Madhya Pradesh High Court
Mst. Anisa Bano vs Income-Tax Officer And Ors. on 6 January, 1989
Equivalent citations: [1989]177ITR368(MP)
ORDER UNDER S. 132(3)--Pertaining to bank account of petitioners who have been assessed under Amnesty Scheme HELD: The authorities have erred in issuing porhibitory orders pertaining to the bank accounts of the petitioners while assessing the income of the firms in which the husbands of the petitioners are the partners. The amnesty is available to the petitioners, since the amount declared by each of them is in their names. Therefore, their failure to explain the source of income would not deprive them of theh amnesty under the Scheme under which they have declared their income and have been assessed to tax accordingly. The prohibitory orders passed by the authorities in relation to the savings bank accounts of the petitioners are therefore quashed. Income Tax Act 1961 s.132 JUDGMENT A.G. Qureshi, J.
1. This order shall also govern the disposal of Miscellaneous Petition No. 912 of 1987 (Mst. Hamidabano v. ITO), Miscellaneous Petition No. 915 of 1987 (Mst. Hamidabano v. ITO), Miscellaneous Petition No. 918 of 1987 (Mst. Rashidabano v. ITO) and Miscellaneous Petition No. 920 of 1987 (Mst. Mariyambai v. ITO). The question of law involved in all these petitions being the same, they are being disposed of by this common order.
2. The facts leading to these petitions, in short, are that the petitioner, Mst. Anisa Bano, was assessed to income-tax in respect of her returns filed by her for the assessment years 1983-84 till 1986-87 under the Amnesty Scheme before the Income-tax Officer, M-Ward, Indore. The Income-tax Officer who had the jurisdiction in the matter passed the assessment orders for the aforesaid years under Section 143(1) of the Income-tax Act, 1961, and all demands thereto have been paid by the petitioner. The returns filed by the petitioner were accepted by the Income-tax Officer without any variation. The petitioner, for the assessment year 1983-84, had shown balance in the capital account at Rs. 87,200, for the assessment year 1984-85 Rs. 1,10,200, for the assessment year 1985-86 Rs. 1,33,500 and for the assessment year 1986-87 Rs. 1,58,700.
3. Respondents Nos. 1 and 2, receiving some information about the concealed income, conducted a raid on December 17, 1986, on the business premises of Milan Supari, Sarvottam Supari Stores and Hilman Traders. The residential places of the partners of the said firms were also raided. The husband of the petitioner is a partner of the aforesaid firms and is living jointly with other brothers and their wives at House no. 12, Daulat Ganj, Indore. During the course of the raid, along with other articles, the savings bank pass-book of Account No. 9216, in the name of the petitioner at Canara Bank, Siyaganj Branch, Indore, was seized and prohibitory/gar-nishee order dated December 15, 1986, under Section 132(3) and Rule 112B of the Income-tax Rules, 1962, was served on the bank on December 17, 1986, at 5.15 p.m. At the time of the seizure, the amount deposited in the savings bank account in the name of the petitioner was Rs. 1,51,893.40.
4. According to the petitioner, the said account belongs to her exclusively and the other persons against whom raid was conducted had no relation with the said account. At the time of the seizure, there was no wealth-tax or income-tax demand against the petitioner, Therefore, the prohibitory order passed by the respondents is illegal because the amount to her credit at the bank was her own income which was already declared and assessed to tax. It has also been stated by the petitioner that no order under Section 132(5) of the Income-tax Act has been passed against the petitioner within the statutory period of 120 days from the date of the seizure. The petitioner, therefore, moved an application for the release of the account on April 28, 1987, before respondent No. 1. But, the petitioner was directed to submit the petition to respondent No. 2. Therefore, she made an application to respondent No. 2 on May 6, 1987, and also sent a reminder on June 3, 1987, but no action was taken by respondent No. 2 on the application of the petitioner and no orders were passed. According to the petitioner, she is, thus, deprived of the amount lying to her credit in the said account without any authority of law. The petitioner apprehends that the amount of the petitioner is being treated as the amount belonging to the partners of the firm. It has also been averred that annexures-C and C1 to the petition reveal that the first respondent had issued a letter on December 15, 1986, to attach the account of the petitioner though the search and seizure was actually made on December 17, 1986. As such, the action of respondent No. 1 cannot be said to be bona fide and the prohibitory order is based on the predetermined notion of the respondents without actually verifying the facts. The petitioner has, therefore, prayed for the issuance of a writ of mandamus against the respondents directing them to vacate the impugned prohibitory order dated December 15, 1986 (Annexure-C), served on the bank, purporting to be under Section 132(3) of the Income-tax Act.
5. In the return filed by respondents Nos. 1 and 2, it is not disputed that the petitioner had filed the returns for the assessment years 1983-84 to 1986-87 and the source of income was admitted on the basis of the returns filed by the petitioner. It is also not denied that the returns were filed under the Amnesty Scheme before the Income-tax Officer, M-Ward, Indore, and that the income shown by the petitioner for the assessment years 1983-84 till 1986-87 has been assessed under the Amnesty Scheme. It is also admitted that a prohibitory order in respect of the bank account of the petitioner was issued to the bank in view of the fact that the petitioner could not prove the source of the deposit and the deposit was treated as unexplained investment of the husband of the petitioner. It was denied that the amount in the name of the petitioner is the exclusive income of the petitioner and that the other persons have no relation whatsoever with it. As regards the passing of order under Section 132(5) of the Income-tax Act, the respondents state that such an order is not required to be passed since no assets were seized from the possession of the petitioner. The account in the name of the petitioner has simply been prohibited as, in fact, the account belongs to the husband of the petitioner. It has further been averred that as the petitioner could not explain the source of the deposit either during the raid proceedings or subsequently in her statement recorded by the Income-tax Officer under Section 131 of the Income-tax Act, the deposit was found to be the concealed income of her husband and, therefore, the respondents were justified in issuing the prohibitory order in respect of the account which stood in the name of the petitioner in the Canara Bank.
6. Learned counsel for the petitioner, Shri G. M. Chaphekar, vehemently argued that the income was declared by the petitioner under the Amnesty Scheme and it was accepted by the authorities. Tax was accordingly levied on that declared income and the petitioner has paid the tax. Therefore, subsequently, the petitioner could not be asked to declare the source of her income. According to learned counsel, the source of income of the petitioner could not be enquired into as the declaration was made under the Amnesty Scheme and in reply to question No. 25, in Circular No. 450 dated February 13, 1986, (see [1986] 158 ITR (St.) 134), by the Central Board of Direct Taxes, it is manifest that when the declarant does not wish to state the source of her/his income, then the authorities cannot compel the declarant to declare the source of income. Therefore, once having accepted the declaration made by the petitioner pertaining to her income and after having assessed her to income-tax, a prohibitory order could not be issued treating the declared income as the income of the husband of the assessee.
7. On the other hand, learned counsel for the Revenue, Shri Mukati, states that the income-tax authorities are not precluded from enquiring into the source of income of a declarant under the Amnesty Scheme once they find that the income is not her income but the income of a firm, the partners of which are liable to be assessed to income-tax. According to Shri Mukati, the view the authorities has taken has been on the basis of the Supreme Court judgment in the case of Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244. The aforesaid Supreme Court judgment was followed again by the Supreme Court in ITO v. Rattan Lal [ 1984] 145 ITR 183.
8. Similar arguments have been advanced in respect of the petitioners in the connected petitions and the stand taken in all these petitions by the petitioners and respondents is identical. In Miscellaneous Petition No. 912 of 1987, the petitioner, Mst Hamidabano, had a capital account of Rs. 95,200 in the year 1983-84, it was Rs. 1,17,700 in the year 1984-85, Rs. 1,40,700 in the year 1985-86 and in the year 1986-87 it was Rs. 1,66,400. She was also assessed to income-tax for the aforesaid years and she had an amount of Rs. 1,51,847.90 as credit balance in her account No. 9217 with the Canara Bank, Siyaganj Branch, Indore.
9. Similarly, the petitioner in Miscellaneous Petition No. 916 of 1987, Mst. Hamidahano was also assessed to income-tax for the years 1983-84 till 1986-87 and her capital account as shown in the last income-tax return was Rs. 1,68,700 and she had account No. 9218 with the Canara Bank, Siyaganj Branch, Indore, having a balance of Rs. 1,51,848.20.
10. The petitioner, Rashidabano, in Miscellaneous Petition No, 918 of 1987 was also assessed to income-tax for the same years as aforesaid and according to the last assessment for the year 1986-87, her capital account was Rs. 1,80,190 and she had a savings bank account No. 9383 having a balance of Rs. 1,51,671.90 with the Canara Bank, Siyaganj Branch, Indore.
11. The petitioner in Miscellaneous Petition No. 920 of 1987, Mst. Mariyambai, was assessed to income-tax for the same years as aforesaid under the Amnesty Scheme and her capital account at the time of her assessment for the year 1986-87 was Rs. 1,66,200 and she had a savings bank account No. 9220 with the Canara Bank, Siyaganj Branch, Indore, having a balance of Rs. 1,51,893.40.
12. In view of the aforesaid amounts in the respective bank accounts of the petitioners, it is manifest that the amount in each of the accounts of the petitioners was less than the declared amount under the Amnesty Scheme. The declaration of the petitioners was accepted by the assessing authorities and final assessment was made in the case of each of the petitioners. As such, in the hands of the petitioners, the amount was undisputedly a declared amount which was already assessed and taxed. Now, therefore, the only question on which the decision on these petitions depends is whether the respondents could treat these amounts in the bank accounts of the petitioners as the accounts of their respective husbands in view of the fact that the petitioners could not satisfactorily explain the source of income leading to the accumulation of the amount deposited in the bank in their names. According to Shri Chaphekar, learned counsel for the petitioners, under the Amnesty Scheme, the assessment in respect of each of the petitioners has rightly been made by the concerned Income-tax Officer and the tax has been paid on the amount declared under the Amnesty Scheme. Thereafter the income-tax authorities had no jurisdiction to again seek the explanation of the petitioners pertaining to the source of the income declared by them. On the other hand, learned counsel for the Revenue, Shri Mukati, argued that the action of the respondents was justified.
13. After considering the arguments advanced by learned counsel for both the parties and considering the Supreme Court authorities relied upon by the respondents, we are of the opinion that these petitions should be allowed.
14. It is not disputed before us that, while making the assessment under the Amnesty Scheme, the declaration made by the declarant has to be accepted and the declarant is to be assessed on the basis of the declaration made by him/her. At that time the question of asking the source of the income to be assessed would not arise because if the declarant is asked to declare the source of income while making a declaration under the Amnesty Scheme, then the whole purpose of the scheme shall be frustrated. The Amnesty Schemes are actually formulated to unearth undeclared money and to afford an opportunity to the tax evaders to voluntarily declare the money which had evaded tax and to pay the tax under the scheme. The intention of the scheme is also clear from the reply to question No. 25 referred to above by the Central Board of Direct Taxes, that the declarant cannot be compelled to declare the source of his/her income while making the declaration under the Amnesty Scheme. Now, what the Supreme Court in the case of Jamnaprasad Kanhaiyalal [1981] 138 ITR 244 has held is that if a voluntary disclosure is made by some persons, then the immunity under the voluntary disclosure scheme is available only to the declarant. The income-tax authorities are not precluded from enquiring into the genuineness of the cash credits in the names of the declarants while assessing the accounts of the firm which show cash credits in the names of the declarants. The income-tax authorities can enquire into the genuineness of the cash credits in the accounts of the firm and are not precluded from knowing the source of the cash credits. The principle of double taxation shall not apply in such cases. In that case decided by the Supreme Court, the assessee was a firm consisting of the father and his three sons with a minor son admitted to the benefits of the partnership. In the books of account ending Diwali 1966, five cash credits each of Rs. 9,250 in the names of five sons of the father of whom only one was a major were shown. It was an admitted position that the sons had no independent source of income and they could not explain the source of each credit. However, they claimed protection under the Voluntary Disclosure Scheme. They further took a plea that the voluntary disclosure has been accepted and tax has been paid thereon. Therefore, the declared income of the five sons could not be treated as income from undisclosed sources. When the matter was referred to the Supreme Court, it held that the Voluntary Disclosure Scheme gives protection only to the income actually earned by the declarant and the Act granted immunity to the declarant alone and not to other persons to whom the income really belonged, and that the declaration was required to be made in respect of the amount which represented the income of the declarant. The declaration could not be made in respect of an amount which was not the income of the declarant. If, therefore, a person made a false declaration with respect to an amount which was not his income, but was the income of somebody else, then there was nothing to prevent an investigation into the true source of the income. Nothing prevented the Income-tax Officer from enquiring into the source of the income if the Income-tax Officer was not satisfied with the, explanation of an assessee about the genuineness or source of an amount found credited in his books, inspite of its having been made the subject of a declaration by the creditor and taxed under the scheme.
15. It has further been held by the Supreme Court that the legal fiction created by Section 24(3) of the Finance (No. 2) Act, 1965, was limited in its scope and could not be invoked in assessment proceedings relating to any person other than the person making the declaration under that Act so as to rule out the applicability of Section 68 of the Income-tax Act, 1961. Therefore, if the income declared by the declarant under the scheme is in the hands of the assessee, then the income-tax authorities were within their rights to tax that income in the hands of the assessee if the source of such income remained undisclosed. The aforesaid principle enunciated by the Supreme Court was again followed by the Supreme Court in the case of ITO v. Rattan Lal [1984] 145 ITR 183.
16. In both the aforesaid authorities, the principle laid down is very clear that the income-tax authorities are not precluded from knowing the source of the income in the hands of an assessee even if such an income has been declared by the creditor under the Amnesty or Voluntary Disclosure Scheme, on the principle that the "Amnesty" under the Scheme of Voluntary Disclosure is available to the declarant alone and not to any other persons to whom the income really belonged and who are subject to assessment.
17. In the instant case, it is uncontroverted that the five petitioners have not been shown as creditors in the books of account of the firm of which the respective husbands of the petitioners are the partners. The amount declared is also not in the hands of the husbands. If there would have been a case of cash having been found in the house, then also the disputed question would have arisen whether the cash belongs to the husbands or to the respective petitioners. In the instant case, the amount declared by each of the petitioners is deposited in a nationalised bank in the names of the petitioners and the petitioners are actually the account-holders. Nowhere has it been shown that the amount declared by the petitioners is being used by their respective husbands either for their benefit or for their use in the firms in which they are partners and in respect of which searches were carried out by the respondents-authorities. As long as the amount declared is in the hands of the petitioners and the petitioners have declared those amounts under the "Amnesty Scheme", they are not subject to assessment again on the ground that the petitioners could not satisfy the authorities about the source of the income declared by them and which has already been assessed and taxed. The income-tax authorities could conduct an enquiry about the source of income declared by the petitioners only when the income declared by them were credited in their names in the accounts of their husbands or the firms of their husbands. The Supreme Court has clearly spelt out the distinction between the amount in the hands of the declarant and the amount so declared in the hands of another assessee. In our opinion, the Supreme Court, in unambiguous language, has laid down the principle that under the Amnesty Scheme, the amnesty is available only to the declarant of an income. But as soon as that income, which is assessed to income-tax, after the declaration by such declarant is used by any other person for the purpose of business or otherwise, then the person so using the declared amount has no amnesty from enquiry into the source of the income so declared.
18. To recapitulate, we find that in Jamnaprasad's case [1981] 130 ITR 244 (SC), the assessee was a firm consisting of father and sons and the income declared by the sons under the Voluntary Disclosure Scheme was credited in the account books showing the sons as creditors and, in those circumstances, it was held that while making the assessment of the firm, the income-tax authorities could treat the cash credits as unexplained as it was found that the income declared by the creditors did not belong to them and as the immunity under the scheme was offered only to the declarant and it could not extend to other persons who are liable to be assessed and to whom the income really belonged.
19. In Rattan Lal's case [ 1984] 145 ITR 183 (SC) also, it was held that the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. As discussed above in the instant case, the income of the petitioners declared by them is deposited in a nationalised bank in their own names and the amount declared by the petitioners is not credited in the books of account of their husbands or their firms. As such, in our opinion, the respondents have clearly erred in issuing prohibitory orders pertaining to the bank accounts of the petitioners while assessing the income of the firms in which the husbands of the petitioners are the partners. The amnesty is available to the petitioners, since the amount declared by each of them is in their names. Therefore, their failure to explain the source of income would not deprive them of the amnesty under the Scheme under which they have declared their income and have been assessed to tax accordingly.
20. In the result, all the five petitions succeed and are allowed, with costs. The prohibitory orders passed by the respondents in relation to the savings bank accounts of the petitioners bearing Nos. 9216, 9217, 9218, 9383 and 9220 with the Canara Bank, Siyaganj Branch, Indore, are quashed. The petitioners are free to operate their accounts as they wish without any restriction. Counsel's fee in each of the petitions is Rs. 250. The amount of security deposit, if any, after due verification, be refunded to the petitioners.