Does amnesty for voluntary disclosure continue?
Q: It has been stated in The Hindu dated June 14 and 21, 2004, that it is not necessary for a taxpayer to disclose a source of income as long as he discloses such income under the head `Other sources'.
The above view cannot be correct because even the head of income under other sources lists items like dividend, interest on securities, lotteries and the like provide for expenditure for earning such income, where it is admissible under Sec. 57 of the Act. If the view that there is no need to disclose the source is correct, persons who disclose their source of income alone expose themselves to scrutiny and other risks of disallowances and additions giving an undue advantage for persons, who do not disclose the source. By such non-disclosure of source, they may be getting away with deduction of illegal expenses, personal expenses and the like, which are not allowable in law.
There is no permanent amnesty unless offered by the Parliament. In this context, reference may be made to the decision of the Full Bench of the Gauhati High Court in K. C. Trunk and Bucket Factory v CIT (1975) 99 ITR 67 (Gauh), where penalty for non-disclosure of source was upheld by the High Court on the ground that the assessee could not disclose the particulars of income.
The law provides for safeguard of secrecy of particulars furnished by the assessee, while disclosing the income under Sec. 138 and 280 of the Act, so that there need be no apprehension for the taxpayer in disclosing the source.
Since the law would treat all taxpayers alike only the view that the assessee is bound to disclose the source would be fair as between those who disclose the source and those who disclose the income without disclosing the source.
A: The above is the summary of a rejoinder by a Commissioner of Income-tax, who feels strongly that mere disclosure of income without disclosing the source is not permissible and that such disclosure is vulnerable for penalty.
All that the present law requires is that, where there is a credit in the books or investment or expenditure, the assessee has to prove the nature of source of such outlay and if it is not so done, it will be treated as undisclosed income ordinarily under the head other sources.
(To be concluded)
S. Rajaratnam
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