JUDGMENT We have heard Shri Vikram Gulati, counsel for the applicant, and Shri Govind Krishna, counsel for the opposite party.
The following questions of law have been referred for the opinion of this court :
"1. Whether the provisions of section 147(a) of the Income-tax Act are applicable when the assessee had already made a disclosure of income under the Voluntary Disclosure of Income and Wealth Act, 1976, for the relevant year?
2. Whether, there was any material before the Tribunal to hold that the income computation by the Department aggregating to Rs. 53,054 in respect of the three years under consideration was justified ?"
Shri Vikram Gulati, appearing for the assessee, submits that since the asses-see has made a disclosure of income under the Voluntary Disclosure of Income and Wealth Act, 1976, the issuance of notice under section 147(a) of the Income-tax Act, 1961 (in short referred to as "the Act"), is illegal and untenable and the reassessment made under the aforesaid provisions, should be declared void. For the purpose of this argument, we quote the following sections, viz., sections 3 and 8 of the Voluntary Disclosure of Income and Wealth Act, 1976, which are as under (see [1976] 102 ITR (St.) 49, 52) :
"3. Charge of income-fax on voluntarily disclosed income.-- (1) Subject to the provisions of this Act, where any person makes, on or after the date of commencement of this Act but before the 1st day of January, 1976, a declaration in accordance with the provisions of section 4 in respect of any income chargeable to tax under the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act for any assessment year-
(a) for which he has failed to furnish a return under section 139 of the Income-tax Act, or
(b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Act, or
(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act or to disclose fully and truly all material facts necessary for his assessment or otherwise, then, notwithstanding anything contained in the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act or in any Finance Act, income-tax shall be charged in respect of the income so declared (such income being hereinafter referred to as the voluntarily disclosed income) at the rate or rates specified in the Schedule.
(2) Nothing contained in Sub-section (1) shall apply in relation to-
(i) the income assessable for any assessment year for which a notice under section 139 or section 148 of the Income-tax Act has been served upon such person and the return has not been furnished before the commencement of this Act;
(ii) where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to the person making the declaration under Sub-section (1) (hereafter in this section, in sections 4 to 13 and in the schedule referred to as the declarant) have been seized as a result of any search under section 132 of the Income-tax Act or under section 37A of the Wealth-tax Act, the income in respect of the previous year in which such search was made or any earlier previous year.
(3) In addition to the amount of income-tax to be paid under Sub-section (1), the declarant shall invest a sum equal to five per cent, of the amount of the voluntarily disclosed income in such securities as the Central Government may notify in this behalf in the Official Gazette.
8. Voluntarily disclosed income not to be included in the total income.--
(1) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act, or the Excess Profits Tax Act, 1940 (15 of 1940), or the Business Profits Tax Act, 1947 (21 of 1947), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), if the following conditions are fulfilled, namely :--
(i) the declarant credits such amount in the books of account, if any, maintained by him for any source of income or in any other record, and intimates the credit so made to the Income-tax Officer ;
(ii) the income-tax in respect of the voluntarily disclosed income is paid by the declarant; and
(iii) the amount required to be invested in the securities referred to in Sub-section (3) of section 3 is so invested by the declarant.
(2) The Commissioner shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income, the amount of income-tax paid in respect of the same, the amount of investment made in the securities referred to in Sub-section (3) of section 3 and the date of payment and investment."
From the reading of the aforesaid sections harmoniously, we find that the amount of voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Indian Income-tax Act, if the certain requisite conditions as mentioned under the relevant section are fulfilled. The aforesaid section is not a bar for reopening of the assessment under section 147(a) for voluntarily disclosed income which is made before the authority concerned, the said scheme is not a bar to issue notice under section 148 if the disclosure made was not total. If only part of the disclosure is made, in that event, the Income-tax Officer/authorities are entitled to issue notice under section 148 of the Act for making reassessment under section 147. In the facts and circumstances of the present case, it appears that the assessee had not disclosed fully and truly the entire escaped income and had made voluntary disclosure of part of the escaped income. In that view of the matter, we are of the opinion that the authorities concerned were very much entitled to apply the provisions of section 147 or 148 of the Act and make reassessment of the actual escaped income. As such both the questions referred to us are answered in the affirmative, i.e., in favour of the Department and against the assessee.