Voluntary disclosure by creditors does not bar tax assessment of unexplained cash credits in another person's books.

A declaration under the voluntary disclosure scheme taxed only the declarant and created a limited legal fiction; it did not determine ownership of the income for assessment proceedings against another person. The court stated that, absent any express exclusion, the Revenue could still examine the assessee's explanation for cash credits under section 68 of the Income-tax Act, 1961, and treat unsatisfactory credits as the assessee's income. Payment of tax by the creditors under the scheme therefore did not bar addition of the corresponding cash credits in the assessee's assessment.

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Issues: Whether acceptance of voluntary disclosure petitions under section 24 of the Finance (No. 2) Act, 1965 and payment of tax thereunder by the creditors precluded the Revenue from treating the corresponding cash credits in the assessee's books as unexplained income of the assessee who was not the declarant.

Analysis: The reference turned on the scope of the voluntary disclosure scheme. The court held that section 24 of the Finance (No. 2) Act, 1965 created a limited legal fiction under which the declared amount was taxed as the declarant's income, but it did not determine ownership of the income for all purposes or confer any benefit, concession, or immunity on persons other than the declarant. The absence of an express exclusionary provision in the 1965 Act did not mean that a declaration made by one person could bind assessment proceedings against another. The court approved the view that the scheme did not prevent the Income-tax Officer from examining the assessee's explanation under section 68 of the Income-tax Act, 1961, and from treating unsatisfactory cash credits as the assessee's income. The contrary view was rejected.

Conclusion: The voluntary disclosure by the creditors did not bar addition of the cash credits in the assessee's assessment, and the question was answered in the negative, against the assessee.

Ratio Decidendi: A declaration under the voluntary disclosure scheme taxes only the declarant and does not, by legal fiction, establish ownership of the income for assessment proceedings of another person or displace the burden under section 68 of the Income-tax Act, 1961 to explain cash credits.

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