Bombay High Court
Commissioner Of Income-Tax vs Vijaya Hirasa Kalamkar (Huf) on 23 September, 1992
Equivalent citations: [1998]229ITR772(BOM)
JUDGMENT V.A. Mohta, J.
1. At the instance of the Commissioner of Income-tax, Nagpur, the following two questions are referred to this court under section 256(1) of the Income-tax Act, 1961 :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the voluntary disclosure petition made by the assessee was within time ?
(2) Whether the Appellate Tribunal was right in holding that a certificate under section 8(2) of the Voluntary Disclosure of Income and Wealth Act, 1976, was not a condition precedent for non-inclusion of the disclosed income ?"
2. The basic material facts relevant to record answers to these questions are these :
During the course of assessment proceedings for the year 1977-78 (previous year ending Diwali 1976), the Income-tax Officer found that there was a deposit of Rs. 40,000 in the personal books of account of the assessee in December, 1975. The assessee contended that the income was not earned during the previous year but had been earned in the past 10 years. A disclosure petition was despatched by post on December 30, 1975, by the assessee from Amravati to the Commissioner of Income-tax at Nagpur under the Voluntary Disclosure of Income and Wealth Ordinance, 1975 (the Ordinance). The petition was rejected by the Commissioner as the declaration was received on January 1, 1976, and not before that day. A sum of Rs. 40,000 was treated by the Income-tax Officer as income from undisclosed sources for the assessment year 1977-78. The assessee's appeal was dismissed by the Appellate Assistant Commissioner. The Tribunal, however, allowed the second appeal taking the view that the disclosure was well within time and the assessee was entitled to the benefits under the Ordinance. The matter was, however, restored to the file of the Income-tax Officer to ascertain whether the three conditions in section 8 of the Ordinance were satisfied or not. For the first time before the Tribunal a question was raised that the assessee was not entitled to the relief also because of non-production of certificate by the Commissioner as contemplated under section 8(2) of the Ordinance.
3. The material portion of section 3 of the Ordinance reads thus (see [1975] 101 ITR (St.) 36) :
"(1) Subject to the provisions of this Ordinance, where any person makes, on or after the date of commencement of this Ordinance 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 Ordinance, or
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under either of the said Acts or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the said Acts or in any Finance Act, income-tax shall be charged in respect of the income so declared (such income hereinafter referred to as the voluntarily disclosed income) at the rate or rates specified in the Schedule to this Ordinance."
4. Having regard to the object of the Ordinance and the words used in section 3(1), it seems to us that the declaration received on January 1, 1976, was well within time. In the whole context, the word "before" will have to be construed as "up to" or as "not after". There are various provisions in the Income-tax Act, wherein the expression "before" has been used (sections 139(1)(a)(i), section 139(1)(b); section 184; section 212). The expression has always been taken to mean "up to". Section 3 specified the period before which a declaration in respect of income has to be made for the purposes of getting a benefit under the Ordinance. It provides a period of limitation within which certain benefits are available. In case of ambiguity the construction which preserves the right to the one which defeats it, has to be preferred. After all, this is a taxing statute which in case of doubt should be interpreted in favour of a taxpayer. Had the legislative intention been to make December 31, 1975, the last day for making the declaration, it could have clearly said so in the proviso. The very fact that the date January 1, 1976, is in terms mentioned indicates that the time limit was up to that date. That in a given case the word "before" in the context of the time can be construed as "not after" is well settled. (R. v. Arkwright, [1848] 12 QB 960). This court in the case of Premchand Nathmal Kothari v. Kisanlal Bachharaj Vyas, , had read the word "before" in section 3 of the Maharashtra (Vidarbha Region) Agricultural Debtors' Relief Act, 1969, as "up to".
5. This takes us to question No. 2 Section 8 of the Ordinance reads thus (see [1975] 101 ITR (St.) 36, 39) :
"8. (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 (11 of 1922), or the Income-tax Act, 1961 (43 of 1961), or the Excess Profits Tax Act, 1940 (15 of 1940), or the Business Profits Tax Act, 1947 (21 of 1947), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), if, -
(i) the declarant credits such amount in the books of account, if any, maintained by him for any source of income or in any other record, and intimates the credit so made to the Income-tax Officer;
(ii) the income-tax in respect of the voluntarily disclosed income is paid by the declarant; and
(iii) the amount required to be invested in the securities referred to in sub-section (3) of section 3 is so invested by the declarant.
(2) The Commissioner shall, on an application by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income, the amount of income-tax paid in respect of the same, the amount of investment made in the securities referred to in sub-section (3) of section 3 and the date of payment and investment."
6. Section 8(1) speaks of the three conditions upon satisfaction of which alone the relief is grantable. The matter is restored to the Income-tax Officer to examine whether those conditions have been satisfied or not by the Tribunal. Production of certificate under section 8(2) is not a condition precedent. It is a mandate to the Commissioner to grant to the assessee a certificate of the voluntarily disclosed income and other enumerated particulars, if applied for. Rightly has the Tribunal held that the holding of the certificate was not a condition precedent to the grant of relief.
7. Hence, both the questions are answered in the affirmative and in favour of the assessee.
8. No order as to costs.