Commissioner Of Income-Tax vs United Trading And Construction Co.

1. The respondent was represented by Mr. M.N. Sharma, advocate. On the death of the said advocate notice was sent to the respondent apprising him of the said fact and asking him to make alternate arrangement. The letter has come back with the endorsement "left". This was in January, 1995. We treat it as sufficient service and proceed with the matter.

2. This appeal is preferred against the order of the Delhi High Court rejecting the application of the Revenue filed under Section 256(2) of the Income-tax Act, 1961. The question which the Revenue wanted to be referred by the Tribunal reads thus :

"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the cash credit amounting to Rs. 25,000 stood explained in view of the disclosure made by the creditors under Section 24 of the Finance (No. 2) Act of 1965 ?

Is the order of the Income-tax Appellate Tribunal not vitiated in view of the provisions of Section 68 of the Income-tax Act, 1961 ?"

3. It is now brought to our notice that this very question has since been decided by this court in ITO v. Rattan Lal [1984] 145 ITR 183. In the said decision it has been held that the immunity enjoyed by a declarant under Section 24 of the Finance (No. 2) Act, 1965, under the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. It was further held that there is nothing in Section 24 of the Finance (No. 2) Act which prevents the Income-tax Officer, if he is not satisfied with the explanation of the assessee about the genuineness of sources of amounts found credited in his books to add them to the assessee's income amount in spite of these having already been made the subject-matter of the declaration made by the depositors/creditors. He is entitled to include them as income of the assessee from undisclosed sources.

4. In view of the said decision, the appeal is allowed. The question shall be deemed to have been referred to the High Court, which we withdraw to this court and answer the same in the negative, i.e., in favour of the Revenue and against the assessee. No costs.