Unexplained income and voluntary disclosure schemes: deeming fiction does not bar section 68 scrutiny of another assessee.

A voluntary disclosure scheme did not prevent the Department from examining unexplained income in the hands of a person other than the declarant, because the deeming fiction was limited to the declarant and did not displace section 68 in another assessee's assessment. Applying that principle, the assessee remained bound to prove the source of the sum credited, and failure to discharge that burden meant the addition could not be deleted. The Tribunal's earlier reliance on the voluntary disclosure scheme was therefore incorrect in law, and the assessed amount was treated as unexplained income for want of proof of source.

---

---

Issues: Whether the assessee had satisfactorily proved the source of the sum of Rs. 30,000 and whether the addition of that amount as unexplained income was liable to be deleted.

Analysis: The question arose in a reference under section 256(1) of the Income-tax Act, 1961. The Tribunal had proceeded on the basis of an earlier view that the voluntary disclosure scheme barred the Department from treating the same amounts as unexplained income in the hands of a person other than the declarant. That view stood displaced by the Supreme Court, which held that the deeming fiction attached to the voluntary disclosure provision was limited to the declarant and did not override section 68 in assessment proceedings relating to another person. The assessee therefore could not rely on that provision to exclude the applicability of section 68.

Conclusion: The assessee did not discharge the burden of proving the source of the amount, and the deletion of the addition was not legally justified.

---