JUDGMENT
Ranganathan, J.
1. The applicant, Radha Kishan, was doing business in iron goods. In his books of account for the financial year which ended on March 31, 1962, there were two cash credits of Rs. 8,000 and Rs. 17,500. The cash credit of Rs. 8,000 appeared on April 1, 1961, and was in the name of one Jagat Rai. The other cash credit of Rs. 17,500 appeared on February 12, 1962, and was in the name of M/s. Tilumal Lachhman Dass of Calcutta. Interest of Rs. 599 had also been credited to these accounts
2. The assessment of the present applicant to income-tax for the assessment year 1962-63 was taken up by the ITO in 1966. By this time, the Govt. of India had promulgated a voluntary disclosure scheme which was embodied in the Finance (No. 2) Act of 1965. This enactment was intended to give a fillip to assesseds who had disclosed their true income in earlier assessment years to come forward with voluntary disclosures of the income on which they had not paid tax. In the disclosure, the declarant had to state that a certain amount representing his income had not been charged to tax either under the 1922 Act or the 1961 Act. The details of the income, the manner in which they were held on the date of the declaration as well as the details of the financial year or years in which they had been earned were also expected to be disclosed by the declarant. When such a declaration was filed before the Commissioner, the Commissioner could, in certain cases where he had information that the existence of this income had been detected in the course of assessment proceedings, refuse to accept the declaration as made and could estimate the concealed income. In other cases the declaration was to be accepted. In either event tax was charged on the income declared or the income determined by the Commissioner on the basis that the said sum constituted the total income of the declarant and was liable to tax accordingly at the rates prescribed in the Finance Act of 1965.
3. The present assessed appears to have taken indirect advantage of the above scheme. On March 30, 1966, Surinder Kumar and Narinder Kumar, two sons of the assessed (who had been aged 16 and 14 years in 1961), filed declarations before the Commissioner. The declaration filed by Surinder Kumar stated that he was declaring a sum of Rs. 17,500 as his untaxed income. Of this a sum of Rs. 5,500 was held by him as cash on the date of the declaration though it had been formally invested in the name of a third party. So far as a sum of Rs. 12,000 was concerned, it had been deposited with the firm, Banwari Lal Radha Kishan (i.e., the assessed), as per details attached. It was stated that the income had been earned before March 31, 1964, but the details of the earlier financial years in which the income was earned and the amount pertaining to each year were not available. A detailed statement accompanying this declaration showed that a sum of Rs. 12,000 had been deposited with the assessed on April 1, 1961, that on Ram Bilas Gupta, that it had been withdrawn on May 19, 1961, that on February 12, 1962, a sum of Rs. 17,500 had been deposited with the assessed in the name of M/s. Tiloo Mal Lachman Dass and that subsequent withdrawals and deposits had been made with the result that as on March 31, 1966, a sum of Rs. 12,000 was deposited with the assesses in the name of Puran Chand & Sons and Rs. 5,500 was the cash in hand. Similarly, Narendra Kumar made a declaration stating that the amount declared by him had been deposited with the petitioner-firm in the name of Jagpat Rai on April 1, 1961, and that there had been subsequent deposits and withdrawals in the account leading to the position that as on March 31, 1966, a sum of Rs. 2,600 stood in the assessed’s books credited in the name of Jagpat Rai and that the balance of Rs. 5,400 remains as cash in hand.
4. When the ITO took up the assessment of the assessed for the assessment year 1962-63, he called upon the assessed to explain the nature and source of the two cash credits. The assessed stated that the two loan accounts in the names of M/s. Tiloo Mal Lachman Dass and Jagpat Rai really represented amounts belonging to Surinder Kumar and Narendra Kumar which had been deposited with the assessed. It is also seen from the assessment order that there was another credit standing in the name of Smt. Krishna Gautam which was sought to be explained by reference to a declaration made by the assessed himself. It was contended that since the amounts in question had been taxed under the provisions of the Finance (No. 2) Act of 1965, in the hands of the two sons of the assessed, Surinder Kumar and Narendra Kumar, the question of taxing them again in the hands of the assessed for the assessment year 1962-63 could not arise.
5. The ITO accepted the assessed’s contention so far as the cash credit in the name of Smt. Krishna Gautam was concerned. So far as the other two items in the names of the two sons were concerned the ITO summoned and examined the two sons of the assessed. He found that at the relevant time they were minors and were studying schools and that there was no satisfactory explanation or account as to how they had come to have in their possession such large sums of money. He was, therefore, not satisfied that the cash credits belonged to the two sons despite the fact that they had disclosed the sum as their income in the voluntary disclosures. The ITO, therefore, added the two sums of Rs. 8,000 and Rs. 17,500 as the assessed’s income and also disallowed the interest of Rs. 599 credited to the said accounts. This had been confirmed by the AAC and the Appellate Tribunal and at the request of the assessed the following question of law has been referred for the decision of this court under s. 256(1) of the I.T. Act, 1961:
“Whether, on the facts and in the circumstances of the case, the amount of Rs. 25,500 deposited in the accounts of Shri Jagpat Rai and Tilumal Lachhman Dass could be treated as the assessed’s income from undisclosed sources for the assessment year 1962-63 ?”
6. The question in this reference is not coming up for the first time before this court. It has been considered at length in Rattan Lal v. ITO [1975] 98 ITR 681. A Division Bench of this court held in the above decision that the ITO has no jurisdiction, while dealing with the case of an assessed, to question the declaration made by the depositors under the Finance (No. 2) Act, 1965, on the basis of which the depositors had already paid the taxes which under no circumstances could be refunded or adjusted. The ITO could not treat the amounts deposited by the depositors with the assessed as if they were not their income and treat them as the income of the assessed. In coming to the above conclusion, this court pointed out that by virtue of the legal fiction created by s. 24(3) of the above Act, the declared amount become the total income of the declarant for purposes of charging income-tax on it. This legal fiction finally imprinted on the sum declared the character of “total income” of the declarant and this finality is achieved by enacting that the income-tax paid thereon shall not be refunded in any circumstances. Having regard to the fact that the legislature had nowhere sanctioned by the above Act either expressly or impliedly the imposition of double taxation and that s. 24(3) of the Finance Act, 1965, contained a non obstante clause which had the effect of making the assessment under s. 24(3) override all the provisions of the I.T. Act including s. 68, the court held that the amount declared could not be treated as part of the total income of another assessed even though it might be an unexplained credit standing in the latter’s book. In arriving at this conclusion this court did not accept the decisions of the Gujarat High Court in Manilal Gafoorbhai Shah’s case [1974] 95 ITR 624 and the Allahabad High Court in Badri Pd. and Sons’ case [1975] 98 ITR 657.
7. In the present reference, the learned counsel for the assessed relied upon the decision of this court in Rattan Lal’s case [1975] 98 ITR 681. On the other hand, the learned counsel for the department drew our attention to a Full Bench decision of the Allahabad High Court in Pioneer Trading Syndicate’s case [1979] 120 ITR 5. In this Full Bench decision, the Allahabad High Court has only reiterated the principles set out in its earlier decision which has already been considered by this court. In these circumstances, we are of the opinion that we are bound to follow the earlier decision of this court in Rattan Lal’s case [1975] 98 ITR 681.
8. Mr. M. L. Verma, counsel for the department, invited our attention to two aspects of the facts on which the present case differed from that considered in Rattan Lal’s case. The first point made by him was that in the present case we are considering an assessment for the assessment year 1962-63, which related to a point of time prior to the voluntary disclosure whereas Rattan Lal’s case was concerned with an assessment in respect of an amount which had been introduced in a third party’s books, subsequent to the declaration. It is no doubt true that there is this difference in the facts between the two cases but we are unable to say that this is a material fact which will have a bearing on the ultimate conclusion when applying the principle established by the Rattan Lal’s case . As already mentioned, the voluntary disclosure scheme was intended to encourage people to disclose income which they had withheld from assessment in any earlier year. Such declaration could thus pertain to amounts which had been standing earlier in the books of other persons in fictitious names or they could also relate to amounts which were lying unaccounted for with the declarant and subsequently introduced into the books of third parties. Hence, so far as the assessment under the Finance Act (No. 2) of 1965 was concerned there would be no difference between the case where the amounts were in somebody’s books already and cases where they were subsequently introduced. This difference in the facts does not, as far as we can see, affect the principle laid down by this court in Rattan Lal’s case . For the same reasons the other difference in facts pointed out by Mr. M. L. Verma, namely, that the declarant was not the same person in whose name the credits appeared in the books of the assessed is also not a material fact while reaching the appropriate conclusion. The concealed income could have remained deposited either in the name of the declarant himself or in the names of the third parties and, therefore, in principle it should make no difference whether the factual position was one or the other so long as there is no doubt that the amount which has been assessed in the hands of the declarant is the amount which is appearing in the books of the assessed who is said to be taxed thereon. We have, therefore, come to the conclusion that these two points on which Mr. Verma lays stress do not make any difference to the ultimate decision and that the principle of Rattan Lal’s case will, therefore, hold good in the present case also.
9. Mr. Verma also pointed out that in the present case, if the assessment for the assessment year 1962-63 had been taken up in 1964 or 1965, the assessed would have had this explanation available to him and could not have depended on the voluntary disclosure. That is no doubt true. But the fact is that the assessment was taken up only in 1966 by which time the declarations had been made and the tax on the declared income also paid. This being so, the assessed was entitled to put forward the plea that the amount in question having been already taxed he cannot be taxed thereon once again.
10. It appears to us that there are two different ways of approaching the problem and that the two lines of decisions represent this divergence of approach. On the one hand, it could be urged that in announcing the voluntary disclosure scheme the intention of the legislature was to attract and bring out undisclosed income to the maximum extent possible by offering attractive terms and conditions therefore. The legislature advisedly offered to those who came forward with disclosure that their explanation regarding the sources, etc., would not be investigated and their explanation regarding the sources, etc., would not be investigated and their disclosure would be department. That apart, the Finance Act also made it clear that the amount brought into the open by the above disclosure would be taxed in the hands of the declarant at the rate appropriate to the amount declared treating it as the total income of the declarant. The legislature could not but have been fully conscious that the result of the above concession would be that the income concealed by one individual may be got declared by a number of persons in order to obtain the advantage of lower tax rate. But, it was perhaps considered worthwhile to grant the concession nevertheless, as the dominant object was to bring as much of the black money as possible into the open. It is, therefore, possible to consider the entire scheme as one offering immunity to the declarants by ensuring that the incomes declared will be taxed only in the hands of the declarants and none else. It will be appreciated that, even according to the ITO, the position in the present case is that the amount of Rs. 25,500 was really the unaccounted income of the assessed but that he had got the sum assessed in tow slabs of Rs. 8,000 and Rs. 17,500 in the hands of his two sons. But if the idea of the scheme was to encourage disclosure notwithstanding the manifest possibilities of such splitting up, then there was nothing wrong in the assessed having done so and the attempt to tax the assessed in 1962-63 on the same amount as part of his other total income would really be an attempt at a second taxation of the same income which the assessed had been induced to declare under the voluntary disclosure scheme. It is on the basis of this reasoning and concept of the voluntary disclosure scheme that Rattan Lal’s case [1975] 98 ITR 681 language of s. 24(1) and (3) of the 1965 Act.
11. The other way of looking at the matter would be to place greater emphasis not on the object and purpose of the scheme but on the strict interpretation of the statutory language in which it is couched. This approach echoes the sentiments expressed by Lord Greene M. R. in Howard de Walden v. IRC [1942] 10 ITR (Suppl.) 90, 94(CA):
“For years a battle of manoeuvre has been waged between the legislature and those who are minded to throw the burden of taxation off their own shoulders on to those of their fellow subjects. In that battle the legislature has often been worsted by the skill, determination and resource-fullness of its opponents….. It would not shock us in the least to find that the legislature was determined to put an end to the struggle by imposing the severest of penalties. It scarcely lies in the mouth of the taxpayer who plays with fire to complain of burnt fingers.”
12. According to this interpretation one has simply to look at the immunity clauses and if it is found that as a result of the language used in the statute the immunity is available only to the declarant and not to others then it should not lie in the mouth of an assessed who has not been frank and how has not come out with a full and fair disclosure to complain of double taxation and the like. The assessed and the declarants, it can be said, took a chance on the statutory language by half-hearted disclosures and cannot complain that the umbrella of immunity is not wide enough to give them shelter. Only the declarant is entitled to the protection provided for and no immunity can be granted to others for whom no such immunity is specifically provided. In this view of the matter, sub-ss. (9), (10) and (11) of s. 24 receive greater emphasis and will be interpreted as conferring an immunity only on the declarant and none else.
13. It will, thus, be seen that the difference of opinion between the Delhi High Court on the one hand and the other decisions referred to on the other is the result of a divergence of approach. Each of the approaches is equally plausible and logical. The Delhi High Court has taken into account the circumstances in which the scheme was introduced and has attached greater importance to the provisions of sub-ss. (1) and (3) of s. 24. On the other hand, the other High Courts have viewed the scope of the legislation in a narrower perspective and have laid emphasis on the limited scope of immunity provided by sub-ss. (10) and (11) of s. 24.
14. In this state of affairs, we think that the decision in Rattan Lal’s case should be followed as it is binding on us. Since the decision of this court has already been taken up in appeal to the Supreme Court and is pending there for decision, we do not think that a review of the two approaches and reconsideration of the matter afresh by this court itself by reference to a larger Bench is called for as suggested by Mr. Verma.
15. We are, therefore, of opinion that it was not open to the ITO to go behind the declarations made by Surinder Kumar and Narendra Kumar and to add the sum of Rs. 25,500 in the hands of the assessed as income from undisclosed sources. The question referred is answered in the negative and in favor of the assessed. However, there will not be an order as to costs.
Khanna, J.
16. As is brought out in the narration of the facts by my learned brother, the two deposits in question were in the name of altogether other persons than the sons of the assessed who had availed of the voluntary disclosure scheme of the Finance (No. 2) Act of 1965, and got those amounts declared in their names. Those other persons were Tilumal Lachhman Dass and Jagpat Rai. Further, these deposits were subsisting in the books of the assessed long before the said disclosures. It was thus not a case where suppressed income saw the light of the day for the first time after the said disclosures, and were then introduced in the assessed’s books. Perhaps something could be said that the assessed seemed to be conscious that when the assessment of the present year was taken up by the ITO, he would not be in a position to explain and satisfy the genuineness of the said deposits in his books, and, therefore, forestalling this difficulty, considered it expedient to take advantage of the introduction of the voluntary disclosure scheme in the year 1965 and hastened to get declarations filed by his minor sons. Still another significant circumstance is that had the assessment of this year been promptly attended to by the ITO and had not got delayed till after 1965, the genuineness of the two deposits was bound to arise for determination, and the assessed had hardly any ground to stand on.
17. These cumulative circumstances would tend to bring the present case closer to the facts involved in the Full Bench decision of the Allahabad High Court in Pioneer Trading Syndicate v. CIT [1979] 120 ITR 5 and of the Gujarat High Court in Manilal Gafoorbhai Shah v. CIT [1975] 95 ITR 624. On the other hand, the Delhi High Court’s decision in the case of Rattan Lal v. ITO [1975] 681 could be treated as somewhat distinguishable as in that case the disclosed amount was introduced for the first time in the assessed’s books after the depositor had made the disclosure under the Finance (No. 2) Act of 1965.
18. It need hardly be impressed that voluntary disclosure schemes have been introduced by the Government from time to time in order to enable any person who had in the past enjoyed income and evaded the payment of tax, to make a clean breast of himself. Thereby concealed incomes, which are sometime euphemistically termed as black money, were allowed to be converted into white money on payment of tax prescribed by the schemes without inviting any penal consequence. Such schemes introduced in good faith had to be equally responded with similar good faith on the part of taxpayers. If, however, they still chose to play hide and seek and made disclosures in pseudo or benami names, they could hardly be treated as grasping in the right spirit the hand of good gesture extended by the Government. As has been observed by Lord Greene in Howard de Walden v. IRC [1942] 10 ITR (suppl.) 90(CA), the taxpayers who again resort to tricks and play with fire, should not complain of burnt fingers. In case, therefore, they get their incomes deceitfully declared in benami names of others and get tax amounts paid thereon, they cannot be heard to make a grievance when the incomes which belong to them, are sought to be taxed in their hands subsequently. The law in this regard is well settled that simply because a person may get an income assessed in his hands would not preclude the revenue authorities from taxing that income again in the hands of the real owner to whom that income belongs.
19. A perusal in this regard of the provisions contained in the Finance (No. 2) Act of 1965 shows that no blanket protection was extended by this Act to all and sundry against any enquiry or investigation about the amounts lying credited in their books. The protection had been extended to the declarants only and the revenue authorities were debarred from making use of the contents of the declarations for the purpose of any of their assessments or penalty proceedings. Clause (x) further envisaged that the amount of voluntarily disclosed income was not includible in the total income of the declarant for any assessment year if he credited such amount in the books of account, if any, maintained by him. This clause thus specifically excluded the taxing of the same income where the amount was found introduced in his account books. The clause did not give any protection to introduction made in the account books of third parties or the assessments that were effected of those third parties.
20. In the present case, as has been noted by the I.T. authorities and the Appellate Tribunal, the two minor sons of the assessed had no possible source of income. The onus of proving the genuineness of the amounts introduced in the assessed’s books squarely lay upon him. In his assessment, therefore, it would appear that the revenue authorities were competent to ascertain if in reality the deposits in his books were his own suppressed income.
21. Another significant feature of the scheme under the Finance (No. 2) Act of 1965 was that the Commissioner, before whom the declarations were filed, was not competent to reject them except on the limited ground of the income having already come to the notice of the revenue authorities.
22. I have considered it appropriate to make the above observations as there appears some force in the following observations which the Appellate Tribunal has made in its order:
“It is well to remember that the declaration was made under a concessional scheme which was introduced to enable assesseds to declare their own incomes in their own cases and not to camouflage their income as somebody else’s income declared in the hands of somebody else. It is in this context that the plea of double taxation of the same income has to be considered. The scheme did not mean that income should not be taxed in the hands of its real owner just because it was declared by somebody else. It only guaranteed that the declared income will not be taxed twice over in the hands of the declarant.”
23. However, as observed by my learned brother, we are bound by the decision of the Delhi High Court given in the case of Rattan Lal [1975] 98 ITR 681. An appeal against the same is stated to be pending in the Supreme Court, and may come up for hearing early. I have, therefore, not considered it advisable that the controversy need be referred to a larger Bench of this court. So far as this court is concerned, that decisions operative and, therefore, the appeal of the assessed must be allowed in terms of the ratio laid in that decision.
