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Issues: (i) Whether the assessee's declaration dated 24 December 1997 under the Voluntary Disclosure of Income Scheme, 1997 could be treated as information available to the Assessing Officer for reopening under sections 147 and 148 of the Income-tax Act, 1961. (ii) Whether such information was sufficient to form the Assessing Officer's belief that income had escaped assessment.
Issue (i): Whether the assessee's declaration dated 24 December 1997 under the Voluntary Disclosure of Income Scheme, 1997 could be treated as information available to the Assessing Officer for reopening under sections 147 and 148 of the Income-tax Act, 1961.
Analysis: The declaration was made after the assessee was found in possession of cash and the amount was bifurcated by the assessee across the relevant assessment years. The declaration was not accepted under the scheme because the tax was not paid within the prescribed time, but the scheme did not grant immunity from assessment proceedings. The Court distinguished the authorities relied upon by the assessee and held that the declaration remained an admissible piece of information and evidence for the limited purpose of reassessment.
Conclusion: Yes. The declaration constituted information available to the Assessing Officer for invoking reassessment proceedings.
Issue (ii): Whether such information was sufficient to form the Assessing Officer's belief that income had escaped assessment.
Analysis: At the stage of issuing notice under section 148, the Court applied the settled rule that only relevant material and a prima facie basis are required, and the sufficiency or correctness of that material is not to be tested then. Since the assessee's own declaration linked the cash to the relevant years and no satisfactory source was explained, the material was adequate to support the formation of belief.
Conclusion: Yes. The information was sufficient to justify the Assessing Officer's belief that income had escaped assessment.
Final Conclusion: The reopening was upheld and the additions sustained, as the reassessment was founded on relevant material and the assessee failed to explain the source of the cash.
Ratio Decidendi: A declaration made under the Voluntary Disclosure of Income Scheme, 1997 may constitute relevant material for reassessment where the scheme grants no immunity from assessment proceedings, and at the stage of reopening the Assessing Officer need only have prima facie material giving rise to a reasonable belief of escapement of income.
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