Judgment:
R.K. Agrawal, J.
The Tribunal had referred the following questions of law under Section 27(1) of the WT Act, hereinafter referred to as the Act, for opinion to this Court :
'1. Whether, on the facts and in the circumstances of the cases and on a correct and true interpretation of Section 15 of the Voluntary Disclosure of Income and Wealth Act, 1976, the Tribunal was justified in law in holding that immunity was available against penalty with reference to the wealth disclosed in whomsoever's hands it came up for consideration ?'
2. Whether, on the facts and in the circumstances of the cases, the Tribunal was justified in law in cancelling the penalties imposed by the WTO under Section 18(1)(a) of the WT Act, 1957, for the asst. yrs. 1964-65, 1965-66 and 1966-67 in question ?'
2. Briefly stated, the facts giving rise to the present reference are as follows :
The assessee is Jangi Lal HUF. For the assessment years in question returns of wealth became due on the 30th of June each year. However, all the returns were filed by the assessee on 31st Dec., 1975 on which date the assessee also made Voluntary Disclosure of Wealth for those years under Section 15(1) of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, later on enacted as the Voluntary Disclosure of Income and Wealth Act, 1976, hereinafter referred to as the Act of 1976. The disclosures upto the asst. yr. 1966-67 were in the status of individual but from the asst. yr, 1967-68 onwards they were in the status of HUF. The WTO initiated penalty proceedings under Section 18(1)(a) of the Act. The explanation of the assessee was that no penalty was leviable as the returns were filed in pursuance of the disclosure made under the Act of 1976 and that full tax had been paid on 30th March, 1977 under Section 15(5) of the Act of 1976 during the extended time allowed under Section 5A thereof. However, the WTO did not accept this explanation observing that the said disclosure had not been accepted by the Department. Accordingly, penalty was imposed on the assessee for all these years in varying amounts.
3. The assessee appealed before the AAC. There, an alternative contention was also raised on behalf of the assessee, namely, that it had come in disclosure with trust and, therefore, penalty should not have been levied at least on the value of the wealth declared under Section 15 of the Act of 1976. However, the AAC did not interfere with the order of the WTO on the ground that it was in the sole discretion of the WTO to accept or not to accept them to be declarations and that since he did not accept them to be full and true, no discretion could be given to him to grant immunity to the assessee. The AAC also did not accept the alternative submission raised before him.
4. Feeling aggrieved, the assessee preferred an appeal before the Tribunal. The Tribunal was of the view that as a fact the disclosures were accepted and immunities were earned. It also held that if, in terms of Section 15 of the Act of 1976, the immunity was earned and the values declared were not to be considered for the purposes of Section 18(1)(a) of the Act of 1976, there was no obligation on the part of the assessee to furnish the returns of wealth under Section 14 of the Act as for each of the assessment years in question, the net wealth was below taxable limit. It further held that the fact that upto the asst. yr. 1966-67 the declaration was in the status of an individual whereas since the asst. yr. 1967-68 it was in the status of HUF would not make any difference as the immunity was held to be with reference to the wealth declared in whomsoever's hands it came up for consideration. The appeal filed by the respondent-assessee was allowed and the penalty was cancelled.
5. We have heard Sri Shambhu Chopra, learned counsel for the Revenue, and Sri Shakeel Ahmad, learned counsel for the assessee.
6. Learned counsel for the Revenue submitted that as the disclosure has not been accepted by the Department, the penalty has rightly been imposed. Sri Shakeel Ahamad, however, submitted that under Section 15 of the Act of 1976 the only requirement was voluntary disclosure of the wealth and in any event in the assessment orders the disclosure was accepted and, therefore, the assessee is entitled for the immunity given under the disclosure scheme. 7. From the record we find that the Tribunal has recorded a specific finding that each of the wealth-tax assessment orders for the assessment years in question, recorded the following :
'4. The assessee has made a voluntary disclosure under Section 15(1) of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, and disclosed a net wealth of '........' The assessee will be given immunities to this extent as laid down under the Disclosure Scheme.'
8. The Tribunal has further held that the assessee is entitled for the immunity to the extent of the wealth disclosed under the Disclosure Scheme.
9. For a proper appreciation of the issues involved in the present reference, Sections 15 and 18 of the Act of 1976 are reproduced below for ready reference :
Section 15 of the Act is reproduced below :
'15. Voluntary disclosure of wealth--(1) Subject to the provisions of this section, where any person makes, on or after the commencement of this Act but before the 1st day of January, 1976, a declaration in respect of--
(a) the net wealth chargeable to wealth-tax for any assessment year for which he has failed to furnish a return under Section 14 of the WT Act; or
(b) the value of the assets which has not been disclosed or the value of the assets which has been understated, in any return of net wealth for any assessment year,
then, notwithstanding anything contained in that Act, the net wealth, or, as the case may be, the value so declared shall not be taken into account for the purposes of any proceeding relating to imposition of penalty on the person making the declaration under this sub-section (hereinafter in this section referred to as the declarant) or for the purposes of the prosecution of the declarant under that Act':
Provided that--
(i) nothing contained in Clause (a) shall apply in relation to the net wealth assessable for any assessment year for which a notice under Section 14 or Section 17 of that Act has been served upon the declarant before the commencement of this Act :
(ii) nothing contained in Clause (b) shall apply in relation to so much of the value of such assets as has been assessed in any assessment for the relevant assessment year made by the WTO before the date on which the declaration under this sub-section is made.
(2) The declaration under Sub-section (1) shall be made to the Commissioner and shall be in such form and shall be verified in such manner as may be prescribed by rules made by the Board.
(3) A declaration under Sub-section (1) shall be signed by the person specified in Sub-section (2) of Section 4 as if the declaration has been made under that section. 4 A copy of the declaration made by the declarant under Sub-section (1) shall be forwarded by the CWT and the information contained therein may be taken into account for the purposes of the proceedings relating to assessment or reassessment of the net wealth of the declarant under the provisions of the WT Act.
(5) The immunity provided under Sub-section (1) shall not be available to the declarant unless the wealth-tax chargeable in respect of the net wealth for the assessment year or years for which the declaration has been made is paid by the declarant in accordance with the provisions of Section 5 and the declarant invests in the securities referred to in Sub-section (3) of Section 3 within the time specified in Sub-section (4) of Section 5 the sum specified in Sub-section (6) of this section.
Explanation:--For the purposes of this sub-section, wealth-tax chargeable in respect of the net wealth for any assessment year for which the declaration is made shall be--
(a) in a case falling under Clause (a) of Sub-section (1), the wealth-tax payable in respect of net wealth declared under that clause for that year.
(b) in a case falling under Clause (b) of Sub-section (1),--
(i) where no assessment has been made in pursuance of the return of the net wealth furnished by the declarant, the wealth-tax payable on the aggregate of the net wealth, returned and the value declared under that clause for that year as if such aggregate were the net wealth, as reduced by the wealth-tax payable on the basis of the net wealth returned;
(ii) where an assessment has been made in pursuance of the return of the net wealth furnished by the declarant, the wealth-tax payable on the aggregate of the net wealth as assessed and the value declared under that clause for that year as if such aggregate were the net wealth as reduced by the wealth-tax payable on the net wealth as assessed.
(6) The sum referred to in Sub-section (5) shall be--
(a) where the declaration has been made in respect of one assessment year, a sum equal to two and a half per cent of the amount of net wealth declared under Clause (a) of Sub-section (1), or, as the case may be, the value declared under Clause (b) of that sub-section;
(b) where the declaration has been made in respect of more than one assessment year, a sum equal to two and a half per cent of the net wealth declared under Clause (a) of Sub-section (1) or, as the case may be, the value declared under Clause (b) of that sub-section in respect of the last of such assessment year.
(7) Where any wealth-tax is paid by the declarant for any assessment year in accordance with the provisions of Section 5, r/w Sub-section (5) of this section, credit therefor shall be given to the declarant in the assessment made under the WT Act for that year.' '18. Removal of doubts.--For the removal of doubts, it is hereby declared that, save as otherwise expressly provided in the Explanation to Sub-section (1) of Section 13 and in Sub-section (4) of Section 16, nothing contained in this Act shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Act.'
10. From a reading of the aforesaid sections, it is seen that immunity provided under Sub-section (1) is to the limited extent that the net wealth or a value declared by a person shall not be taken into account for the purpose of any proceeding relating to imposition of penalty on the person making the declaration or for the purpose of transaction of the declarant under that Act. Further, the immunity is available and confined to the person making the declaration under the Act and to nobody else. Under the scheme of the WT Act, individual and HUF are treated to be different and, therefore, if the declaration has been made by a person in his individual capacity, the immunity would not enure to the HUF even though it may be represented by that person as Karta or vice versa, as the case may be. In the present case, we find that the declaration has been given by the respondent-assessee in the capacity of individual upto the asst. yr. 1966-67 and from the asst. yr. 1967-68, they were in the status of HUF and, therefore, the immunity provided under Section 15 r/w Section 18 of the Act will not be available to the assessee HUF upto the asst. yr. 1966-67.
11. In the case of Addl. CIT v. Kanhaiyalal Jessaram : [1977]106ITR168(MP) , the Madhya Pradesh High Court has held that even if the offer for settlement is not accepted and if the Department insists on deciding the assessment case on merits, any facts said to be disclosed in such offer have to be altogether excluded and then it becomes incumbent on the Department to resort to the usual assessment or the best judgment assessment, as the case may be, and in that event the Department would be empowered to impose the minimum penalty imposable under the section.
12. We are in full agreement with the principles laid down by the Madhya Pradesh High Court. However, in the present case as assessee is an HUF and the declaration upto the asst. yr. 1966-67 was made by Sri Jangi Lal in his capacity as individual and not in the capacity as Karta of his HUF, in view of the specific provisions of Section 15 r/w Section 18 of the Act of 1976, the immunity granted under the aforementioned sections cannot be availed by the HUF.
13. In view of the foregoing discussions, we answer both the questions referred to us in the negative that is in favour of the Revenue and against the assessee. However, there shall be no order as to costs.