TaxTMI 
TaxTMI 
2007 (5) TMI 200
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice premises on April 18, 1995, the petitioner thereafter had made a declaration of Rs. 1.2 crores as undeclared on-money. Thereafter, Mr. Tanna made a disclosure that it would be of some other firm. The contention of learned counsel for the respondent is that in the application for voluntary disclosure scheme made on December 26, 1996, in which he had failed to disclose all the relevant material. Over and above, the petitioner was called upon to furnish details as to the connection with regard to the firms. But even till date from Mr. Tanna all details and particulars of partnership firms are not forthcoming. Under these circumstances, we are not inclined to interfere and the petition stands dismissed." Vimal Chandra S. Dave, Ms. Neelam Kalsi, S. N. Singh and Ms. Pallavi Divekar, Advocates, for the appellants. Amarjit Singh and Vikas Singh, Additional Solicitors-General of India (Mrs. Neera Gupta and B. V. Balaram Das, Advocates, with them) for the respondents. JUDGMENT The judgment of the court was delivered by S. B. SINHA J.-Leave granted. Interpretation and application of the provisions of the Voluntary Disclosure of Income Scheme falls for our consideration in this appeal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lier by the Income-tax Department during the course of search and seizure action, the Voluntary Disclosure of Income Scheme 1997 certificate issued under section 68(2) of the Voluntary Disclosure of Income Scheme, 1997 and as such, the certificate under section 68(2) of the Voluntary Disclosure of Income Scheme 1997 dated March 10, 1998, issued by the Commissioner of Income-tax (Central)-II is held to be null and void." The appellant contended that the said order having been passed without complying with the principles of natural justice and behind its back was illegal. A writ petition was filed before the Bombay High Court and by an order dated February 4, 2004, the matter was directed to be considered de novo by the Commissioner of Income-tax, whereupon, again by reason of an order dated May 13, 2004, the Commissioner of Income-tax inter alia opined that as a partner is an intrinsic part of a firm, only because no specific search warrant was issued in the name of the assessee-firm, the same would not entitle it to take benefit of the 1997 Scheme. It was held: "The partner of the firm, Mr. Kauntey M. Tanna was searched and he answered the questions asked of him, as partner of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere to be fulfilled before the assessee can take benefit of the immunity given by the scheme. The broad conditions were that the assessee should make a full and true disclosure and that the information should not be in the prior knowledge of the Department. Neither of these two conditions have been met by the assessee in this particular case. At the time of the Voluntary Disclosure of Income Scheme declaration the assessee should have informed the Commissioner of Income-tax, Central-II, that there was a search and seizure operation and that the document on which basis the declaration was being made was seized at the time of the search operation. To the contrary the assessee has deliberately tried to mislead the Commissioner of Income-tax, Central-II, by stating that the Voluntary Disclosure of Income Scheme declaration was on the basis of the decision of the hon'ble Income-tax Appellate Tribunal. The assessee failed to mention in his declaration that the information of the on-money taken by it on the sale of flat/shop was already with the Department as a result of the search proceedings, therefore the assessee failed to make a full and true disclosure as envisaged in the Voluntary ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation and unfair disclosure has been made out. A Scheme known as the Voluntary Disclosure of Income Scheme, 1997 was made by Parliament under the Finance Act of 1997. The relevant provisions of the said Scheme, before we embark upon the rival contentions of the parties as noticed hereinbefore, may be noticed by us : "Section 63.(a) 'declarant' means a person making the declaration under sub-section (1) of section 64; Section 64. (1) Subject to the provisions of this Scheme, where any person makes, on or after the date of commencement of this Scheme but on or before the 31st day of December, 1997, a declaration in accordance with the provisions of section 65 in respect of any income chargeable to tax under the Income-tax Act for any assessment year (a) for which he has failed to furnish a return under section 139 of the Income-tax Act; (b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Scheme; (c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le as evidence against the declarant for the purpose of any proceeding relating to imposition of penalty or launching of prosecution under the Income-tax Act, the Wealth-tax Act, the Foreign Exchange Regulation Act, 1973, or the Companies Act, 1956." It appears that as there remained certain doubts in regard to the applicability of the said Scheme, inter alia in relation to the partners of a firm vis-a-vis firm, some questions were posed which were sought to be answered by issuance of a circular letter No. 754 dated June 10, 1997, by the Central Board of Direct Taxes. Question No.5 : If the firm had concealed income, can the partners file declaration in respect of such concealed income? Answer : The declaration will be by the firm verified by the managing partner. If there is no managing partner, then by one of the partners. The partners need not make declaration regarding their respective share of income. Question No.7 : Where a private limited company has not filed return of income for assessment year 1990-91 in respect of its income as per books of a account, can it file a declaration under the scheme and pay tax at 35 per cent.? Answer : Yes. Question No.13 : Immunity sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be separate entities but while construing a statute involving immunity from certain penal actions, in our opinion, the provisions thereof should not ordinarily be judged on the touchstone of the provisions of the 1961 Act, only because the 1997 Scheme has a direct nexus therewith. It may be necessary for the aforementioned purpose to bear in mind that the immunity granted pursuant to acceptance of a declaration made under the voluntary taxation scheme or the Kar Vivad Samadhan Scheme, 1998 does not lead to total immunity. Immunity granted under the Scheme has its own limitations. The Scheme must be applied only in the event the conditions precedent laid down therefor are applicable. See State CBI v. Sashi Balasubramanian [2006] 10 SCALE 541 and Alpesh Navinchandra Shah v. State of Maharashtra [2007] 2 SCC 777. A raid was conducted in the premises of the firm. Search warrant might have been issued in the name of a partner of the firm. The partner made certain statements. The search revealed some undisclosed income. The firm has a separate legal entity, it could have made a declaration, but it was done in respect of the same amount regarding which the partner of the firm made discl....