Refund of disclosure-scheme deposits allowed after protective wealth-tax assessments were cancelled and no demand survived.

Amounts deposited under the Voluntary Disclosure of Income and Wealth Act, 1976 could not be retained once the protective individual wealth-tax assessments were cancelled. The Tribunal noted that the declarations and returns were processed under the Wealth-tax Act, 1957, and after annulment of the assessments the Revenue could not deny refund by treating the payments as confined to the disclosure scheme. The sums were refundable as deposits without any surviving demand, or alternatively were first liable to credit and adjustment under section 15(7) of the disclosure statute and then refundable under section 34 of the Wealth-tax Act. Refund was therefore admissible.

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Issues: Whether refund was admissible of the amounts deposited under the Voluntary Disclosure of Income and Wealth Act, 1976 after the protective individual wealth-tax assessments were cancelled.

Analysis: The declarations and accompanying wealth-tax returns filed under the disclosure scheme were forwarded to the Wealth-tax Officer and assessments were completed under the Wealth-tax Act, 1957. After the Tribunal cancelled the individual assessments, the Wealth-tax Officer could not deny refund by contending that the payments were confined to the disclosure scheme. The amounts had either become refundable as deposits not capable of appropriation against any surviving demand, or, at the least, were liable to credit and adjustment under section 15(7) of the disclosure statute and then refundable under section 34 of the Wealth-tax Act, 1957. The protective nature of the assessments also meant that no final tax recovery could survive once the assessments were annulled.

Conclusion: Refund was admissible and the Revenue's challenge failed; the assessees were entitled to succeed.

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