1. This reference under Section 27 of the Wealth-tax Act, 1957 (hereinafter referred as 'the Act'), made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as 'the Tribunal') is at the instance of the Revenue.
2. Messrs. Sajanmal Rampal Godha, the respondent (hereinafter referred to as 'the assessee'), is a Hindu undivided family. In respect of the assessment year 1976-77, the assessee filed a return declaring a net wealth of Rs. 1,27,191. The accounting year of the assessee relevant to the assessment year 1976-77 expired on September 7, 1975. On October 8, 1975, the President of India promulgated the Voluntary Disclosure of Income and Wealth Ordinance, 1975 (hereinafter referred to as 'the Ordinance'), to provide for voluntary disclosure of income and wealth and matters connected therewith or incidental thereto, Under Section 13 of the Ordinance, it was provided that where the voluntarily disclosed income is represented by cash (including bank deposits), bullion, investment in shares, debts due from other persons, commodities or any other assets specified in the declaration made under Sub-section (1) of Section 3 in respect of which the declarant has failed to furnish a return under Section 14 of the Wealth-tax Act for the assessment year commencing on the 1st day of April, 1975, or any earlier assessment year or years, or which have not been shown in the return of net wealth furnished by him for the said assessment year or years, or which have been understated in value in the return of net wealth furnished by him for the said assessment year or years, then, notwithstanding anything contained in the Wealth-tax Act, wealth-tax shall not be payable by the declarant in respect of the assets referred to in Clause (a) or Clause (b) and such assets shall not be included in his net wealth for the said assessment year or years.
3. Section 3 of the Ordinance made the provision enabling declaration to be. made by a person in respect of any income chargeable to tax under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961, for any assessment year.
4. After the promulgation of the Ordinance, the assessee, on December 29, 1975, made a voluntary disclosure of Rs. 75,887 before the Wealth-tax Officer. It was submitted on behalf of the assessee that the said amount of Rs. 75,887 was covered under the Voluntary Disclosure Scheme of 1975 and that the said amount should be excluded from the net wealth of the assessee. It was also urged by the assessee before the Wealth-tax Officer that, for the purposes of assessing the wealth-tax, the valuation date in respect of the assessment year 1976-77 should be taken as March 31, 1976. The Wealth-tax Officer did not accept the said contentions of the assessee and held that the valuation date should be taken as September 7, 1975, and that the assessee could not be given the benefit of the disclosure made by him under the Voluntary Disclosure Scheme, 1975, on December 29, 1975, because exemption under the said Scheme is to be allowed up to the assessment year 1975-76 and the assets disclosed are to be included in the assessment year 1976-77. On appeal, the Appellate Assistant Commissioner held that since no accounts were kept by the assessee in respect of items declared under the Voluntary Disclosure Scheme, the previous year in respect of income from assets from undisclosed sources could only be taken as the financial year and, therefore, the accounting year of the asses-see in respect of those assets should be taken as ending on March 31, 1976. The Appellate Assistant Commissioner has also held that the Hindu undivided family had been partitioned before the close of the accounting year on February 19, 1976, as a result of the death of the karta of the family on January 30, 1976, and for that reason the assets declared by the assessee under the Voluntary Disclosure Scheme were not includible in the total wealth of the assessee-Hindu undivided family for the accounting year ending on March 31, 1976. The Appellate Assistant Commissioner excluded the value of the gold ornaments, silver ornaments, silver utensils and silver, bullion which had been estimated at Rs. 1,08,888 from the total wealth of the assessee for this year. The Tribunal has affirmed the said order of the Appellate Assistant Commissioner, and on an application made by the Revenue, the Tribunal has referred for the consideration of this court the following two questions :
'1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the previous year in respect of the assets disclosed under the Voluntary Disclosure of Income and Wealth Ordinance, 1975, is the financial year ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the learned Appellate Assistant Commissioner of Income-tax excluding an amount of Rs. 1,08,888 being the value of assets disclosed under the Voluntary Disclosure of Income and Wealth Ordinance, 1975, from the net wealth of the assessee for the assessment year 1976-77 ?'
5. We have heard Shri V. K. Singhal, learned counsel for the Revenue, in support of the reference and Shri Duli Chand Godha representing the assessee.
6. The first question relates to the previous year in respect of the assets disclosed under the Ordinance. The question is whether the previous year should be taken as the accounting year ending on September 7, 1975, which was the previous year in respect of the business income of the assessee or it should be the financial year closing on March 31, 1976. The said question has to be considered in the light of the definition of the expression 'valuation date' contained in Clause (q) of Section 2 of the Act which reads as under :
'(q) 'valuation date', in relation to any year for which an assessment is to be made under this Act, means the last day of the previous year as defined in Section 3 of the Income-tax Act, if an assessment were to be made under that Act for that year :
Provided that- (i) where in the case of an assesee there are different previous years under the Income-tax Act for different sources of income, the valuation date for the purposes of this Act shall be the last day of the last of the previous years aforesaid.'
7. From a perusal of the said definition, it is evident that it refers to the previous year as defined in Section 3 of the Income-tax Act, 1961, and it further lays down that if in the case of an assessee there are different previous years for different sources of income, the valuation date for the purposes of the Act would be the last day of the last of the said previous years.
8. In Clause (a) of Sub-section (1) of Section 3 of the Income-tax Act, 1961, the expression 'previous year' has been defined to mean the financial year immediately preceding the assessment year and in Clause (b), it is provided that, if the accounts of the assessee have been made up to a date within the said financial year, then, at the option of the assessee, the previous year is the twelve months ending on such date.'
9. In Baladin Ram v. CIT : [1969]71ITR427(SC) , the Supreme Court, while considering the provisions of Section 2(11) of the Indian Income-tax Act, 1922, containing the definition of the expression 'previous year' in the context of income from undisclosed sources, has referred to the decision in Bishan Dutt v. CIT : [1960]39ITR534(All) and has observed as under (at page 432)
'The view expressed by the High Court was that there being nothing to show that any accounts in respect of the undisclosed source of income existed or were maintained or that the assessee exercised any option under Section 2(11)(i)(a) in respect of such accounts, the only course open to the Department was to tax his income from undisclosed source on the basis of the financial year being the previous year. On that basis the amount could be taxed only for the assessment year 1944-45 and not for the assessment year 1945-46. On similar facts the Calcutta High Court expressed the same view in Jethmal Lakhani v. CIT : [1963]49ITR633(Cal) . By now it appears to be well settled and no decision, even of a High Court, has been cited to the contrary that in such circumstances the only possible way in which such undisclosed income can be assessed or reassessed is to make the assessment during the ordinary financial year.'
10. The provisions of Section 3(1)(a) and (b) of the Income-tax Act, 1961, are in pari materia with the corresponding provisions of the Indian Income-tax Act, 1922. The aforesaid decision in Baladin Ram's case : [1969]71ITR427(SC) will, therefore, govern the provisions of Section 3(1)(a) and (b) of the Income-tax Act, 1961.
11. In Laxmi Narain Gupta v. CIT : [1980]124ITR94(Patna) , the Patna High Court has applied the principles laid down in Baladin Ram's case : [1969]71ITR427(SC) while dealing with the provisions of Sections 68 and 69 of the Income-tax Act, 1961. In that case, the accounting period taken for the purpose of the said assessment for the said assessment year was the year ending on September 30, 1968, and the question was whether the income from undisclosed sources declared by the assessee was taxable under Section 68 or under Section 69 of the Income-tax Act, 1961. Relying upon the decision in Baladin Ram's case : [1969]71ITR427(SC) , the Patna High Court held that the previous year for taxing the unexplained investments could not be the accounting year ending on September 30, 1968, but it should be the close of the financial year ending on March 31, 1969.
12. In view of the principles laid down in the decision in Baladin Ram's case : [1969]71ITR427(SC) , it must be held that, with regard to the assets which were disclosed by the assessee under the Voluntary Disclosure Scheme of 1975, the previous year would be the financial year ending on March 31, 1976. This means that there were two accounting years, one was the accounting year in respect of the income from business which closed on September 7, 1975, and the other was the financial year ending on March 31, 1976, in respect of undisclosed income from other sources. In view of the definition of 'valuation date' contained in Section 2(q) of the Act, the latter date, i.e., March 31, 1976, has to be taken into consideration. The Appellate Assistant Commissioner and the Tribunal were, therefore, right in proceeding on the basis that the valuation date for the purposes of wealth-tax assessments for the assessment year 1976-77 was March 31, 1976. Question No. 1 must, therefore, be answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
13. Question No. 2 relates to exclusion of the amount of Rs. 1,08,888 being the estimated value of the assets disclosed under the Ordinance. From the order of the Appellate Assistant Commissioner, it appears that this exclusion has been made for the reason that a partition had taken place in the Hindu undivided family on February 19, 1976, i.e., before the valuation date of March 31, 1976. Shri Singhal sought to challenge the aforesaid finding recorded by the Appellate Assistant Commissioner regarding partition and has submitted that the said finding is not in accordance with Section 20(2) of the Act From the order of the Tribunal we find that the Revenue did not assail the finding with regard to the partition of the Hindu undivided family recorded by the Appellate Assistant Commissioner and the question as to whether the Appellate Assistant Commissioner was justified in arriving at the said finding was not agitated before the Tribunal. It cannot, therefore, be said that this matter arises out of the order of the Tribunal. If it is held that there was a partition of the Hindu undivided family on February 19, 1976, and the valuation date for the assessment year 1976-77 was March 31, 1976, the amount of Rs. 1,08,888 being the estimated value of the assets disclosed under the Ordinance has to be excluded from the wealth of the assessee for the assessment year 1976-77. Question No. 2 also must, therefore, be answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
14. For the above reasons, both the questions which have been referred for the consideration of this court are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. No order as to costs.