Jagannatha Shetty, J.
1. The following question has been referred under s. 256(1) of the I.T. Act, 1961, by the Income-tax Appellate Tribunal, Bangalore Bench :
'Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the declaration made by the assessee is under section 14 and, therefore, does not get the immunity under section 8 from being included in the total income in the assessment is right in law ?'
2. The assessee is a HUF deriving income from several partnership firms. For the assessment year 1973-74, the assessment was originally concluded on July 25, 1974, determining the total income of the assessee at Rs. 14,110. On August 30, 1974, the assessee filed a return of income disclosing a net income of Rs. 12,850. On September 29, 1975, there was a search under s. 132 of the I.T. Act in the business premises of the assessee and books of account and valuables were seized by the income-tax authorities.
3. On October 8, 1975, the President of India promulgated an ordinance called Voluntary Disclosure of Income and Wealth Ordinance, 1975 (Ordinance No. 15 of 1975). That ordinance was replaced by the Voluntary Disclosure of Income and Wealth Act, 1976 (Act VIII of 1976) (called shortly 'the Voluntary Disclosure Act').
4. In accordance with the above provisions, the assessee made a declaration of his income in Form No. B prescribed under the Voluntary Disclosure of Income and Wealth Rules, 1975.
5. On January 30, 1976, the ITO, issued a notice to the assessee under s. 148 of the Act for reopening the assessment for the year 1973-74. On March 3, 1976, the assessee filed a return including the sum of Rs. 3,120 which was disclosed under the Voluntary Disclosure Act.
6. On February 7, 1977, the assessee filed a revised return for the year 1974-75 disclosing the net income at Rs. 1,40,120 wherein he included the income of Rs. 1,27,164 which was declared under the Voluntary Disclosure Act. He urged before the assessing authority that the income declared under the Voluntary Disclosure Act should not be included for the purpose of assessment. the ITO, however, rejected that contention and included that income in the total income of the assessee and completed the assessment.
7. The above contention of the assessee has been rejected by all the authorities below. The question before us is whether the income declared by the assessee under s. 14(1) of the Voluntary Disclosure Act in Form No. B is entitled to be excluded from the total income of the assessee for the purpose of assessment.
8. The answer to the question turns on the relevant provisions of the Voluntary Disclosure Act and the Rules prescribed thereunder. Section 3(1) of the Voluntary Disclosure Act provides for charge of income-tax on the income voluntarily disclosed.
9. Section 3(1)(c) reads :
'3. (1)...notwithstanding anything contained in the Indian Income-tax Act, 1922 (XI of 1922), or the Income-tax Act or in any Finance Act, income-tax shall be changed in respect of the income so declared (such income being hereinafter referred to as the voluntarily disclosed income) at the rate or rates specified in the Schedule.'
10. Section 4 provides for particulars to be furnished in the declaration under s. 3(1).
11. Section 5 provides for time for payment of income-tax at the rates prescribed under the Schedule in respect of the voluntarily disclosed income.
12. Section 8 with which we are primarily concerned reads :
'8. Voluntarily disclosed income not to be included in the total income.
- (1) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian Income-tax Act, 1922.....if the following conditions are fulfilled, namely :- ...'
13. Section 9 to 12 provides for matters connected with the voluntarily disclosed income or incidental thereto.
14. Before proceeding further, we have to hark back to s. 3(2) which provides :
'(2) Nothing contained in sub-section (1) shall apply in relation to - (i) the income assessable for any assessment year for which a notice under section 139 or section 148 of the Income-tax Act has been served upon such person and the return has not been furnished before the commencement of this Act;
(ii) where any books of account, other documents, money, bullion. jewellery or other valuable articles or things belonging to the person making the declaration under sub-section (1) (hereinafter in this section, in sections 4 to 13 and in the Schedule referred to as the declarant) have been seized as a result of any a search under section 132 of the Income-tax Act or under section 37A of the Wealth-tax Act, the income in respect of the previous year in which such search was made or any earlier previous year.'
15. The income which can be declared under s. 3(1) is the income liable to tax for any assessment year up to and including the assessment year 1975-76. The provisions of s. 3(1) do not, however, cover the income for any assessment year which has not been disclosed in a return of income furnished on or after October 8, 1975, and the income for any assessment year for which the notice under s. 139 of s. 148 has been served on the declarant but the return for that year has not been filed by him before October 8, 1975. The provisions of s. 3(1) also do not apply in respect of income of the previous or earlier years if there was any search and seizure under s. 132 of the I.T. Act or under s. 37A of the W.T. Act. In other words, the income falling under the above said categories cannot be considered under the Voluntary Disclosure Act makes separate provisions for such incomes of persons for whom s. 3(1) is not attracted. Such persons are dealt with under under s. 14 which reads :
'14. Disclosure of income in cases of search and seizure. - (1) subject to the provision of this section, where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to a person have been seized as a result of a search under section 132 of the Income-tax Act or section 37A of the Wealth-tax Act and such person (hereafter in this section refereed to as the declarant) Makes, on or after the date of commencement of this Act but before the 1st day of January, 1976, a declaration in accordance with sub-section (2) in respect of any income relating to the previous year in which such search was made or by earlier previous year -
(a) for which he has failed to furnish a return under section 139 of the Income-tax Act, or
(b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the commencement of this Act, or
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Indian Income-tax Act, 1922 (XI of 1922), or the Income-tax Act, or to disclose fully and truly all material facts necessary for his assessment or otherwise.....'.
16. The declarant under s. 14(1) has been given certain benefits and immunities under clauses I and II of sub-s. (1) of s. 14.
17. The declaration made under s. 14(1) must be in duplicate in Form B prescribed under the Voluntary Disclosure of Income and Wealth Rules, 1975. The declarations, no doubt, has to be submitted to the Commissioner of Income-tax, but the Commissioner has to send a copy of the declaration to the ITO and the information contained therein may be taken into account for the purpose of proceedings relating to the assessment or reassessment of the income of the declarant under the provisions of various enactment. In other words, such income cannot be excluded from the total income of the declarant for the purpose of assessment. This would also be clear from sub-ss. (4) and (6) of s. 14. These sub-sections provide for aggregating the declared income with the other income of the assessee in the relevant assessment year.
18. To make the picture complete, we may now turn to s. 16 of the Voluntary Disclosure Act. It provides for immunity from penalty, prosecution, etc. But it is limited only to voluntary disclosure of income declared under s. 3(1) and apparently is not applicable in regard to the declaration made under s. 14.
19. Mr. K. R. Prasad, learned counsel for the assessee, however, contended that there is no definition of the expression 'the voluntarily disclosed income' in the Voluntary Disclosure Act and in the absence of any such definition, it is not proper to exclude that expression in regard to the declaration made under s. 14(1). He also urged that any declaration made under s. 14 is a voluntarily disclosed income and that there is, therefore, logically and legally no distinction between the declarations made under s. 14 and the declarations made under s. 3(1).
20. It is true that there is no definition of the said expression 'the voluntarily disclosed income'. But, there is enough indication in the Act, and particularly in s. 3(1), that that expression must refer to only the income voluntarily declared under s. 3(1). The expression is distinct and different from the declaration envisaged under s. 14(1). Section 14(1), as we have earlier stated, contains a complete code in itself providing certain benefits and immunities to persons against whom there has been search and seizure under s. 132 of the I.T. Act. That is also made further clear under s. 3(2)(ii) which excludes s. 3(1) in respect of such persons.
21. Section 8 provides a benefit for persons falling under s. 3(1) and it expressly states that the amount of voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year, Whereas there has been no such prohibition in s. 14(1) of the Act. On the contrary, there has been specific provisions in s. 14(4) to (6) in regard to the aggregation of such income in the assessment.
22. In the result, we answer the question in the affirmative and against the assessee.
23. There will be no order as to costs.