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PETITIONER: JAMNAPRASAD KANHAIYALAL

       Vs.

RESPONDENT: COMMISSIONER OF INCOME-TAX, M.P., BHOPAL

DATE OF JUDGMENT08/05/1981

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) PATHAK, R.S. VENKATARAMIAH, E.S. (J)

CITATION:  1981 AIR 1759            1981 SCR  (3) 849  1981 SCC  (3) 441  CITATOR INFO :  R          1984 SC 989  (1,2)  F          1984 SC1990  (2)

ACT:      Voluntary Disclosure  Scheme under  section 24  of  the Finance (No.  2) Act,  1965, Scope and effect of-Whether the acceptance of  a disclosure  statement made  by a  declarant under section  24 of  the Finance Act, 1965 confers immunity on another  person from tax liability in respect of the same sum of  money-Whether section  24 has  an overriding  effect over section  68 of  the Income  Tax Act, 1961-Bar of double taxation-Section 18  of the  Voluntary Disclosures of Income and Wealth Act, 1976 (Act 8 of 1976).

HEADNOTE:      During the  course of the assessment proceedings of the assessee-firm for  the assessment  year 1967-68,  the Income Tax officer  noticed cash  credits of  Rs. 9,250 each in the names of  five sons of the Managing Partner, in the books of the assessee.  The  Income  Tax  officer  found  that  these creditors, who  were minors,  had no  independent source  of income. The  assessee contended before the ITO that the five creditors  had   voluntarily  disclosed  the  credits  under section 24  of the  Finance (No.  2) Act,  1965 and that the disclosures were  accepted  by  the  Commissioner.  The  ITO rejected the  contention of  the assessee  and held that the cash credits in question were unexplained cash credits, that they represented the income of the assessee from undisclosed source, and  accordingly made an addition of Rs. 46,250. The appellate Assistant Commissioner held that the acceptance of the voluntary disclosures under section 24(3) of the Act and the payment  of tax  thereon precluded  the Department  from disputing  the   fact  that   the  income  belonged  to  the creditors, and,  as the same income could not be taxed twice once in the hands of the creditors and again in the hands of the assessee,  set aside  the order of the ITO. The Tribunal disagreed with  the  Appellate  Assistant  Commissioner  and upheld the  order of  the ITO.  Hence the  reference at  the instance of the assessee under section 257 of the Income Tax Act, 1961 .      Answering the reference against the assessee, the Court

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^      HELD: Per Sen, J.      1. Section  24 of  the Finance (No. 2) Act, 1965 cannot be  construed  as  conferring  any  benefit,  concession  or immunity on  any person  other than  the person  making  the declaration under  the provisions  of the Act. The scheme of the Act  makes it  abundantly clear  that it  was to protect only  those  who  preferred  to  disclose  the  income  they themselves had  earned in The past and which they had failed to disclose  at the  proper time.  The scheme only permitted the bringing 850 forward of  income to  tax; it did not require investigation of the claim of the declarant. The Act granted immunity only to the declarant and not to other persons to whom the income really belonged. [859 G-H, 860 A]      2. The  legal fiction created by sub-s. (3) of s. 24 of the Finance  (No. 2) Act, 1965 by virtue of which the amount declared by  the declarant  had to  be charged to income-tax "as if  such amount were the total income of the declarant", was limited  in scope and it cannot be invoked in assessment proceedings relating  to any  person other  than the  person making the  declaration, and  did not  take away  the  power vested in  the ITO  under section  68 of the Income Tax Act, 1961 to  reject the’  explanation of  an assessee for a cash credit  on   the  ground   that  the   explanation  was  not satisfactory in the case of such other person. [861 F-G]      3. The  finality under  sub-s. (8) of section 24 of the Act was  to the  order of the Central Board of Revenue under sub-s. (6)  thereof and not to the assessment of tax made on the basis  of a  declaration made by the creditors under the scheme.  There   was,  therefore,   nothing  to  prevent  an investigation into  the true  nature and  source of the cash credits. [861 B, D]      4. The  acceptance of  voluntary disclosures under s 24 of the  Act and  the payment of tax thereon by the creditors could not, in law, justify the deletion of the amount of Rs. 46,250  as   it  represented   the  assessee’s  income  from undisclosed sources.  In a  case of  this description, there was no  question of double taxation which was a situation of assessee’s own  making in getting false declarations made in the names  of the creditors with a view to avoid higher slab of taxation.  once it  was found that the income declared by the creditors  did not  belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it actually belonged. [861 H, 862 A-B, 863 C]      Manilal Gafoorbhai  Shah v. Commissioner of Income Tax, (1974) 95  I.T.R.  624  Gujarat;  Badri  Prasad  &  Sons  v. Commissioner of  Income Tax, (1975) 98 I.T.R. 657 Allahabad; Pioneer Trading  Syndicate v.  Commissioner of  Income  Tax, Lucknow, (1979)  120 I.T.R.  5 (Full  Bench  Allahabad)  and Additional  Commissioner   of  Income   Tax  v.  Samarathmal Santoshchand,  (1980)   124  I.T.R.   297  Madhya   Pradesh, approved.      Rattan Lal  & Ors  v. Income Tax officer, 98 I.T.R. 681 Delhi; Shakuntala  Devi & Ors v. C.I.T, (1980) 125 I.T.R. 18 Delhi and  Mohd. Ahsan  Wani v. C.I.T., (1977) 106 I.T.R. 84 Jammu & Kashmir, overruled.      5. The declaration made under sub-s. (2) of s.24 of the Income Tax Act, 1961 had to relate to income actually earned by the  assessee. It  did not require any investigation into the correctness  of the declarations or any determination of the amounts  belonging to  the declarant. The mere charge to tax on  the amounts  under the  Voluntary Disclosure  Scheme could not  have the  effect of converting the money from the

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deductions from the books of the assessee into the income of The  declarants  if  it  did  not  belong  to  it.  It  was, therefore, open  to the  Income Tax  officer to  investigate into the  source of  the cash credit amounting to Rs. 46,250 standing in  the books  of the  assessee in the names of the sons of the Managing Partner. [859 C-D, 860 F-G] 851      1. The  making of  an assessment against a declarant on his disclosure  of statement under section 24 of the Finance (No. 2)  Act, 1965  cannot deprive  Income  Tax  officer  of jurisdiction to  assess the  same receipt  in the  hands  of another person  if, in  a  properly  constituted  assessment proceeding under  the Income  Tax Act,  the receipt  can  be regarded as the taxable income of such other person. [852 G- H, 853 A]      2. The  liability  imposed  under  section  24  of  the Finance (No.  2) Act,  1965 is  identifiable with the income tax liability  under the  Income Tax  Act.  The  scheme  for voluntary disclosure  of income  and its  taxation  is  only another mode  provided by  law for  imposing income  tax and recovering it.  Consequently the  general  principles  which apply to  assessments made  under the  Income Tax Act would, except for  provision to  the  contrary,  be  applicable  to assessments made  under section  24 of  the Finance  (No. 2) Act, 1965.  Accordingly when the assessment to income tax is made under  the latter enactment, it will be governed by the general principle  that a  finding recorded  therein governs only the particular person assessed. [852 B-D]      3. The  finality enacted by sub.s. (8) of section 24 of the Finance  (No. 2) Act, 1965 attaches to the assessment of the declarant only. It cannot in law operate in favour of or against any other person. [852 F]      3:1. The  jurisdiction of  an Income  Tax officer  when making an  assessment is  concerned primarily with the issue whether the  receipt  under  consideration  constitutes  the income of  the assessee  before him.  Any finding reached by the Income Tax officer touching a person not the assessee in the process  of determining that issue cannot be regarded as an operative  finding in  favour of  or against such person. The only  exception of  this rule  centers  on  the  limited class, and  for the  limited purpose, defined by the Supreme Court in  Income Tax  Officer, A-Ward,  Sitapur v. Murlidhar Bhagwan Das, 52 I.T.R. 335 at 346. [852 D-F]      Ahmed Ibrahim  S. Dhoraji v. The Commissioner of Wealth Tax Gujarat,  [1981] 3 SCR p. 402 and Income Tax Officer, A- Ward, Sitapur  v. Murlidhar  Bhagwan Das, 52 ITR 335 at 346, applied.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Tax Reference Case No. 19 of 1975.      Tax Reference u/s. 256 of the Income Tax Act, 1961 made by  the  Income  Tax  Appellate  Tribunal,  Jabalpur  Bench, Jabalpur in R.A. No. 221/Jab/73-74 arising out of I.T.A. No. 1560 (Jab)/1972-73  decided on  10-1-1974;  Assessment  Year 1967-68.      S. T. Desai, B.L. Noma and K.J. John for the Petitioner 852      V.s. Desai,  Champat Rai and Miss A. Subhashini for the Respondent.      The Judgment  of A.P.  Sen and E. S. Venkataramiah, JJ. was delivered  by Sen,  J. R.S.  Pathak, J.  gave a separate opinion.

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    PATHAK, J:  I agree.  The acceptance  of  a  disclosure statement made by a declarant under s.24 of the Finance (No. 2) Act,  1965 cannot  confer immunity on another person from tax liability  in respect  of the  same sum of money. As was held by  this Court  in Ahmed  Ibrahim  S.  Dhoraji  v.  The Commissioner (of  Wealth Tax  Gujarat the  liability imposed under s.24  of the Finance (No. 2) Act, 1965 is identifiable with the  income tax liability under the Income-tax Act. The scheme for  voluntary disclosure  of income and its taxation is only another mode provided by law for imposing income tax and recovering  it.  Consequently,  the  general  principles which apply  to assessments  made under  the Income-Tax  Act would  except   for  the   provision  to  the  contrary,  be applicable to  assessments made  under s.24  of the  Finance (No. 2)  Act, 1965.  Accordingly,  when  the  assessment  to income tax  is made  under the  latter enactment, it will be governed by  the general  principle that  a finding recorded therein governs  only the  particular person  assessed.  The jurisdiction  of  an  Income  Tax  officer  when  making  an assessment is concerned primarily with the issue whether the receipt under  consideration constitutes  the income  of the assessee before  him. Any  finding reached by the Income Tax officer touching a person not the assessee in the process of determining that  issue cannot  be regarded  as an operative finding in  favour of  or  against  such  person.  The  only exception to this rule centres on the limited class, and for the limited  purpose, defined  by this  Court in  Income-Tax Officer, A-Ward  Sitapur v. Murlidhar Bhagwan Das. Viewed in the light of that principle it is apparent that the finality enacted by sub-section (8) of section 24 of the Finance (No. 2) Act,  1965 attaches  to the  assessment of  the declarant only. It  cannot in  law operate in favour of or against any other person.      I am  of opinion  that  the  making  of  an  assessment against a  declarant on  his disclosure statement under s.24 of the  Finance (No.  2) Act,  1965 cannot deprive an Income Tax officer  of jurisdiction  to assess  the same receipt in the hands of another person if, in 853 a  properly  constituted  assessment  proceeding  under  the Income Tax A Act, the receipt can be regarded as the taxable income of  such other  person.  I  would  answer  the  first question in  the affirmative,  in favour  of the Revenue and against the  assessee. That being so, no answer is necessary to the  second question.  The Commissioner  of Income-Tax is entitled to his costs of the reference.      SEN, J.  This is a direct reference under s. 257 of the Income Tax  Act, 1961  made  by  the  Income  Tax  Appellate (Tribunal, Jabalpur,  for short, The Appellate Tribunal), at the instance  of the assessee. The reference is necessitated due to  divergence of  opinion, as  reflected in the various decisions of  different High  Courts, with  respect  to  the scope and effect of the Voluntary Disclosure Scheme under s. 24 of the Finance (No. 2) Act, 1965 (the ’Act’, for short).      The assessee,  Messrs. Jamnaprasad  Kanhaiyalal,  is  a partnership firm.  The firm  consists of 4 partners, namely, Kanhaiyalal and  his 3  major sons, Rajkumar, Swatantrakumar and Santoshkumar  with his minor son Satishkumar admitted to the benefits of the partnership. In the course of assessment proceedings for  the assessment  year 1967-68,  the relevant accounting year  of which  was the year ending Diwali, 1966, the Income Tax officer (ITO, for short) noticed in the books of account  of the  asssesee five  Cash credits of Rs. 9,250 each in  the names  of five sons of Kanhaiyalal, as detailed below:

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                                                    Rs.           Sailendrakumar                5 yrs.     9,250/-           Satishkumar                   9 yrs.     9,250/-           Sunilkumar                    7 yrs.     9,250/-           Swatantrakumar                16 yrs.    9,250/-           Santoshkumar                  18 yrs.    9,250/-                                                   --------                                                   46,250/-                                                   --------- The ITo  accordingly called upon the assessee to explain the genuineness as  well as  the source  of the cash credits. On being  questioned,   Kanhaiyalal   the   Managing   Partner, disavowed ail  knowledge as to the capacity of the creditors to advance the amounts in question. 854 On the  contrary, he  admitted that  the  creditors  had  no independent source  of income  of their  own.  In  fact,  he further stated  that he  could not explain the source of the cash credits.      It was  contended before  the ITo  that  the  creditors having  made   voluntary  disclosures  under  the  Voluntary Disclosure Scheme  and the  disclosures made  by them having been accepted by the Commissioner of Income Tax and tax paid thereon, the  amount of  Rs. 46,250  could not be treated as income of  the assessee  from undisclosed  sources. The ITo, however, held  that the  disclosures made  under the  scheme granted  immunity   from  further   taxation  only   to  the declarant, and  not to  person to  whom the  income actually belonged. He further held that the assessee having failed to prove the  genuineness and  source of  the cash credits, the amount of Rs. 46,250 credited in the books of account of the assessee in the names of the creditors, who had no income of their own  must be  treated as  the assessee’s  income  from undisclosed sources.  According to  him, such  cash  credits were treated  in their names after making false declarations under the  Scheme, with  a view  to avoid  a higher  rate of taxation. He  accordingly made  an addition of Rs. 46,250 as assessee’s income from undisclosed sources.      The Appellate Assistant Commissioner disagreed with the ITO, holding  that when  an amount was disclosed by a person under s.  24 of  the Act,  there was an immunity not only as regards the  declarant, but  there was also a finality as to the  assessment.  In  his  view,  the  entire  statement  of Kanhaiyalal had  to be  ignored, as it was not clear in what capacity the  questions were  put to  him  and  the  answers elicited because  any investigation  into the  source of the deposits was  prohibited  and  illegal  under  the  Act.  He accordingly  held  that  the  acceptance  of  the  voluntary disclosures  made  by  the  creditors  in  question  to  the Commissioner and  the payment  of tax  thereon precluded the Department from  disputing that  the income  belonged to the said creditors-and as the same income cannot be taxed twice, once in the hands of the creditors and again in the hands of the assessee, the order passed by the ITO in that behalf was unsustainable.   The   Appellate   Assistant   Commissioner, therefore,  directed   the  deletion   of  Rs.  46,250.  The Department went up in appeal before the Appellate Tribunal.      The Appellate  Tribunal, however,  disagreed  with  the Appellate Assistant  Commissioner and upheld the decision of the ITo. It was of the opinion that the ITo was justified in treating the  cash credits appearing in the books of account of the assessee in the names of 855 the creditors  as unexplained  cash credits,  since  it  was found that  the A  income declared  by the creditors did not

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belong to  them, and  there was  nothing to prevent the same being taxed  in the  hands  of  the  assessee  to  which  it actually belonged.  According to  the Tribunal  the immunity under s.  24 of the Act was conferred on the declarant only, and there  was nothing to preclude an investigation into the true  nature  and  source  of  the  credits.  The  Appellate Tribunal, after  taking into  consideration the statement of Kanhaiyalal, and  having regard  to the age of the creditors and the fact that none of them had any independent source of income at  any time,  held that  the ITo  was  justified  in holding that the asssessee failed to discharge the burden of proof under  s. 68  of the Income Tax Act, 1961 in regard to the nature and source of the cash credits and, therefore, it had to  be treated as the assessee’s income from undisclosed sources. Thereupon,  the assessee  applied to  the Appellate Tribunal under  s. 256  of the Income Tax Act, 1961 to refer the question  of law arising out of its order, to the Madhya Pradesh High Court for its opinion.      There being a conflict of opinion between the different High Courts  as to  the true  nature of the immunity granted under s.  24 of  the Act,  the Appellate Tribunal has made a reference under  s. 257  of the Income Tax Act, 1961 to this Court, of  the following  questions of law, for its opinion, namely:      1.   Whether on  the facts  and in the circumstances of           the case,  it was  open to the Revenue authorities           to investigate  into the  genuineness of  the five           credits aggregating  to Rs.  46,250 and  records a           finding in  regard thereto,  when  the  Disclosure           petitions made by the five creditors under Section           24 of  the Finance  (No. 2)  Act, 1965,  had  been           acted upon by the Revenue authorities ?      2.   If the  answer to  the first  question is  in  the           negative and  in favour  of the  assessee, whether           the addition  of Rs.  46,250 to  the income of the           assessee   as   representing   its   income   from           undisclosed  sources,  for  the  assessment  years           1967-68, is valid and justified in law ?      The main  question in  controversy lies within a narrow compass. The question, in fact, is whether the provisions of s. 24 of the Act can be construed as conferring any benefit, concession or 856 immunity on  any person  other than  the person  making  the declaration under  the provisions  of the  Act.  It  may  be mentioned that  to avoid any room for doubt, the legislature has introduced  s. 18 in the Voluntary Disclosures of Income and Wealth  Act, 1976 (Act No. 8 of 1976) which specifically provides that save as otherwise provided in the Act, nothing contained in  the Act  shall be  construed as conferring any benefit, concession or immunity on any person other than the person making  the declaration  under the  provisions of the Act. The  question for  consideration is whether the absence of such  a provision  as is found in Act No. 8 of 1976 leads to the consequence that acceptance of a declaration under s. 24 of the Act confers a benefit which is not provided by the Act on a person other than the declarants and takes away the power of  the ITO under s. 68 of the Income Tax Act, 1961 to make an  investigation as to the nature and source of a cash credit appearing in the books of the assesssee to reject the explanation offered by the assessee as unsatisfactory and to treat it as his income from undisclosed sources.      Section 24  of the  Finance (No.  2) Act, 1965 provided for the  making  of  voluntary  disclosures  in  respect  of amounts representing  income chargeable  to  tax  under  the

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Income Tax  Act 1922  or the  Income tax  Act, 1961, for any assessment year  commencing on  or before  April 1, 1964. On such disclosure  being made under sub-s. (I) thereof, in the manner provided  by sub-s.  (2) the amount was to be charged to Income  tax in  accordance with sub-s. (3) which provided by a  legal fiction  that income tax shall be charged on the amounts of voluntarily disclosed income at certain specified rates "as  if such  amount were  the  total  income  of  the declarant". There  was a  safeguard provided  in sub-s.  (4) that the benefit under the scheme would be available only in respect of  the voluntarily  disclosed  income  and  not  in respect of  the amount  detected  or  deemed  to  have  been detected by the ITO before the date of declaration. When the Commissioner of  Income Tax passed an order under sub-s. (4) there was an appeal provided to the Central Board of Revenue under sub-s.  (S) and  the Board  was empowered under sub-s. (6) to  pass such orders thereon as it deemed fit. There was a finality  attached to  the order of the Board under sub-s. (8)      In support  of the  reference, learned  counsel for the assessee  has,   in  substance,   put  forth   a  three-fold contention. It is submitted, firstly, that the ITO could not have treated the cash credits standing 857 in the  names of  the  sons  of  Kanhaiyalal,  the  Managing Partner as . the assessee’s income from undisclosed sources, having regard  to the  fact that each one of them had made a declaration under sub-s. (I) and paid tax thereon under sub- s. (3). The submission is that it is not permissible for the Department to  go into the question of the nature and source of the  amount so  declared in  a voluntary disclosure under s.24 of  the Act,  and to say that it does not represent the income of  the declarant.  Secondly, it is urged that sub-s. (I) read with sub-s. (3) of s.24 of the Act has a overriding effect over s.68 of the Income Tax Act, 1961 and, therefore, the ITO  could not  make any  investigation as to the nature and source of the cash credits, and thirdly, it is submitted that there  cannot be  double taxation  of the  same income, once in the hands of the creditors and again in the hands of the  assessee.  These  submissions  proceed  on  a  wrongful assumption that  there is  a finality  attached under sub-s. (8) to  the legal  fiction created  by sub-s.  (3) for which there is  no basis  whatever. The contentions cannot, in our opinion, prevail.      For an  appreciations of  the contentions raised, it is necessary to  set out the relevant provisions of s.24 of the Act. Sub-s. (1), insofar as relevant reads .      (1)  Subject to  the provisions  of this section, where           any person  makes, on  or after  the 19th  day  of           August, 1965,  and before  the 1st  day of  April,           1966, a declaration in accordance with sub-section           (2) in  respect of  the amount representing income           chargeable to tax under the Indian Income-tax Act,           1922 (11 of 1922), or the Income-tax Act, 1961 (43           of 1961),  for assessment  year commencing  on  or           before the 1st day of April, 1964-      (a)  for which he has failed to furnish a return within           the time  allowed under  section 22  of the Indian           Income-tax Act,  1922 (11 of 1922), or section 139           of the Income-tax Act, 1961 (43 of 1961), or G      (b)  which he  has failed to disclose in a return of in           come filed  by him  on or  before the  19th day of           August, 1965,  under the  Indian Income  Tax  Act,           1922 (11  of 1922) or the Income Tax Act, 1961 (43           of 1961), or

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858      (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 to the           Income-tax officer  or to disclose fully and truly           11 material facts necessary for his assessment. he shall,  notwithstanding anything  contained in  the  said Acts, be  charged income-tax  in accordance with sub-section (3) in respect of the amount so declared or it more than one declaration has  been made  by a person the aggregate of the amounts declared therein, as reduced by any amount specified in any  order made  under sub-section (4) or, if such amount is altered  by an  order of the Board under sub-section (6), then such altered amount...............      Sub-s.  (3)  containing  the  legal  fiction  reads  as follows:      (3)  Income-tax shall  be charged  on the amount of the           voluntarily disclosed income-           (a)  where the  declarant is a person other than a                company, at  the rates specified in paragraph                A, and           (b)  where the  declarant is  a  company,  at  the                rates specified in Paragraph F, of Part  I of  First Schedule to the Finance Act (X of 1965) as if such amount were the total income of the declarant      Sub-s. (8)  on which  strong reliance  is placed,  runs thus:      (8)  An order  under sub-section (6) shall be final and           shall not  be called  in question before any Court           of law or any other authority.      The crux  of the  matter is  whether the  provisions of s.24 of  the Act can be construed as conferring any benefit, concession or  immunity on  any person other than the person making the  declaration under the provisions of the Act. The question is  whether the  non-obstente clause  contained  in sub-s. (I) of s. 24 of the Act precludes the Department from proceeding against  the person  to whom  the income actually belonged. The contention that there was an immunity not only as regards  the declarant,  but there was also a finality as to the  assessment under  s.24  of  the  Act  stems  from  a misconception of  the nature  and  scope  of  the  Voluntary Disclosure Scheme. 859      Under sub-s. (I) of s.24, a person was required to make a voluntary disclosure in respect of the amount representing the income  chargeable to  tax under  the Indian  Income Tax Act, 1922  or the  Income Tax  Act, 1961  for any assessment year commencing on or before April 1, 1964. Sub s. (I) makes it clear  that the  declarations, which  were expected to be made in  the manner provided by sub-s. (2), were with regard to the  income which  was chargeable to tax under the Income Tax Acts of 1922 or 1961, but which was not disclosed at the proper time. Neither under the Act of 1922 nor under the Act of 1961,  was a  person required  to submit  a  return  with regard to  the income  which was either not earned or deemed to have  been earned by him. It, therefore, follows that the declarations under  sub-s. (2)  of s.24  had  to  relate  to income actually earned by him. The scheme only permitted the bringing forward  of  income  to  tax  it  did  not  require investigation of  the claim  of the  declarant. If  a person made a declaration, the Commissioner was under an obligation to assess him to tax.      In  respect   of  the  voluntary  disclosures  made,  a declarant acquired an immunity from further investigation as to the  nature and  source of  the income.  He also acquired

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certain benefits.  One of  the distinctive  features of  the scheme was  that tax  was chargeable  on the  whole  of  the disclosed income taken as a single block at rates prescribed for personal  income or  for corporate income under the Act, and not  at an ad hoc concessional rate. Further, facilities were allowed  to payment  of tax  in appropriate instalments extending over a period not exceeding four years, subject to a down  payment of  not less  than 10%  of the  tax due  and furnishing a  security in  respect of  the  balance.  Income which had  already been  detected on  the material available prior to  the  date  of  disclosure,  was,  however,  to  be assessed under  the regular provisions of the Income Tax Act and not under the scheme. Any admissions made by a person in the declarations filed by him under the scheme in respect of such income  were not  to be  used in  assessing that income under the  Income Tax  Act. Under  the scheme, the disclosed income was  not to  be subject to any further proceedings of assessment. The  identity of  the declarant  was not  to  be revealed and he was also immune from penalty and prosecution for the  past concealment  of the  disclosed income.  It is, therefore, obvious that the Act granted immunity only to the declarant alone  and not to other persons to whom the income really belonged.      The scheme of the Act makes it abundantly clear that it was to  protect only  those who  preferred to  disclose  the income they 860 themselves had  earned in the past and which they had failed to disclose  at the appropriate time. It is undoubtedly true that the  Act was brought on the statute book to unearth the unaccounted  money.   But  there   is  no  warrant  for  the proposition that  by  enacting  the  same,  the  legislature intended to  permit, or  connive at,  any fraud sought to be committed by  making benami declarations. If the contentions were to be accepted, it would follow that an assessee in the higher income  group could,  with immunity,  find out  a few near relatives  who would oblige him by filing returns under s.24  of  the  Act  disclosing  unaccounted  income  of  the assessee as  their own and claiming that the said income was kept by them in deposit with the assessee.      That takes  us to  the contention  based on  the  legal fiction contained  in sub-s.  (3) of s.24 of the Act and the finality of the assessment, by virtue of sub-s. (8) thereof. The legal  fiction contained  in sub-s.  (3) of  s.24 of the Act, construed  in the  light of  the other provisions; must mean that  the income  voluntarily disclosed shall be deemed to be  the income  of the  declarant. The  words "as if such income were the total income of the declarant" can only mean that even  though the  income did not actually belong to the declarant lt  would be treated to be his income for purposes of payment  of income tax under the scheme. If, therefore, a person made  a false  declaration with  regard to income not earned by  him,  it  is  difficult  to  comprehend  how  the Department could  be prevented  from proceeding  against the person to  whom the  income actually belonged and during the course of whose assessment the concealed income is detected. It, therefore,  logically follows that on a disclosure being made, the  amount was  not to  be charged  to income  tax in accordance with  sub-s. (3)  of s.24  of the Act, taking the disclosed income as the taxable income of the declarant.      The immunity  under s.  24 of  the Act was conferred on the declarant  only and  there was  nothing to  preclude  an investigation  into  the  true  nature  and  source  of  the credits. The  ITO was,  therefore, justified in treating the cash credits  in the books of account of the assessee in the

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names of  the creditors  as unexplained  cash  credits.  The finality under  sub-s. (8)  is to  the order  of the Central Board of  Revenue under  sub-s. (6).  Under sub-s.  (4)  the Commissioner of Income Tax was required, within thirty days, if satisfied  that the  whole or  any  part  of  the  income declared had  been detected  or deemed to have been detected by the ITO prior to the 861 date of  declaration, to  make an  order in  writing to that effect and  forward a  copy thereof  to the  declarant.  Any person who objected to such an order could appeal under sub- s. (5)  to the  Central Board of Revenue stating the grounds for such  an objection. The Board was empowered to pass such orders as it thought fit under sub-s. (6). This order of the Board under sub-s. (6) was final and conclusive by reason of sub-s. (8).  Thus, the  finality under sub-s. (8) was to the order of  the Board under sub-s. (6) of s. 24 and not to the assessment of  tax made on the declarations furnished by the creditors under  the scheme,  by virtue of the legal fiction contained in sub-s. (3) of s. 24 of the Act.      The next  question  that  calls  for  determination  is whether the  non-obstante clause  contained in sub-s. (1) of s. 24  of the  Act precludes  the Department from proceeding against the  person to  whom the  income actually  belonged. Under sub-s. (1) of s. 24 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 nature and sources of the said amount. There was nothing in s. 24 of the Act which prevented  the  ITO,  if  he  was  not  satisfied  with  the explanation of  an assessee  about the genuineness or source of an  amount found  credited in  his books, in spite of its having already been made the subject of a declaration by the creditor and then taxed under the scheme. We find no warrant for the  submission that s. 24 had an overriding effect over s. 68  of the  Income Tax  Act, 1961, insofar as the persons other than the declarants were concerned.      In our  judgment, the  legal fiction  created by sub-s. (3) of  s. 24  of the  Act by  virtue of  which  the  amount declared by  the declarant  was to  be charged to income tax "as if  such amount  were the total income of the declarant" was limited  in its  scope, and  it  cannot  be  invoked  in assessment proceedings relating to any person other than the person making  the declaration  under the  Act so as to rule out the applicability of s. 68 of the Income Tax Act, 1961.      The last  question that  remains is  whether  the  same income cannot  be taxed  twice, once  in the  hands  of  the creditors and  again in the hands of the assessee. In a case of this description, there is 862 no question  of double  taxation. The  situation is  of  the assessee’s own making in getting false declarations filed in the names  of the creditors with a view to avoid higher slab of taxation.  Once it  was found that the income declared by the creditors  did not  belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it actually belonged.      It follows that the decisions of the Gujarat High Court in Manilal Gafoorbhai Shah v. Commissioner of Income Tax, of the  Allahabad   High  Court  in  Badri  Prasad  &  Sons  v. Commissioner of Income Tax, and Pioneer Trading Syndicate v.

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Commissioner of  Income  Tax,  Lucknow  and  of  the  Madhya Pradesh High  Court in  Addl. Commissioner  of Income Tax v. Samrathmal Santoshchand which lay down the true scope of the Voluntary Disclosure  Scheme under  s. 24 of the Act must be upheld. The  decisions of the Delhi High Court in Rattan Lal & Ors  v. Income  Tax Officer  and Shakuntala Devi & ors. v. C.I.T. and  of the Jammu & Kashmir High Court in Mohd. Ahsan Wani  v.   C.I.T.,  taking  a  view  to  the  contrary,  are overruled.      The  Income  Tax  officer  was  entitled  to  determine whether the  amount disclosed  was or  was not the income of the declarant,  while  dealing  with  the  case  of  another assessee under  s. 68 of the Income Tax Act, 1961. The legal fiction created by sub-s. (3) of s. 24 was restricted to the Voluntary Disclosure  Scheme itself.  The protection enjoyed by the  declarant under  that scheme  extended only  to  the amounts so  declared being  not liable  to be  added, in any assessment, of the declarant. There was no absolute finality attached to  the declaration  especially when the nature and source of  the sum  declared was  being determined  for  the purpose of  its inclusion in the income of an assessee other than the  declarant. There  was,  therefore,  nothing  which prevented the Income Tax officer from investigating into the nature and  source of  the sums  credited in  the  books  of account of  an assessee  and reject  his explanation  to the effect that 863 the sums  belonged to  the persons who had made declarations about them under s. 24 of the Act.      Accordingly, the  reference must  be answered in favour of the  Revenue and  against the assessee. Our answer to the first question  is that  the legal fiction created by sub-s. (3) of  s. 24  of the  Finance (No.2) Act, 1965 by virtue of which the  amounts disclosed  by the  declarants had  to  be charged to  income tax  "as if  such amount  were the  total income of the declarants" was limited in its scope and could not be invoked in the assessment proceedings relating to the assessee in  whose books of account the cash credits appear. The answer to the first question is sufficient to dispose of the second.  On the  construction placed on sub-s. (3) of s. 24 of  the Act,  it must  also be  held  that  the  ITO  was justified in  treating the  cash credits  appearing  in  the books of account of the assessee, amounting to Rs. 46,250 as the assessee’s  income from  undisclosed sources,  since the assessee failed to discharge the burden of proof placed upon him  under   s.  68   of  the  Income  Tax  Act,  1961.  The Commissioner of Income Tax shall be entitled to his costs of the reference. S.R. 864