JUDGMENT
1. In pursuance of the provisions contained in the Voluntary Disclosure of Income and Wealth Act, 1976, the petitioner made some voluntary disclosures.
2. The above statute deals with three types of voluntary disclosures. The first is covered by Section 3 of the Act. The second type of disclosure is
visualised by Section 14. This disclosure of income is for those cases where a search and seizure has been made. The third type of disclosure is dealt with by Section 15. This deals with voluntary disclosure of wealth.
3. The petitioner submits that the voluntary disclosure in the present case was made in terms of Section 14. He had paid the tax on the disclosed income in two phases, i.e., 50 per cent, before 31st of March, 1976, and 50 per cent, by 31st March, 1977. It is submitted once that the payment was made in terms of Section 14, then the Revenue was not justified in levying interest. It is this levy of interest which is the subject-matter of challenge in this petition.
4. Learned counsel appearing for the respondent-income-tax authorities submits that the interest was payable and this interest was to be paid in terms of Section 6 of the Act. It is submitted that earlier an Ordinance in the shape of the Voluntary Disclosure of Income and Wealth Ordinance of 1975 came into existence. If the amount of income-tax payable in respect of the voluntarily disclosed income was not paid on or before the 31st day of March, 1976, then the declarant was liable to pay simple interest at 12 per cent, per annum on the amount remaining unpaid after the 1st of April, 1976. It is submitted that this amount was payable in terms of Section 6 of the Ordinance which Ordinance assumed the shape of the Parliament Act 8 of 1976. The short question which thus arises is as to whether the Revenue was within its rights to levy interest in terms of Section 6 or there is immunity from payment of interest when disclosure of income is made in terms of Section 14.
5. Learned counsel appearing for the petitioner submits that the petitioner disclosed his income in terms of Section 14. It is submitted that in terms of Section 14(5), the immunity provided under Section 14(1) was not to be available to the declarant unless and until the tax chargeable in respect of the income of the previous year or years for which the declaration was made, was paid in accordance with the provisions of Section 5.
6. It be seen that in terms of Section 5, the petitioner could pay one-half of the amount of the income-tax in respect of the voluntarily disclosed income by the 31st day of March, 1976, and the remaining by the 31st day of March, 1977. Section 6 provided that if some tax remains unpaid up to the 1st day of April, 1976, then interest was to be payable. It may further be seen that Sub-section (5A) was inserted in Section 14. It was provided that a declarant not paying the tax in accordance with Section 5 would ontinue to enjoy the immunity provided he complied with the statutory requirements by the 1st day of January 1978.
7. Before the submissions made by learned counsel for the parties are dealt with, it would be apt to notice Section 5, Section 6, Section 14 (5) and (5A). These read as under :
“5. Time for payment of income-tax and for investment in notified securities.–(1) Subject to the provisions of Sub-section (2), the income-tax payable under this Act in respect of the voluntarily disclosed income shall be paid by the declarant before making the declaration and the declaration shall be accompanied by proof of payment of such tax.
(2) If the Commissioner is satisfied, on an application made in this behalf by the declarant, that the declarant is unable, for good and sufficient reasons, to pay the full amount of income-tax in respect of the voluntarily disclosed income in accordance with Sub-section (1), he may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments if the declarant furnishes adequate security for the payment thereof ; so, however, that an amount which is not less than one-half of the amount of income-tax payable in respect of the voluntarily disclosed income shall be paid on or before the 31st day of March, 1976, and the remainder, if any, on or before the 31st day of March, 1977.
(3) The security required to be furnished by a declarant for the purposes of Sub-section (2) shall be in such form and in such manner as the Commissioner may, in his discretion, direct.
(4) The investment in the securities referred to in Sub-section (3) of Section 3 shall be made by the declarant within thirty days from the date on which the declaration is made by him under Sub-section (1) of that section.
6. Interest payable by declarant.–If the amount of income-tax payable in respect of the voluntarily disclosed income is not paid on or before the 31st day of March, 1976, the declarant shall be liable to pay simple interest at twelve per cent, per annum on the amount remaining unpaid from the 1st day of April, 1976, to the date of payment and the provisions of the Income-tax Act and the rules made thereunder shall, so far as may be, apply as if the interest payable under this Section were interest payable lender Sub-section (2) of Section 220 of that Act.
14. (5) The immunity provided under Sub-section (1) shall not be available to the declarant unless the tax chargeable in respect of the income of the previous year or years for which the declaration has been made is paid by the declarant in accordance with the provisions of Section 5.
14. (5A) A declarant who has not paid, in accordance with the provisions of Section 5, the tax chargeable in respect of the income of the previous year or years for which the declaration has been made shall, notwithstanding anything contained in Sub-section (5), be entitled to the immunity provided under Sub-section (1) if, before the 1st day of January, 1978, the declarant-
(i) pays the amount of such tax remaining unpaid ; and
(ii) pays the simple interest at the rate of twelve per cent, per annum on the amount of such tax remaining unpaid on the 31st day of March, 1976, from the 1st day of April, 1976, to the date of payment of such tax.”
8. The petitioner had disclosed his income in terms of Section 14, therefore, he wanted immunity in terms of Section 14(1). For this he had to comply with the provisions of Section 5. As to whether there was a compliance or not, the petitioner was required to pay 50 per cent, of the tax by the 31st day of March, 1976, and the remainder by the 31st day of March, 1977. Section 6 provides that in case the tax is not paid by the March 31, 1976, then interest is to be paid. This is the plain reading of the statutory provisions. To say that Section 6 is not applicable when income is disclosed in terms of Section 14, is an argument which is contrary to the plain reading of the statutory provisions. To repeat, in order to claim immunity under Section 14(1), the provisions of Sub-section (5) have to be looked into. This Sub-section (5) makes further reference to Section 5. Section 5 is controlled by Section 6. It is the chain of events indicated in the above manner which would govern the situation. So far as insertion of Sub-section (5A) is concerned, additional benefit was given. Immunity was provided to those assessees who made the payment by the 1st day of January, 1978. This was an additional benefit allowed. Therefore, to say that Section 6 is not applicable to Section 14, is an argument which cannot be accepted.
9. Learned counsel appearing for the petitioner has placed reliance on a circular issued by the Central Board of Direct Taxes. It is submitted that the question as to how the cases of those declarants who had paid the full amount but not in conformity with 5(2) of the Act was the subject-matter of the circular. The decision taken was that even if the procedure laid down in Section 5(2) of the Act was not adhered to in strict terms of the statute, the immunity would still be available.
10. It be seen that this circular deals with the grant of immunity and not with the subject of interest. Therefore, it is not applicable to the facts of this case. Thus, the argument raised by learned counsel for the petitioner that the circular has a binding effect on the Departmental authorities and this court should take notice of this, does not arise in this case. We are of the opinion that the circular in question deals only with the grant of immunity and does not deal with the subject of payment or non-payment of interest or applicability or non-applicability of Section 6 to a disclosure made in terms of Section 14 of the Act.
11. Counsel for the petitioner places reliance on a Division Bench judgment of the Madras High Court reported in Swaminathan (V. N.) v. CIT [1984] 150 1TR 375. In the above case, the assessee had paid two instalments, one before March 31, 1976, and the other before March 31, 1977. This was a case of voluntary disclosure of wealth under Section 15 of the Act. In the
above case, the assessee was held liable to pay interest. It was observed that if the assessee wants to get immunity under the Act, he has to pay the interest. The above case, as a matter of fact, does not advance the plea put across by the petitioner.
12. In view of the above, we are of the opinion that the respondents were well within their rights to claim interest in terms of Section 6 of the Act. This petition is found to be without merit and is dismissed with costs. Cost Rs. 500.
13. This order shall govern the disposal of writ petitions, O. W. P. Nos. 357, 338, 378, 379, 380, 381 and 382 of 1982.
14. A copy of this order be placed on each of the files.
15. Disposed of accordingly.