Law: Income Tax Act, 1922

Section: 26A,3C,First Schedule,22,34,23,23B

Income-tax Act, 1922 -- Section 3 read with Fifth Schedule to the Act and Income-tax (Declaration of undisclosed income) Rules, 1976 and C.B.R. Circular C. No. 63(211)-II-IV/76, dated 14-7-1976 -- Undisclosed income -- Declaration of undisclosed income -- Whether in addition to income already assessed -- Held yes -- Whether assessed income of the relevant year should not be reopened for the purpose of declaration -- Held yes -- Whether the assessed income plus the undisclosed income constitute income chargeable for the relevant year -- Held yes -- JUDGMENT The judgment of the court was delivered by S.A. NUSRAT, J. ---The petitioner is a partnership firm registered under Section 26 A for the purpose of Income-tax Act. By an amendment made in the Income-tax Act in 1976, a new Section 3-C was introduced together with the First Schedule(hereinafter referred to as the Schedule), making provision for declaration of undisclosed income by person in respect of his all income profits and gains of any previous year or years ending before the 1st day for July 1975. The undisclosed income was thus to cover the period up to the assessment year 1975-76, and tax on such declared income was to be paid at 30%. Rule 3 of the Schedule laid down that save as provided in sub rule(2), which provided for payment of tax in case the undisclosed income was in the form of assets other than cash, the Income-tax of undisclosed income was to be paid before making a declaration, and the declaration was to be accompanied by proof in respect thereof. Rule 7 of the Schedule authorised the Central Board of Revenue to make rules and issue necessary orders and directions for giving effect to the provisions of the Schedule or concerned matters connected therewith for which no provision or no sufficient provision existed in the Schedule. In exercise of power conferred by rule 7 of the Schedule the Central Board of Revenue framed rules called the Income-tax (Declaration of Undisclosed Income) Rules, 1976 by a Circular C No 63(211)-11-IV/76 dated 14th July, 1976 for the implementation of the provisions of Section 3-C of the Schedule. In order to avail the benefit of Section 3-C of the Income-tax Act…

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