M. Katju, J.
1. This writ petition has been filed for quashing the impugned notice dated October 29, 2001, under Section 144A of the Income-tax Act, 1961, for proceeding under Section 158BD, read with Section 158BC. Annexure 10 to the writ petition and the direction dated December 12, 2001, issued by the Additional Commissioner of Income-tax to the Deputy Commissioner of Income-tax, annexure 12 to the writ petition and for refund with interest of the seized amount. The petitioner has also prayed for a mandamus restraining the respondents from proceeding with block assessment under Section 158BC.
2. Heard learned counsel for the parties.
3. It is alleged in paragraph 2 of the petition that the petitioner is assessed to income-tax for the last 20 years.
4. The Voluntary Disclosure of Income Scheme, 1997 (VDIS), a copy of which is annexure 1 to the petition provided in Section 64 that any person can make a declaration under Section 65 of any income chargeable to tax for any assessment year mentioned in Section 64(1). In case the declarant was a person other than a company or firm, the tax was to be charged at 30 per cent. of the voluntarily disclosed income. Section 64(2) of the said scheme provided that persons against whom notices under Section 142 or 148 of the Income-tax Act had been served and the return has not been furnished before the commencement of the scheme, and the persons, against whom proceedings against Sections 132, 132A and 133A have been initiated are not entitled to make a declaration under the scheme.
5. It is alleged in paragraph 6 of the petition that the petitioner was not a person covered by the above categories, and hence he was entitled to make a declaration of his income under Section 64 of the Voluntary Disclosure of Income Scheme. It is alleged in paragraph 8 of the petition that with the object to make a declaration for a sum of Rs. 8,50,000 the petitioner went to Delhi, and contacted his chartered accountant on October 17, 1997. The chartered accountant informed him that he will have to deposit a sum of Rs. 2,55,000 as tax under the scheme which was deposited by the chartered accountant on October 17, 1997 itself. As regards the balance amount of Rs. 6,15,000 the petitioner was carrying this amount with him and when he went to check in the Hotel B. Continental, Karol Bagh, New Delhi, he was intercepted by the income-tax authorities who were conducting search proceedings against the owner, and the amount of Rs. 6,15,000 was seized. The petitioner admitted before the search team that he was carrying this amount in a suitcase belonging to him.
6. In paragraph 11 of the petition it is stated that even though there was no search warrant against the petitioner nor was the petitioner resident of the premises where the search was being conducted, the amount of Rs. 6,10,000 was seized from him and he was allowed to carry the balance of Rs. 5,000. On October 18, 1997, the petitioner filed a declaration under Section 65 of the Scheme along with the proof/challan showing deposit of Rs. 2,55,000 and sent it by post to the Commissioner of Income-tax, Meerut. It is alleged in paragraph 13 of the petition that the voluntary disclosure of the petitioner was accepted by the Commissioner of Income-tax, Meerut, and a (Certificate to this effect was granted to the petitioner under Section 68(2) of the Scheme on November 7, 1997, vide annexure 2 to the petition.
7. On October 20, 1997, the petitioner wrote a letter to the Director, Investigation, stating that he had made a declaration under the Scheme and the tax on the income disclosed under the Scheme was deposited on October 17, 1997 prior to the seizure of the money and hence the amount seized be returned to him. The petitioner then on January 19, 1998, wrote a letter to the Commissioner of Income-tax, Meerut, that the amount of Rs. 6,10,000 which was seized from the petitioner by the officials of the Income-tax Department on October 17, 1997, be returned to him as this amount was already declared under the scheme and tax of Rs. 2,55,000 has already been deposited before the seizure. He had also sent a letter dated January 20, 1998, to the Commissioner of Income-tax, Meerut. The true copies of these letters are enclosed as annexures 5 and 6 to the petition.
8. On December 10, 1999, the petitioner received the notice dated December 3, 1999, for submitting the return for block assessment vide annexure 7 to the petition. On January 31, 2000, the petitioner filed his return before respondent No. 3. On February 2, 2001, the petitioner wrote a letter to the Assessing Officer, respondent No. 3 stating the full facts vide annexure 8 to the petition. In reply to various queries of respondent No. 3 the petitioner submitted his reply dated October 25, 2001, stating that he was entitled to make declaration under Section 65 of the Scheme and hence he cannot be assessed under Section 158BD vide annexure 9 to the writ petition. The petitioner received notice dated October 29, 2001, under Section 144A of the Income-tax Act for proceeding under Sections 158BD and 158BC vide annexure 10 to the writ petition. On November 26, 2001, the petitioner gave a detailed reply stating that the amount under the voluntary disclosure cannot be assessed again in any other proceeding vide annexure 11 to the petition. However, the Additional Commissioner of Income-tax vide letter dated December 12, 2001, addressed to the Deputy Commissioner of Income-tax directed respondent No. 3 to continue with the block assessment although there was no warrant of authorisation under Section 132 against the petitioner. The true copy of the letter dated December 12, 2001 is annexure 12 to the writ petition.
9. It is alleged in paragraph 25 of the petition that the amount under the voluntary disclosure scheme having been accepted and a certificate to that effect having been granted by the Commissioner of Income-tax under Section 68(2) of the Scheme, it was immune from further assessment under the Income-tax Act. It is alleged in paragraph 26 of the writ petition that the certificate granted under the Voluntary Disclosure of Income Scheme cannot be cancelled and its validity cannot be questioned.
10. The Department has filed a counter affidavit and we have perused the same. In paragraph 4 of the affidavit it is stated that the search proceedings under Section 132(1) of the Income-tax Act were organised on October 17, 1997, against some lottery operators of Uttar Pradesh and persons having links with such persons. The search operation in respect of the warrant against one Balbir Singh Chhabra was going on in the hotel in question when the petitioner walked in at about 10.30 a.m. into the premises. It is alleged that it is apparent that he had some business connection with the persons searched because he stated that he had come to return money to one Amarjeet Singh Lamba, then in charge of the premises being searched. There was a personal search of the petitioner and he was found to be having a sum of Rs. 6,10,000 and some documents evidencing earning of income from various activities. The statement of the petitioner's driver and Amarjeet Singh Lamba was also recorded. The petitioner stated therein that he had taken the money in question from Pradeep Gaur, chartered accountant, and he had come to the hotel to give it to Amarjeet Singh Lamba. When he was confronted with the sworn statement of his driver, he admitted that he had brought the money from his home and he had taken this money as loan from Amarjeet Singh Lamba 10-15 days ago and had come to return it. He refused to answer any further question and denied having any financial or business connection with Amarjeet Singh Lamba, despite the statement that he had taken the money from him. He also did not explain the nature of entries in the documents found from his possession and seized. Hence, the authorised officer was of the opinion that the money was unaccounted and the documents contained incriminating entries relating to earning of income on which tax had not been paid. The petitioner did not object to the seizure.
11. In paragraph 8 of the counter affidavit it is stated that the declaration under the Voluntary Disclosure of Income Scheme was prepared and sent by post on October 18, 1997, to the Commissioner of Income-tax, Meerut, from Delhi along with the challan and the copy of general entry dated October 17, 1997. There was no mention of seizure of cash or documents under Section 132(1) or of the survey operations under Section 133A made in the declaration filed by the petitioner. It is alleged in paragraph 9 of the same that the petitioner has obtained the certificate from the Commissioner of Income-tax, Meerut, fraudulently since being covered by Sections 132(1) and 133(1) of the Income-tax Act he was not eligible to file a declaration and he suppressed these facts from the Commissioner of Income-tax. In paragraph 13 of the same it is alleged that the Assessing Officer of Balbir Singh Chhabra/Hotel B. Continental, Delhi, examined the sworn statements, seized documents and the money during block assessment proceedings under Section 158BC of the Act. He was not able to find adequate evidence to link the same to those assessees, therefore, he excluded the same from their assessments and he was satisfied that they related to the petitioner. In paragraph 14 of the same it is stated that the proceedings under Section 158BD against the petitioner were initiated on February 3, 1999, by issuing the notice duly served on December 10, 1999, requiring him to file his return for the block period within 16 days and in compliance the petitioner filed the said return of income on January 31, 2000 at nil income. In paragraph 18 of the affidavit it is stated that the Assessing Officer completed the block assessment of the petitioner on December 18, 2001 well before the limitation expiring on December 31, 2001, at income of Rs. 8,65,000 on the basis of seized documents and other evidence. In paragraph 19 of the same it is stated that the petitioner obtained a certificate under the Voluntary Disclosure Scheme fraudulently and hence respondent No. 2 brought the facts before respondent No. 1 and requested him to cancel or withdraw the certificate vide annexure CA-1 to the counter affidavit.
12. A rejoinder affidavit has also been filed and we have perused the same.
13. The main ground for rejecting the prayer of the petitioner for dropping the proceedings under Section 158BD was that in the declaration form the petitioner did not mention that the amount of money seized from his possession was under Section 132(1) and hence the certificate was of no consequence. In our opinion, this ground is untenable in view of the fact that it has been admitted in the order dated December 12, 2001, annexure 12 to the petition that no warrant of authorisation under Section 132 was issued in the name of the petitioner or for his premises. There is also no dispute that no action was taken against the petitioner under Sections 132(1), 132A or under Section 133A of the Income-tax Act. Hence, in our opinion the petitioner was fully eligible to make a declaration under Section 64 of the said Scheme for which certificate under Section 68(2) had already been granted. As such, in our opinion, the petitioner was entitled to the immunity under Section 68 and was entitled for the refund of the amount seized.
14. In paragraph 22 of the counter affidavit it has been admitted by the Department that when the Scheme came into force no notice under Section 142(1) or 148 was issued to the petitioner, nor any action under Section 132 or 133A was taken against him. In paragraph 27 of the counter affidavit the department has admitted that the petitioner was not a resident of the search premises and no separate search warrant had been issued in his name.
15. In our opinion, the petitioner did not suffer from the infirmity as contemplated under Section 64 of the Voluntary Disclosure of Income Scheme, 1997, Scheme. In Killick Nixon Ltd. v. Deputy CIT [2002] 258 ITR 627, the Supreme Court while interpreting an analogous provision of the Kar Vivad Samadhan Scheme observed (page 634) : 'Once the declarant makes payment of the amount so determined under Section 90, the immunity under Section 91 springs into effect. We are also of the view that upon such declaration being made, tax arrears being determined, paid and certificate issued under the Kar Vivad Samadhan Scheme, there is no jurisdiction for the Assessing Officer to reopen the assessment by a notice under Section 143 of the Act except where the case falls under the proviso (2) of Sub-section (1) of Section 90 as it is found that any material particular furnished in the declaration is found to be false.'
16. A similar view was taken by the Supreme Court in CIT v. Shaily Engineering Plastics Ltd. : [2002]258ITR437(SC) . In All India Federation of Tax Practitioners v. Union of India : [1998]231ITR24(SC) , the Supreme Court observed that the Government was committed to make success of the Voluntary Disclosure of Income Scheme 1997. In Laherchand Dhanji v. Union of India : [1982]135ITR689(Bom) , the Bombay High Court while dealing with the Voluntary Disclosure Scheme, 1975, observed that the Commissioner of Income-tax has no power to cancel or modify the certificate granted by him.
17. We are bound by the decisions of the Supreme Court referred to above and we respectfully agree with the decision of the Bombay High Court. The petitioner had a valid certificate granted to him by the Commissioner of Income-tax, Meerut, under Section 68(2) of the Voluntary Disclosure of Income Scheme, 1997, and hence the impugned proceedings under Section 158BD in pursuance of notice dated October 29, 2001, and December 12, 2001, are illegal and are hereby quashed. The amount seized from the petitioner shall be refunded to the petitioner along with interest at 12 per cent. per annum from the date of seizure to the date of refund within two months from the date of production of a certified copy of this order before respondent No. 1.
18. The petition is allowed. No order as to costs.