K. S. TIWANA J. - The petitioner purchased a house in sector 28D, Chandigarh, from Mr. Otto Oalwein, a German national, for Rs. 1,25,000, vide sale deed registered on 15th of November, 1972. The Inspecting Assistant commissioner of Income-tax, Chandigarh, respondent No. 1, initiated acquisition proceedings under Chapter XX-A of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), and issued notice under section 269D(1) of the Act to the petitioner who raised objections. After hearing the objections, respondent No. 1, on 17th of December, 1973, passed orders under section 269F(6) of the Act. The appeal by the petitioner under section 269G of the Act before the Appellate Tribunal failed. The petitioner further took the matter to the High Court in appeal under section 269H of the Act, which was admitted to hearing on 31st of March, 1975. During the pendency of the appeal, on 8th of October, 1975, the Voluntary Disclosure of Income and Wealth Ordinance, 1975, was promulgated, under which certain facilities were allowed to persons and assessees, who voluntarily disclosed their income and wealth. This Ordinance was replaced by the Voluntary Disclosure of Income and Wealth Act, 1976 (hereinafter referred as 'Act No. 8 of 1976'). On 27th of November, 1975, the Government of India issued a press note explaining the circumstances under which the acquisition proceedings initiated under Chapter XX-A of the Income-tax Act would be dropped in cases where declarations in relation thereto were made under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. It clarified that where the transferee makes a declaration disclosing difference of income equal to the difference between the apparent consideration plus 15 per cent. thereof and the fair market value as estimated by the competent authority and also files an affidavit to the effect that he had paid the extra money as admitted by way of purchase consideration to the transferor, and that he undertakes to give evidence in his possession and co-operates fully in matter of assessment of the transferor, and that he agrees that the affidavit may be utilised in the assessment of the transferor, the acquisition proceedings would be dropped. The petitioner after the press note filed a declaration under section 3(1) of the Act, No. 8 of 1976, making disclosure of the difference between the apparent consideration plus 15 per cent. and the fair market value as estimated by the competent authority. A sum of Rs. 7,194 was deposited as tax on this account and Rs. 1.370 were invested in securities. An affidavit to co-operate with the assessment of the transferor in accordance with the press note was also filed. The Commissioner issued the certificate under section 8(2) of Act No. of 1976 on 22nd of March, 1976.
On April 1, 1976, the petitioner moved the respondent No. 1 with a request that the acquisition proceedings be dropped and also filed the certificate issued by the Commissioner under section 8(2) of Act No. 8 of 1976. On 24th of August, 1976, respondent No. 1 wrote to the petitioner, letter annexure 'P-5', that it was not possible to drop the acquisition proceedings as the acquisition proceedings have been closed in the sense that orders under section 269F(6) have been passed by the competent authority and she had gone in appeal to the Tribunal or the high Court against those orders. Taking the appeal as an obstacle in the way of dropping of the acquisition proceedings as suggested in annexure 'P-5', the petitioner withdrew the appeal, which was dismissed by the High Court, as such, on 30th of August, 1976. The petitioner again approached respondent No. 1, vide application, annexure 'P-8' to the petition, to drop the proceedings as the appeal had been withdrawn from the High Court and that the order under section 269F(6) had not yet become final. The income-tax department, vide letter date 8th of October, 1976, annexure 'P-9' to the petition, informed her that proceedings cannot be dropped, as they had become final.
Through this petition the petitioner has assailed the orders, dated 24th of August, 1976, annexure 'P-5' and annexure 'P-9' to the petition, refusing to drop the acquisition proceedings, on the ground that the acquisition proceedings had not yet become final in view of the pendency of the appeal, provided by section 269H of the Act, in the High Court. When the voluntary disclosure was made and the requirements of the press note were complied with, the acquisition proceedings had to be dropped. She has prayed for the issue of a writ for the quashing of these orders and dropping the acquisition proceedings.
In the written statement, the respondents admitted the facts of the case. It was stated that the orders under section 269F(6) had become final as the proceedings were closed with the passing of the orders and the pendency of the appeal did not affect the finality of the order under section 269F.
The questions which we are called upon to decide in this case are whether the press note envisages any stage where the proceedings initiated under Chapter XX-A of the Act are to become final and whether in spite of the pendency of the appeal filed by the petitioner in the High Court under section 269H of the Act the order under section 269F(6) had become final and the acquisition proceedings closed with that order.
The press note starts with the heading, 'Subject :-The Voluntary Disclosure of Income and Wealth ordinance, 1975-Clarifications regarding'. It was issued under Chapter XX-A of the Act. It was to achieve the purpose of both the Acts. The press note relates to proceedings initiated under Chapter XX-A of the Act. The proceedings initiated under this Chapter would become final only when all the stages given in it are covered, that is, objections and appeals, if filed within time, are decided. The logical conclusion, therefore, is that the press note would apply so long as the proceedings initiated under Chapter XX-A of the Act do not become final. Press note itself does not contain any hint about the finality of the proceedings. The question of finality of these proceedings is to be determined in view of the provisions of Chapter XX-A of the Act.
For the proper appreciation of the circumstances, a resume of the relevant provisions of Chapter XX-A of the Act, which were incorporated in the Act in 1972, is necessary. The heading of the Chapter is 'Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax'. Section 269A contains definitions and section 269B provides for the creation of competent authority to take proceedings under this Chapter. Section 269F classifies the properties about which action under this Chapter can be initiated. Section 269D provides the manner in which the acquisition proceedings are to be taken and also prescribes the period during which these can be initiated. Section 269E deals with the filing of the objections by the transferor or the transferee against the notice of acquisition. Section 269F provides how the objections are to be heard and decided. Sub-section (6) of this section, which has been depended upon by the respondents, is as under :
'(6) If after hearing the objections, if any, and after taking into account all the relevant material on record, the competent authority is satisfied that, -
(a) the immovable property to which the proceedings relate is of a fair market value exceeding twenty-five thousand rupees;
(b) the fair market value of such property exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration; and
(c) the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in clause (a) or clause (b) of sub-section (1) of section 269C,
he may, after obtaining the approval of the Commissioner, make an order for the acquisition of the property under this Chapter....'
Section 269G provides for an appeal against the order of the Competent authority to the Appellate Tribunal. Sub-section (7) of this section is relevant, which is as under :
'(7) Save as provided in section 269H, orders passed by the Appellate Tribunal on appeal shall be final.'
Section 269H provides for an appeal to the high Court by a person aggrieved by any order of the Appellate Tribunal passed under section 269G. Section 269I deals with the vesting of the acquired property in the Central Government. Explanation to section 269I(1) is relevant, which is an under :
'269I. (1) As soon as may be after the order for acquisition of any immovable property made under sub-section (6) of section 269F becomes final, the competent authority may, by notice in writing, order any person who may be in possession of the immovable property to surrender or deliver possession thereof to the competent authority or any other person duly authorised in writing by the competent authority in this behalf, within thirty days of the date of the service of the notice.
Explanation. - For the purposes of this sub-section, an order for the acquisition of any immovable property (hereafter in this Explanation referred to as the order for acquisition) made under sub-section (6) of section 269F becomes final, -
(a) in a case where the order for acquisition is not made the subject of an appeal to the Appellate Tribunal under section 269G, upon the expiry of the period during which such appeal may be presented under that section;
(b) in a case where the order for acquisition is made the subject of an appeal to the Appellate Tribunal under section 269G, -
(i) if the order for acquisition is confirmed by the Appellate Tribunal and the order of the Appellate Tribunal is not made the subject of an appeal to the high Court under section 269H, upon the expiry of the period during which such appeal may be presented under that section to the High Court;
(ii) if the order of the Appellate Tribunal is made the subject of an appeal to the High Court under section 269H, upon the confirmation of the order for acquisition by the High Court.'
Act No. 8 of 1976, as its name implies, gives certain concessions and protections to certain persons and assessees, who had earlier not disclosed their incomes but disclosed them after it came into force from 8th of October, 1975. Section 3(1) of this Act is relevant, which runs as under :
'3. (1) Subject to the provisions of this Act, where any person makes on or after the date of commencement of this Act but before the 1st day of January, 1976, a declaration in accordance with the provisions of section 4 in respect of any income chargeable to tax under the Indian Income-tax Act, 1922 (11 of 1922), or 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, or
(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 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 (11 of 1922), or the Income-tax Act, or to disclose fully and truly all material facts necessary for his assessment or otherwise,
then, notwithstanding anything contained in the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act or in any Finance Act, income-tax shall be charged 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.'
Section 14 of Act No. 8 of 1976 provides for immunity to such persons from penal action by the income-tax department.
The press note issued runs as under :
'Chapter XX-A of the Income-tax Act, 1961, provides for acquisition of immovable properties in certain cases of transfer. The question, whether the acquisition proceedings initiated under this Chapter could be dropped in cases where declarations in relation thereto are made under the Voluntary Disclosure of Income and Wealth ordinance, 1975, has been examined.
It is clarified that the acquisition proceedings would be dropped in cases where -
Only the transferee makes a declaration under the ordinance disclosing income equal to the difference between -
(i) the apparent consideration plus 15% thereof; and
(ii) the fair market value estimated by the competent authority and also files an affidavit to the effect that -
(a) he had paid the extra money as admitted, by way of purchase consideration, to the transferor;
(b) he undertakes to give evidence as may be in his possession and to co-operate fully in the matter of assessment of the transferor; and
(c) he agrees that the affidavit may be utilised in the assessment of the transferor,
both the transferor and the transferee admit payment of consideration approximating the fair market value of the property estimated by the competent authority and each of them makes a declaration under the Ordinance disclosing an amount equal to the difference between -
(i) the apparent consideration plus 15% thereof; and
(ii) the fair market value estimated by the competent authority.'
In order to conceal their income and avoid payment of wealth-tax, the transferors and the transferees of immovable property kept the value of the property very low at the time of sale. This also, like the other concealment of income and wealth, led to an evasion of tax on quite a large scale. in order to counteract this tendency, Chapter XX-A was added to the Act in 1972. Another evil habit which developed amongst many affluent persons and good earners was to conceal their income and wealth from the taxation authorities and avoid paying tax on it. This social malady of stocking the money and thus keeping it away from open circulation started eating into the vitals of the countrys economy. The promulgation of the ordinance and Act No. 8 of 1976 was one step to bring out this hidden wealth, which has commonly come to be known in the society as 'the black money'. This Act by promising exemptions and immunity from certain penal actions gave an impetus to the hoarders of this wealth to declare it. The aim and purpose of Act No. 8 of 1976 was to give benefit and immunity to those persons, who came within its ambit. The press note brought into the ambit of Act No. 8 of 1976, the transferors and transferees who valued their properties at a low price at the time of transfer and against whom proceedings under Chapter XX-A of the Act had been initiated.
It cannot be denied that the disclosure along with the deposit of the tax, etc., was made by the petitioner to the concerned authorities and its copy is annexure 'P-2' to the petition. The difference in the value of the property assessed by the competent authority plus 15 per cent. was disclosed and the tax on it was deposited. The Income-tax Commissioner on 22nd of March, 1976, on the disclosure submitted to him issued a certificate under section 8(2) of Act No. 8 of 1976, copy of which is annexure 'P-3' to the petition. The issuance of this certificate shows the fulfillment of the conditions of the press note. Order under section 269F(6) is the culmination of the proceedings of the acquisition by the competent authority. Notice under section 269I(1) to the person in occupation of such property, to deliver possession, is to be issued by the competent authority within 'thirty days of the order under section 269F(6) becoming final'. Explanation to section 269I(1) of the Act makes it manifest that the order of the Tribunal made subject to an appeal to the High Court under section 269H of the Act shall become final on confirmation by the High Court or, if no appeal, as provided, is filed, then, on expiry of the period of limitation. Similar is the import of section 269G(7) also. The provisions only reiterate the general law that all the appealable orders passed by the courts, tribunals or authorities, which are subject to appeal, become final only after the decision of the appeal in case it is filed by the affected party. In other words, such proceedings in which appealable orders are passed and appeal is filed are a continuation of the original proceedings. The order of the competent authority, so long as it was being agitated by way of statutory appeals provided by sections 269G and 269H of the Act, could not attain finality as it could be modified or set aside, in those appeals. The matter was still pending and had not attained finality in view of Explanation to section 269I(1) of the Act when Act No. 8 of 1976 and the press note which announced certain concessions to the persons, who had made voluntary disclosures, came into force. The language of the press note is explicit and is in conformity with the objects of the statute, under which it was issued for the benefit of the persons coming forward with voluntary disclosures. The petitioner acting on the press note moved the commissioner of Income-tax in time and deposited the tax due. The tax once deposited in such circumstances cannot be refunded. If the position of the respondents is accepted, the petitioner will be subjected to double jeopardy. In these circumstances, even equity is in her favour.
The position taken by the department in annexures 'P-5' and 'P-9' that the order of the competent authority under section 269F(6) had become final is ultra vires of the provisions of Chapter XX-A of the Act and is in conflict with the provisions of Act No. 8 of 1976 and the press note. That being the position, the petition is accepted and the writ prayed by the petitioner is hereby issued that annexures 'P-5' and 'P-9' being in violation of the explicit provisions of the statute and the policy of law cannot be sustained and are hereby quashed. After the issue of the certificate, annexure 'P-3', under section 8(2) of Act No. 8 of 1976, the acquisition proceedings, which were still not finally decided, because of the pendency of the appeal under section 269H, shall be deemed to have been dropped. The respondent shall pay costs of the petition to the petitioner, which are assessed at Rs. 300.
BHOPINDER SINGH DHILLON J. - I agree.