TRIBHOVANDAS BHIMJI ZAVERI versus UNION OF INDIA AND ORS.

Citation: [1993] SUPP. 2 S.C.R. 207 · Decided: 08-09-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Judgment (excerpt)

TRIBHOV ANDAS BHIMJI ZA VERI 
v. 
UNION OF INDIA AND ORS. 
SEPTEMBER 8, 1993 
[B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.] 
Voluntary Disclosure of Income and Wealth Ordinance, 1975 Voluntary 
Disclosrne of Income and Wealth Act, 1976. Section 3 and 14-Declaration 
of concealed income by assesse~Acceptance of-Conditions requisite. 
The appellants-assessee was a partnership firm and their accounting 
year was the Samvat Year. The accounting year relevant to Samvat Year 
2031 and to the Assessment Year 1976-77 ended on 3rd November, 1975. 
A 
B 
c 
A search of the premises of the appellants was conducted on 28th D 
October, 1975 under section 132 of the Income Tax Act, by the Commis· 
sioner of Income Tax-Respondent No.3. During the search, which con-
tinued from time to time until the end of December 1975, cash, jewellery, 
diamonds and books of account were seized. On 31st December, 1975, the 
appellants made a disclosure under section 3(1) of the Voluntary Dis-
closure of Income and Wealth Ordinance 1975Noluntary Disclosure of E 
Income and Wealth Act, 1976 for the Assessment Years 1965-66 to 1975-76. 
It was disclosed thereby for the Assessment Years en bloc an income of Rs. 
1,41 crores viz. Rs. 1.20 crores being the value of silver bars, silverware, 
diamonds, set jewellery and other ornaments; Rs. 20 lakhs in cash and Rs. 
1 lakh being the value of miscellaneous assets including furniture and F 
fixtures. The 3rd respondent informed the appellants on 21st November, 
1975 that since cash, jewellery, diamonds and books of accounts had been 
seized from the appellants before the declaration was filed, it was not in 
order under the terms of section 3(2)(ii) and that the declaration ought to 
be filed under section 14(1). The appellant's request for review of this 
decision was rejected on 30th December, 1975. On 31st December, 1975 G 
which was the last date for filing of declarations under the Ordinance/Act, 
the appellants made a declaration under protest under the provisions of 
section 14. Representations were also made to the Central Board of Direct 
Taxes to have the declaration under section 3(1) accepted but, on 20th 
June, 1980, the Board declined to interfere. 
H 
207 
A 
B 
c 
208 
SUPREME COURT REPORTS [1993] SUPP. 2 S.C.R. 
A Writ Petition was filed in the High Court by the appellants 
impugning the decision to reject the declaration under section 3 but the 
writ petition was summarily dismissed. 
In the appeal to this Court by Sp.~cial Leave it '!ltS subn\itted that 
section 3(1) did not and could not apply in respect of income for any 
assessment year sub~.equent to the Assessment Year 1975-76 because there 
could be no failure to file a return in respect of the Assessment Year 
1976-77, the previous your whereof being 1975-76 and for subsequent years 
having regard to the period for which the Ordinance/Act was to operate 
viz. between 8th October, 1975 and 31st December, 1975, as the obligation 
to file the return had yet to arise, and there was therefore no question of 
not disclosing income in return or not filing a return so that sub-clauses · 
(a) and (b) in sub-section (1) of Section 3 did not apply. It was further 
submitted that the fact that the search and seizure under section 132 of 
the Income Tax A.d, 1961, had been carried out during the accounting year 
D 1975-76 did not exclude the income of that accounting year from b'eing 
declared under section 3, and that it would be an absurd result i.f a 
declaration made prior to the seizure could be nullified by subsequ~;' 
seizure. 
... 
The appeal was contested on behalf of the Revenue by submitting 
E that the case of the appellant fell within the provisions of section 14, and 
therefore the decision to decline to accept the disclosure made by the 
appellant under section. 3 was justified. 
Dismissing the appeal, this court 
F 
HELD : 1. The object of the Voluntary Disclosure of Income and 
Wealth Act, 1976 is to motivate the voluntary declaration of concealed 
income and with that object in mind the Schedule to the Act ·prescribes 
concessional rates of tax. A declaration of concealed income made after 
books of account or other documents or valuable assets have been seized 
G cannot be said to be a volutary disclosure; it is made because the books, 
documents and assets seized would disclose to the assessing authority the 
concealment of income. Such concealment could have been in respect of 
the previous year in which the seizure was made 

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