluntary Disclosure of Income Scheme, 1997 showing ownership of jewellery, and whether the value of such jewellery was assessable under section 69A for the relevant assessment year.

Analysis: A declaration under the scheme, if tax is duly paid, excludes the disclosed income from inclusion in total income and the declaration remains protected. Where the tax required under the scheme is not paid, the declaration is treated as never having been made for the purposes of the scheme. In that situation, the declaration can constitute material for reopening assessment. Under section 69A, where the assessee is found to be the owner of jewellery or other valuables and offers no satisfactory explanation about the nature and source of acquisition, the value may be deemed to be income of the financial year in which the asset is found. The presumption is rebuttable, but the burden lies on the assessee to furnish an acceptable explanation.

Conclusion: Reassessment was validly initiated on the basis of the declaration, and the Tribunal was not justified in holding the notice under section 148 invalid for want of jurisdiction. The question was answered in favour of the Revenue.

Ratio Decidendi: An invalid VDIS declaration can furnish material for reassessment, and unexplained jewellery found with the assessee is assessable as income of the year in which it is found unless the assessee rebuts the statutory presumption with an acceptable explanation.

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