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VOLUNTARY DISCLOSURE OF INCOME AND WEALTH ACT, 1976
STATEMENT OF OBJECTS AND REASONS
The President promulgated the Voluntary Disclosure of Income and Wealth Ordinance. 1975 on Oct. 8. 1975 to provide for voluntary disclosure of income and wealth and for matters connected therewith or incidental thereto. The scheme of voluntary disclosure contained in the Ordinance offered an opportunity to persons who had evaded tax in the past to declare their undisclosed income and Wealth, pay tax thereon on a reasonable basis and return to the path of civil responsibility in future. The operation of the scheme is restricted to declarations made during the period from 8th October, 1975 to 31st December. 1975. In order to enable persons to disclose their concealed income or wealth represented by gold and articles or ornaments made of gold and with a view to removing certain practical difficulties experienced in the operation of the scheme of voluntary disclosure contained in the Ordinance of October 8. 1975 the President promulgated on November 29, 1975 another Ordinance, namely, the Voluntary Disclosure of Income and Wealth (Amendment) Ordinance, 1975. 2. The Bill seeks to replace the Voluntary Disclosure of Income and Wealth Ordinance, 1975 as amended by the Voluntary Disclosure of Income and Wealth (Amendment) Ordinance, 1975. 3. The Notes on clauses appended to the Bill explain in detail the various provisions thereof.- Gaz. of Ind.. 12-1-1976, Pt. II, S. 2. Ext., p. 290.
An Act to provide for voluntary disclosure of income and wealth and for matters connected therewith or incidental thereto. Be, it enacted by Parliament in the Twenty-sixth Year of the Republic of India as follows:-
SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT
(1) This Act may be called THE VOLUNTARY DISCLOSURE OF INCOME AND WEALTH ACT, 1976.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 8th day of October, 1975.
SECTION 02: DEFINITIONS
In this Act, unless the context otherwise requires, -
(a)
(i) "Gold (Control) Act" means the Gold (Control) Act, 1968;
(ii) "Income-tax Act" means the Income -tax Act. 1961 -;
(iii) "Wealth tax Act" means the Wealth-tax Act, 1957 -;
(b) all other words and expressions used in this Act but not defined and defined in the Income-tax Act shall have the meanings respectively assigned to them in that Act
SECTION 03: CHARGE OF INCOME --TAX 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, 1922or 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 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, 1922or 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-to13-and in the Schedule referred to as the declarant) have been seized as a re- suit of any search under section 132 of the Income -tax Act-or under S. 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.
SECTION 04: PARTICULARS TO BE FURNISHED IN DECLARATION
(1) The declaration under sub- section (1) of section 3-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.
(2) The declaration shall be signed-
(a) where the declarant is an individual, by the individual himself; where such individual is absent from India, by the individual concerned or by some person duly authorised by him in this behalf and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;
(b) where the declarant is a Hindu undivided family by the karta, and where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family;
(c) where the declarant is a company, by the managing director thereof or where for any unavoidable reason such managing director, is not able to sign the declaration or where there is no managing director, by any director thereof;
(d) where the declarant is a firm, by the managing partner thereof or where for any unavoidable reason such managing partner is not able to sign the declaration, or where there is no managing partner as such, by any partner thereof, not being a minor;
(e) where, the declarant is any other association, by any member of the association or the principal officer thereof; and
(f) where the declarant is any other person, by that person or by some person competent to act on his behalf.
(3) Any person, who has made a declaration under sub-section (1) of section 3-in respect of his income, or as a representative assessee in respect of the income of any other person, shall not be entitled to make any other declaration under that sub-section in respect of his income or, as the case may be, the income of such other person, and any such other declaration, if made, shall be deemed to be void.
SECTION 05: TIME FOR PAYMENT OF INCOME--TAX AND FOR INVESTMENT IN NOTIFIED SECURITIES
(1) Subject to the provisions of sub-section (2), the income-tax payable under this Act in respect of the voluntarily disclosed income shall be paid by the declarant before making the declaration and the declaration shall be accompanied by proof of payment of such tax.
(2) If the Commissioner is satisfied, on an application made in this behalf by the declarant, that the declarant is unable, for good and sufficient reasons to pay the full amount of income-tax in respect of the voluntarily disclosed income in accordance with subsection
(1), he may extend the time for payment of the amount which remains unpaid or allow payment thereof by installments if the declarant furnishes adequate security for the payment thereof; so, however, that an amount which is not less than one-half of the amount of income-tax payable in respect of the voluntarily disclosed income shall be paid on or before the 31st day of March, 1976 and the remainder, if any, on or before the 31st day of March, 1977.
(3) The security required to be furnished by a declarant for the purposes of sub- section (2) shall be in such form and in such manner as the Commissioner may, in his discretion, direct.
(4) The investment in the securities referred to in sub-section (3) of section 3-shall be made by the declarant within thirty days from the date on which the declaration is made by him under sub-section (1) of that section.
SECTION 06: INTEREST PAYABLE BY DECLARANT
If the amount of income-tax payable in respect of the voluntarily disclosed income is not paid on or before the 31st day of March, 1976, the declarant shall be liable to pay simple interest at twelve per cent. per annum on the amount remaining unpaid from the 1st day of April, 1976 to the date of payment and the provisions of the Income-tax Act and the rules made there under shall, so far as may be, apply as if the interest payable under this section were interest payable under sub-section (2) of section 220-of that Act.
SECTION 07: MODE OF RECOVERY
(1) If the declarant fails to pay the income-tax in respect of the voluntarily disclosed income within the time allowed under subsection (2) of section 5-or to Bivest the amount required to be invested in the securities referred to in subsection (3) of section 3-
within the time specified in sub- section (4) of section 5-, the declarant shall be deemed to be in default.
(2) The provisions contained in sections 221-to227-,229-,231-and232 of the Income-tax Act-and the Second and Third Schedules to that Act and any rules made there under shall, so far as may be, apply as if the said provisions were provisions of this Act and referred to income-tax and sums payable by way of penalty and interest under this Act instead of to tax and sums by way of penalty and interest payable under that Act and to the declarant instead of to the assessee.
(3) Any arrears in respect of the amount required to be invested by the declarant m the securities referred to in sub-section (3) of section 3-shall be recoverable in accordance with the provisions of sub-section (2) as if such arrears were arrears of income-tax and the amount so recovered shall be utilised for the purchase of such securities in the name of the declarant.
SECTION 08: 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, 1922or the Income-tax Act, or the Excess Profits Tax Act, 1940or the Business Profits Tax
Act, 1947-orthe Super Profits Tax Act, 1963or the Companies (Profits) Surtax Act 1964-, if the following conditions are fulfilled, namely:-
(i) the declarant credits such amount in the hooks 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.
SECTION 09: VOLUNTARILY DISCLOSED INCOME NOT TO AFFECT FINALITY OF COMPLETED ASSESSMENTS ETC
The declarant shall not be entitled, in respect of the voluntarily disclosed in- come or any amount of income-tax paid thereon, to reopen any assessment or reassessment made under any of the Acts mentioned in sub-section (1) of section 8-or claim any set off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment.
SECTION 10: INCOME --TAX IN RESPECT OF VOLUNTARILY DISCLOSED INCOME NOT REFUNDABLE
Any amount of income-tax paid in pursuance of a declaration made under sub-section (1) of section 3-shall not be refundable under any circumstances.
SECTION 11: DECLARATION NOT ADMISSIBLE IN EVIDENCE AGAINST DECLARANT
Notwithstanding any- thing contained in any other law for the time being in force, nothing contained in any declaration made under subsection
(1) of section 3-shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty or for the purposes of prosecution under any of the Acts mentioned in sub-section (1) of section 8 or the Wealth-tax Act-
SECTION 12: SECRECY OF DECLARATION
(1) All particulars contained in a declaration made under sub-section (1) of section 3-shall be treated as confidential and, notwithstanding anything contained in any law for the time being in force, no court or any other authority shall be entitled to require any public servant or the declarant to produce before it any such declaration or any part thereof or to give any evidence before it in respect thereof.
(2) No public servant shall disclose any particulars contained in any such declaration except to any officer employed in the execution of any of the Acts mentioned in sub-section (1) of section 8-, or the Wealth-tax Act, or to any officer appointed by the
Comptroller and Auditor-General of India or the Board to audit income -tax receipts or refunds.
(3) The provisions of sub-sections (1) and (2) shall apply in relation to all documents and particulars relating to the investment in securities referred to in sub-section (3) of section 3-(including the payment of interest on such securities) as they apply in relation to the declaration made under sub-section (1) of that section and the particulars contained therein.
SECTION 13: EXEMPTION FROM WEALTH --TAX IN RESPECT OF ASSETS SPECIFIED IN DECLARATION
(1) 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--
(a) 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
(b) which have not been shown in the return of net wealth furnished by him for the said assessment year or years, or (c) 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 or any rules made there under,-
(i) 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;
(ii) the amount by which the value of the assets referred to in clause (c) has been under-stated in the return of net wealth for the said assessment year or years, to the extent such. amount does not exceed the voluntarily disclosed income utilised for acquiring .such 'assets, shall not be taken into account in computing the net wealth of the declarant for the said assessment year or years Explanation.- Where a declaration under sub-section (1) of section 3 is made by a firm, the assets referred to in clause (i) or, as the case may be, the amount referred to in clause (ii) shall not be taken into account in computing the net wealth of any partner of the firm or, as the case may be in determining the value of the interest of any partner in the firm.
(2) The provisions of sub -section (1) shall not apply unless the conditions specified in sub-section (1) of section 8 -are fulfilled by the declarant.
(3) All words and expressions used in this section and in section 15-but not defined and. defined in the Wealth-tax Act shall have the meanings respectively as - signed to them in that Act.
SECTION 14: DISCLOSURE OF INCOME IN CASES OF SEARCH AND SEIZURE
(1) Subject to the provisions of this section, where any books of account, other documents, money, bullion, jewellery or other valuable articles or things belonging to a person have been seized as a result of a search under section 132 of the Income-tax Act or section 37A-of the Wealth-tax Act and such person (hereafter in this. section referred to as the declarant) makes, on or after .the date of commencement of this Act but be- fore the 1st day of January, 1976, a declaration in accordance with sub-section (2) in respect of any income relating to the previous year in which such search was made or any earlier previous 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 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, 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 any of the Acts mentioned in sub -section (1) of section 8-or the Wealth -tax- Act, the amount of income so declared or, as the case may be, the value of the assets representing such income, shall not be taken into account for the purposes of -
(i) payment of interest by the declarant under sub -section (8) of section 139 of the Income-tax Act-;
(ii) payment of interest by the declarant under section 215-or section 217 of the Income-tax Act-or the corresponding provisions of the Indian Income- tax Act, 1922;
(iii) imposition of penalty on the declarant under the provisions of any of the said Acts, except under section 221 of the Income-tax Act-or the corresponding provisions of any of the other said Acts - and
(iv) prosecution of the declarant under the provisions of any of the said Acts.
(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 rules made by the Board.
(3) A declaration under this section shall be signed by the person specified in sub -section (2) of section 4-as if the declaration had been made under that section.
(4) A copy of the declaration made by the declarant under sub -section (1) shall he forwarded by the Commissioner to the Income -tax Officer and the information contained therein may he taken into account for the purposes of the proceedings relat - ing to assessment or reassessment of the income of the declarant under the provisions of any of the Acts mentioned in sub -section (1) of section 8 -or the Wealth -tax Act.
(5) The immunity provided under sub -section (1) shall not be available to the declarant unless the tax chargeable in respect of the income of the previous year or years for which the declaration has been made is paid by the declarant in accordance with the provisions of section 5-.
Explanation.--2[For purposes of this sub -section and sub -section 5A], tax chargeable in respect of the income of any previous year for which the declaration is made shall be,- (a) where the declarant has not furnished a return in respect of the total income of that year and no assessment has been made in respect of the total income of that year, the tax payable on the income declared under sub -section (1) for that year as if such income were the total income; (b) where the declarant has furnished a return in respect of the total income of that year and no assessment has been made in pursuance of such return, the tax payable on the aggregate of the total income returned and the income declared under sub -section (1) for that year as if such aggregate were the total income, as reduced by the tax payable on the basis of the total income returned; and (c) where an assessment in respect of the total income of that year has been made, the tax payable on the aggregate of the total income as assessed and the income declared under sub -section (1) for that year as if such aggregate were the total income as reduced by the tax payable on the basis of the total income as assessed.
3[(5A) A declarant who has not paid, in accordance with the provisions of section 5 the tax chargeable in respect of the income of the previous year or years for which the declaration has been made shall, notwithstanding anything contained in sub - section (5) be entitled to the immunity provided under sub-section (1) if before the 1st day of January, 1978, the declarant
(i) pays the amount of such
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