Separate tax charge on disclosed concealed income is not a deductible debt for net wealth computation.

Tax paid on concealed income under section 68 of the Finance Act, 1965 is treated as a separate and distinct charge on disclosed income, not as a concessional quantification of the general income-tax liability under the Income-tax Acts. Because the levy operates ad hoc and outside the normal incidents of assessment, the amount paid under that disclosure scheme is withdrawn from assessability under the Income-tax Act. It therefore does not represent a pre-existing income-tax debt owed by the assessee and cannot be deducted as a debt in computing net wealth for wealth-tax purposes. The issue is resolved against deductibility and in favour of the Revenue.

---

---

Issues: Whether tax paid on concealed income under section 68 of the Finance Act, 1965, is deductible as a debt owed in computing net wealth.

Analysis: Section 68 of the Finance Act, 1965 creates a separate and distinct charge on concealed income disclosed under that section. The tax so paid is not a mere concessional quantification of liability under section 3 of the Indian Income-tax Act, 1922 or section 4 of the Income-tax Act, 1961. It is levied ad hoc on disclosed income irrespective of the assessment year, without the normal incidents of assessment under the Income-tax Act. Once tax is paid under section 68, the amount is withdrawn from assessability under the Income-tax Act and is not payment in discharge of the general income-tax liability arising under the charging provisions of the Income-tax Act.

Conclusion: Tax paid under section 68 of the Finance Act, 1965 is not deductible as a debt owed by the assessee for wealth-tax purposes. The answer is against the assessee and in favour of the Revenue.

Ratio Decidendi: Tax levied under a distinct statutory disclosure scheme, where it constitutes a separate charge on specified concealed income, is not a pre-existing income-tax liability and therefore cannot be treated as a debt owed for computing net wealth.

---