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income-tax Officer Vs. Keshardeo Madanlal - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Ahmedabad
Decided On
Judge
Reported in(1982)2ITD558(Ahd.)
Appellantincome-tax Officer
RespondentKeshardeo Madanlal
Excerpt:
.....the ito that he himself disclosed all the concealed income under section 14(1), including the share income received from the firm of ramjidas babulal in all the relevant years and hence the ito should not add the firm's share all over again. there is no provision in the act to tax the same amount twice. the assessee had disclosed a total amount of rs. 2,12,934 for all the relevant years under consideration under section 14(1) and this amount included his concealed income received from the firm, i.e., rs. 28,760. the case of the assessee was that the ito cannot tax the same amount, i.e., rs. 28,760, twice and claimed that he should not tax the same amount again, under the order under section 143(3) read with section 147(a) of the income-tax act, 1961 ('the act'). according to the.....
Judgment:
1. These nine appeals and six cross-objections are filed by the revenue and the assessee respectively. The appeals are relevant to the assessment years 1968-69 to 1976-77 while the cross-objections are relevant to the assessment years 1970-71 to 1975-76. In the appeals by the revenue the only question for our consideration in all the years is whether the AAC has erred, in law and on facts, in holding that the amount disclosed by the assessee under Section 14(1) of the Voluntary Disclosure Scheme Act, 1975 ('the VDS Act'), should be reduced by his proportionate share in the amount disclosed by the firm, in which he is a partner, and whether he further erred in deleting the relevant amounts in question in all the years. As common grounds are involved in all these appeals and cross-objections, for the sake of convenience we dispose them of by this common order.

2. The assessee claimed before the ITO that he himself disclosed all the concealed income under Section 14(1), including the share income received from the firm of Ramjidas Babulal in all the relevant years and hence the ITO should not add the firm's share all over again. There is no provision in the Act to tax the same amount twice. The assessee had disclosed a total amount of Rs. 2,12,934 for all the relevant years under consideration under Section 14(1) and this amount included his concealed income received from the firm, i.e., Rs. 28,760. The case of the assessee was that the ITO cannot tax the same amount, i.e., Rs. 28,760, twice and claimed that he should not tax the same amount again, under the order under Section 143(3) read with Section 147(a) of the Income-tax Act, 1961 ('the Act'). According to the assessee, the ITO has neither the power nor discretion to reduce the income disclosed under the VDS Act. The assessee has disclosed a total amount, which includes the share income from the firm in consequence of the disclosure by the firm. This contention did not find favour with the ITO and he rejected the same.

3. Being aggrieved, the assessee went in appeal before the AAC. Before the AAC, the assessee reiterated the arguments advanced before the ITO.The AAC remanded the matter to the ITO by a remand order dated 30-12-1978, directing the ITO to report whether the claim regarding double taxation was made before him and if so with what result. The ITO sent a remand report and in the said report, he stated that claim was made by the assessee for immunity in respect of tax relevant to the share from the firm but the said claim was rejected because there was no provision in the VDS Act which empowers the ITO to reduce the share of the firm. After considering the remand report as well as the facts and arguments, the AAC came to the conclusion that it cannot be said that there is no double taxation of the same amount because this amount has been included in the income disclosed by the assessee as his proportionate share of income on reassessment in the case of the firm after the disclosure. The same amount has been taxed over again in the sense that the assets disclosed by the assessee were acquired out of the same undisclosed income of the firm in the relevant years. The AAC, therefore, directed the ITO to exclude the amounts mentioned in column 4 of the chart given in Para 2 of her order in the respective years.

Being aggrieved by this order the revenue came in appeal before us. The assessee has filed cross-objections for the assessment years 1970-71 to 1975-76.

4. Shri Kathuria, the learned departmental representative, submitted that under the VDS Act the assessee cannot put any condition in the form of footnotes, added in the disclosure in Form B and those notes do not make it clear that they are made for the purpose of exemption of the tax from the share of the firm. His next contention was that the description in the disclosure was not given in accordance with the columns of Form B. Shri Kathuria contended that when the firm makes a disclosure the partners need not make their own disclosures under Section 14(1). He further argued that there was a discrepancy in the amount disclosed by one of the partners, viz., Shri Bajranglal, and the share that comes to him from the firm. He further argued that Rs. 17,000 were seized at the time of a raid from the premises of the firm and that is not explained. In view of these facts, the claim of the assessee could not be allowed and the order of the AAC should be reversed.

5. On the other hand, Shri Talali, the learned counsel for the assessee, contended that the amounts involved in the relevant years are doubly taxed or taxed twice by the ITO. The assessee is the partner in the firm of Ramjidas Babulal. A search was carried out under Section 132 of the Act, at the premises of the firm and its partners including the assessee. Subsequently, the firm as well as the partners filed declaration under Section 14(1) and the assessee disclosed all the concealed income of Rs. 2,12,943 which includes the concealed income received from the firm and for clarifying this position footnotes were added in the disclosure stating that the assessee has declared the concealed income, including the concealed income received from the firm of Ramjidas Babulal in the relevant years. Similarly, in the disclosure of the firm it was stated vide the footnotes that the partners should be given immunity to the extent of their shares in the above income declared and such type of notes can be given to explain the facts of the case in Form B under column 7 relating to remarks. Shri Talati further submitted that the full descriptions in view of Form B, of the concealed income was given in accordance with the columns under column B (sic). When there was a settlement and the exemption of the firm's share has been claimed by way of footnotes clarifying the facts, the ITO could not tax the amount twice which is declared by the assessee himself in his disclosure. Shri Talati further submitted that when the firm discloses, there is no bar on the partners in disclosing simultaneously the income of the firm along with their individual concealed income under Section 14(1). Section 14(1) provides that any concealed income should be disclosed. Therefore, the partners were at liberty and they have rightly disclosed their respective income including the income from the firm. Rebutting the point raised by the learned departmental representative that in the case of Shri Bajranglal, Shri Bajranglal has disclosed Rs. 1,500 in one year while his share comes to Rs. 5,000, Shri Talati submitted that the partners have disclosed their concealed income at the relevant time and they have spread over the concealed income to the years, which was allowed by the Commissioner. Therefore, for that year the partner has disclosed only up to the investment value of the relevant year as he has no option but to spread over the income according to the facts in the case of Shri Bajranglal. As regards the objection relating to Rs. 17,000 seized by the department at the time of raid from the premises of the firm, Shri Talati submitted that the firm has disclosed under Section 14(1), Rs. 2,30,000 and Rs. 17,000 which were seized at the time of the raid and the same were explained to the department and were not taxed in the relevant year, i.e., in the assessment order under Section 143(3) read with Section 147(a). Therefore, the amount of Rs. 17,000 is not relevant at all to the case of the assessee. In view of all these facts, there is a clear case of double taxation and the AAC was, therefore, right in allowing the claim of the assessee. The AAC's order should be upheld.6. We have heard the rival submissions and considered the material on record. The assessee is a partner in the firm of Ramjidas Babulal.

Searches under Section 132 were carried out in the case of the firm and its partners, including the assessee. Subsequently, the firm as also the assessee came up with declaration under Section 14(1) disclosing an income of Rs. 2,30,000 and Rs. 2,12,943, respectively, in respect of the assessment years 1967-68 to 1976-77 as under :----------------------------------------------------------------------Asst. Yr.

Income decla- Income decla- Income claimed red by firm red by assessee as double taxed----------------------------------------------------------------------1968-69 Rs. 10,000 Rs. 7,000 Rs. 1,6671969-70 Rs. 10,000 Rs. 7,000 Rs. 1,6671970-71 Rs. 10,000 Rs. 28,420 Rs. 1,6671971-72 Rs. 20,000 Rs. 28,420 Rs. 2,5001972-73 Rs. 20,000 Rs. 28,420 Rs. 2,5001973-74 Rs. 20,000 Rs. 28,420 Rs. 2,5001974-75 Rs. 40,000 Rs. 28,420 Rs. 5,0001975-76 Rs. 40,000 Rs. 28,420 Rs. 5,0001976-77 Rs. 50,000 Rs. 28,420 Rs. 6,250---------------------------------------------------------------------- The claim of the assessee was that there has been double taxation in respect of his proportionate share of disclosure in the case of the firm to the extent of the amounts mentioned in column 4 of the above table. The submission of the assessee's counsel was that the proportionate share of the disclosed income by the said firm stood included in the amounts of disclosure made by the assessee and included in his return of income and that the ITO ought to have excluded such proportionate share from the firm as the said amounts were shown in the individual returns of the assessee. The departmental representative, Shri Kathuria, submitted that when the firm discloses partners need not make declaration regarding their respective shares. Therefore, the proportionate share of the assessee from the firm, i.e., total Rs. 28,334, could be added in the amount of Rs. 2,12,943 which was disclosed by the assessee. In this case the disclosure was made by the assessee of Rs. 2,12,943, and the firm also disclosed the concealed income. In our view, when the assessee discloses the concealed income under Section 14(1), he has to disclose all the concealed income from all the sources. There is no provision in the VDS Act or in the Income-tax Act, which precludes the assessee from making disclosure of the total escaped income. In fact Section 14(1) clearly mentioned that the declaration should be made in respect of any income or wealth relating to the previous year, which has escaped assessment. In our view, there is no bar when the assessee discloses the total concealed income including the income from the firm. Now, the vital question which remains for our consideration is that the assessee has declared the undisclosed income from the firm which he had received from the firm in the relevant years as indicated in the above table in column 4.

For the factual position Shri Kathuria submitted that in case of disclosure under Section 14(1), the assessee cannot put any condition by way of footnotes. The meaning of the word 'immunity' given in the footnotes, is restricted to immunity from penalty and prosecution under Section 16 of the VDS Act. We are unable to agree with Shri Kathuria.

In Form B the assessee has declared his income. In the Annexure to that form by way of footnotes, the assessee has claimed immunity or exemption from the share of income received from the firm Ramjidas Babulal. In fact the notes given in the disclosure by the assessee and by the firm are explanatory. They were made to clarify the facts of the case and such notes can be given under column 7 relating to remarks.

Even the first note of the assessee clarifies the fact that the above income of Rs. 2,12,943 declared was in addition to income assessed or returned for partnership share of Ramjidas Babulal, Kalupur, Ahmedabad.

That income was in addition to the income of the firm which was returned and assessed in the regular assessment under Section 143(3) and the concealed income from the firm was included in the disclosure made by the assessee. Similar note was given by the firm in its disclosure, wherein it was claimed that the partners of the firm should be given immunity to the extent of their share in the above income declared. The view taken by Shri Kathuria was that the word 'immunity' has only a limited meaning and 'immunity' means immunity from penalty and prosecution, as used in Section 16. We are unable to agree again with Shri Kathuria because the word 'immunity' should not be taken in the limited meaning which is used in the VDS Act. The word 'immunity' is not defined in the VDS Act or the Income-tax Act. When the word is not defined in either of those two Acts, the meaning should be given which is understood in common parlance. The dictionary meaning given to the word 'immunity' in the Oxford Dictionary and Law Lexicon, includes exemption from taxation, freedom from public service, exemption from obligation, exemption or lease from any change, etc. Apart from this, their Lordships of the Gujarat High Court in the case of Manilal Gaffoorbhai v. CIT [1974] 95 ITR 624 have used the word 'immunity' to mean exemption of income of the assessee. All this shows that we should not read the word 'immunity' in the limited meaning of penalty and prosecution but should give it a wider meaning which is understood in common parlance. In our view, there is nothing wrong in the notes if they have used the word 'immunity' to mean exemption. Shri Kathuria further submitted that the disclosure was not in accordance with the columns of Form B inasmuch as full description of the assets and the name under which the said assets were held, was not given. We are unable to accept this contention of Shri Kathuria. In the disclosure made by the assessee at pages 7 to 10 of the paper book the description of assets, viz., name in which held and the amount, is given. In case of the firm only the amount has been disclosed, because the firm has no assets and the money has been taken by the partners. We do not find any force in the submission of Shri Kathuria on this point also. The last contention of the learned departmental representative was that there was a discrepancy in the disclosure inasmuch as in the case of Shri Bajranglal Ramjidas, the amount disclosed by the partner is Rs. 1,500 while his share from the firm comes to Rs, 5,000 in the assessment year 1975-76. The explanation given by the learned counsel for the assessee on this point is that in the relevant, year the assessee has invested only Rs. 1,500 in the assets and he has disclosed the income under Section 14(1) to the extent of the assets available and he has spread over the concealed income in the years, as allowed by the Commissioner.

The assessee has shown the correct facts and no discrepancy exists. The second discrepancy pointed out by Shri Kathuria was that at the time of the raid of the premises of the firm Rs. 17,000 were seized and for that no satisfactory explanation was given. While the firm has disclosed Rs. 2,30,000, only Rs. 17,000 were with them. How then the partners have shared Rs. 2,30,000 As regards this discrepancy the counsel for the assessee replied that Rs. 17,000 were very much explained and no tax was levied in the years involved. That is not a discrepancy at all. We are satisfied with the explanation of the counsel that the firm has disclosed Rs. 2,30,000 and was taxed only for the amount. So far as Rs. 17,000 were concerned, the amount was explained. That has no relevance to the year under consideration. In view of the above facts, in short, the disclosure made under Section 14(1) is different from that made under Section 3(1). Under Section 14(1), the ITO has to examine the disclosure, with reference to the various assets which have been found during the course of the search under Section 132 and there is no bar when the assessee includes the undisclosed income received from the firm in the relevant years. The assessee has disclosed the total income on oath. Therefore, it should be taken that he has disclosed the total income including his proportionate share from the firm and the total amount which was disclosed by the assessee was determined by the ITO under Section 132(5). In fact, the undisclosed income of the firm is the undisclosed income of the respective partners in their profit-sharing ratio. It is thus the undisclosed income of the firm which has come to the partner and which has been invested by him in various assets. Therefore, in our view, the assessee is entitled to the relief which he has claimed in his returns to the extent of the amounts which represented his proportionate share in the undisclosed income of the firm. There is a clear case of double taxation of the same amount and the ITO was not justified in including the proportionate share of the firm in the order under Section 143(3) read with Section 147(a). In our view, the AAC was justified in allowing the claim of the assessee. We, therefore, uphold the order on this issue.

7. The assessee has filed cross-objections against the order of the AAC for the years 1970-71 to 1975-76, The assessee did not press these cross-objections.

8. In the result, the appeals as well as the cross-objections are dismissed.


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