SHIV PRASAD BHATNAGAR

STATE OF MADHYA PRADESH & ANR.

March 5, 1981

( 0. CHINNAPPA REDDY AND BAHARUL ISLAM, JJ]

National Security Act-Section 12 ( 1)-Scope of-Staleness and irrelevance of grounds of detention-If would vitiate the order of detention.

The petitioner was detained under section 12 (I) of the National Security Act on the grounds that he, alongwith his friends, in the second week of November, 1980 indulged in filthy abuse of Muslims, threatened their lives and performed "marpeet" and that he and his associates terrorised the common man in the area by their various criminal acts which caused disturbance to the public peace and public safety.

In support of the petition it was contended' on behalf of the petitioner that

the reference to associates without naming even one rendered the ground vague D and, therefore, vitiated the order of detention and (2) that the incidents enumerated in the second ground related to the years 1974, 1975, 1977 and 1978 which could not be said to be proximate enough to sustain the order of detention.

Allowing the petition,

HELD : The detenu is entitled to be released.

It is now well settled that grounds of detention must be pertinent and not irrelevant, proximate and not stale, precise and not vague. Irrelevance, staleness and vagueness are vices any single one of which is sufficient to vitiate the order of detention. [83 DJ

In the instant case the incidents enumerated to substantiate the second ground show that apart from the vice of staleness from which they suffer, they were related to "law and order" and not to the maintenance of public order.

They are stale because of the passage of time since the happening of some of the incidents; they are irrelevant because they related to law and order and not to maintenance of public order. [83 El

In Re: Sushanta Goswami and Ors., [1969] 3 S.C:R. 138 followed.

ORIGINAL JURISDICTION : Writ Petition No. 397 of 1981.

(Under Article 32 of the Constitution)

Mrs. Shyamala Pappu, M. S. Mann, S Shukhar, Miss Raj Shree and Mrs. Indra Sawhney for the Petitioner.

S. K. Gambhir and Vijay Hansario for the Respondent.

SUPREME COURT REPORTS

(1981] 3 S.C.R,

The Judgment of the Court was delivered by

CHINNAPPA REDDY J.

Shiv Prasad Bhatnagar is under preventive detention pursuant to an order made by the District Magistrate, Vidisha, Madhya Pradesh. The order and the grounds of detention were served on him on November 28, 1980.

The District Magistrate made a report of the order to the State Government and the latter approved the detention order on December 2, 1980.

The approval was communicated to the detenu on December 5, 1980.

A representation was submitted by the detenu on December 13, J 980. The Advisory Board constituted by the State Government met on January 3, 198 J, considered the material placed before it by the detaining authority as well as the representation and the written arguments submitted by the detenu. The detenu was also given a personal hearing. The Advisory Board submitted its report to the State Government on January 4, 1981. 4' Thereafter the State Government confirmed the order of detention on February 3, 1981 under Sec. 12 (1) of the National Security Act.

The period of detention was stipulated as one year from the date of the order of detention. The order confirming the detention was communicated to the detenu on February 12, 1981 and he was also informed that the Advisory Board had opined that there was sufficient cause for his detention.

Smt. Shyamla Pappu, learned counsel for the detenu made a number of submissions.

In the view that we are taking of one of the primary submissions, we do not think it necessary to consider the rest of the submissions.

The primary submission that we have in mind is that the grounds of detention suffer from the vice of either vagueness or staleness.

The first ground mentions that the detenu alongwith his friends, in the second week of November, 1980, indulged in filthy abuse of Muslims, threatened their lives and performed "mar pit". Details of incidents were given to substantiate the ground. As many as six incidents were mentioned and in everyone of them it was said that the detenu alongwith his associates had indulged in this or that violent action.

No mention was made of the name of even a single associate.

The argument was that the reference to 'associates' without naming even one rendered the ground vague and, therefore, vitiated it.

Similarly, it was said the second ground also referred to the detenu and his accociates without naming even a single associate and for that reason the second ground also was vague. The further submission was that the incidents enumerated in second ground were of the years 1974, 1975, 1977 and 1978 and could by no means be said to be proximate

' J

S.P. BHATNAGAR v. MADHYA PRADESH (Chinnappa Reddy, J.) 83

enough to sustain an order of preventive detention. The second ground was to the effect that the detenu and his associates had terrorized the common man in the Vidisha area by their various criminal acts which caused disturbance to public peace and public safety.

Several incidents were narrated to substantiate this ground. The first incident was of the year 1974, the second incident was of the year 1975, the next three incidents were of the year 1977 and the rest of the incidents barring the last one were of the year 1978. A perusal of the incidents enumerated to substantiate the second ground show that apart from the vice of staleness from which they appear to suffer, the incidents are related to "law and order" and not to the maintenance of public order.

The incidents appear to bear a striking resemblance to the grounds of detention which were considered Jn Re: Sushanta Goswami & Ors., (') particularly in the cases of Debendra Nath Das, Abdul Wallah, Anil Das, Dilip Kumar Chakraborty and Ashoka Kumar Mukhe1jee.

It is now well settled that grounds of detention must be pertinent and not irrelevent, proximate and not stale, precise and not vague.

Irrelevance, staleness and vagueness are vices any single one of which is sufficient to vitiate a ground of detention.

And, a single vicious ground is sufficient to vitiate an order of detention.

In the present case we are satisfied that the second ground of detention suffers both from the vice of staleness, because of the passage of time since the happening of some of the incidents and the vice of irrelevance because they relate to 'law and order' and not to 'the maintenance of public order'. The detenu is entitled to be released.

He is directed to be released forthwith.

The petition is allowed.

P.B.R.

Petition allowed.

(!) [:%9] 3 S.C.R. 138.

SHIV PRASAD BHATNAGAR

STATE OF MADHYA PRADESH & ANR

March 5, 1981

0. CHINNAPPA REDDY

BAHARUL ISLAM, JJ

National Security Act

Section 12

section 12

National Security Act

Sushanta Goswami

Article 32

Shyamala Pappu

M. S. Mann

S Shukhar

Raj Shree

Indra Sawhney

S. K. Gambhir

Vijay Hansario

Shiv Prasad Bhatnagar

December 2, 1980

December 5, 1980

December 13, J 980

January 3, 198 J

January 4, 1981

February 3, 1981

Sec. 12

National Security Act

February 12, 1981

Shyamla Pappu

Vidisha

Sushanta Goswami

Debendra Nath Das

Abdul Wallah

Anil Das

Dilip Kumar Chakraborty

Ashoka Kumar Mukhe1jee


829 A

STATE OF KARNATAKA

KRISHNA BHIMA WALVAKAR & ANR.

May 7, 1981

(0. CHINNAPPA REDDY, A.P. SEN AND

BAHARUL !SLAM, JJ.]

Essential Commodities Act, 1957-Sections 6A, 6B & 6C-Scope of-Consignment moved on a Sunday-Whether exonerates the consignee from making the requisite declaration before the specified authority.

Interpretation-Power coupled with public duty-Whether use of word 'may' in an order makes the power discretionary.

Clause 3(2)(a) of the Edible Oil, Edible Oil Seeds and Oil Cakes (Declaration

of Stocks) Order, 1976 enjoins that before a consignment of oil leaves a place a D stock holder who transports edible-oils shall make a declaration in Form II to the specified officer of the place (in this case the Tehsildar of the) Taluk from where such edible oils are transported. Clause (b) enjoins that the declaration shall be shown at every check post on the route immediately after arrival there.

A police officer seized in transit a truck carrying a large quantity of groundnut oil on the ground that the requisite declaration in Form II had not been furnished to the Tehsildar of the place of despatch of the consignment.

The Deputy Commissioner, after issuing a notice to the respondent under section 6B of the Essential Commodities Act, 1955, released the truck and the consignment on taking from him an indemnity bond and a bank guarantee towards the price of oil. The respondent however produced before the Deputy Commissioner a copy of the invoice issued by the seller and a declaration in Form 39 prescribed under the Mysore Sales Tax Act, 1957.

The Deputy Commissioner ordered confiscation of the truck and the oil on the view that the respondent had contravened the provisions of clause 3(2) (a) and (b) of the Order. On appeal the Sessions Judge affirmed this order.

A single Judge of the High Court in revision held that there was no contravention of the requirement of the Order because the day on which the goods were despatched being a Sunday, it was impossible for the respondent to deliver on that day to Tehsildar the declaration in Form II and that the law would not expect a citizen to do the impossible.

The respondent in the State's appeal to this Court contended that: (I) the

'onfiscation of the entire consignment was arbitrary and excessive in that the use H of the word "may" in section 6A made exercise of that power discretionary; (2) Bince there was nothing to show that the goods had been seized, the power of

A confiscation under section 6A had not been properly exercised and (3) the order of confiscation was a nullity in that the Deputy Commissioner had not issued a proper show cause notice under section 6B of the Act.

Allowing the State's appeal

HELD : l (a) The word 'may" used in section 6A does not mean that the Deputy Corn.missioner could not order confiscation of the entire consignment of an essential commodity l where he found contravention of any of the orders issued under section 3 of the Act. The power conferred on the Deputy Commissioner under section 6A is a power coupled with public duty. [834 H]

(b) In difecting confiscation of the entire consignment which was being transported without furnishing the declaration I in Form II the Deputy Commissioner acted in public interest. The whole purpose of the control order was to maintain control over the stock of essential commodities at a place with a view to securing their equitable distribution and availability at fair prices. The require

rnents of clause 3 (2) (a) and (b) are mandatory. [835 C-Dl

(c) "Stock bolder" as defined in the Order includes the purchaser of oil who is in possession or control thereof. By a legal fiction the explanation treats the owner to have control over the oil in transit. Respondent 4 being the purchaser fell within the definition of "stock holder". Moreover there was nothing to show that the consignor had reserved the jus disponendi by the terms of the contract or appropriation and, therefore, the property in the goods passed to respondent 4 (purcha£er) on delivery to a common carrier under section 25 of the Sale of Goods Act, 1930. [836 A-Bl

(d) The peputy Commissioner was right in holding that the declaration in Form II was required to be filed before the specified officer before the goods left a place and that the declaration should be produced at every check post in transit as required by law. The respondent having contravened the provisions of clause 3 (2) (a} and (b) of the order the truck and the consignment of oil were rightly confiscated. [837 A-Cl

(e) It is not correct to say that since the date of despatch of the goods was a Sunday there was no need to comply with the requirements of clause 3 of the Order. If the consignment had to be despatched on Sunday nothing prevented the parties from furnishing the declaration a day earlier. In a transaction of such a magnitude a duty was cast on the party to comply with the requirements of the

Order before the consignment left the place. [834 A-Bl

2. The very fact that the seized groundnut oil was released only after the respondent furnished the requisite bank guarantee clearly showed that the consignment had been seized. Therefore power under section 6A had been correctly exercised. [837 E-F]

3. There was no breach of the requirement of section 6B. In response to the show cause notice issued by the Deputy Commissioner respondent 4 appeared before him and filed a copy of the invoice and declaration in Form 39 H of the Mysore Sales Tax Act. The Deputy Commissioner gave a hearing to the parties. That being so, validity of the confiscation under section 6C could not be challenged. [837 G-H]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 669 A of 1980.

Appeal by special leave from the judgment and order dated the 2nd February, 1979 of the Karnataka High Court in Criminal Revision Petition No. 320 of 1978.

B.R.L. Iyengar and N. Nettar for the Appellant.

A.L. Wahi and K.C. Dua for Respondent Nos. 1-3.

Ram Jethmalani and Miss Rani Jethmalani for Respondent No.4.

The Judgment oft he Court was delivered by

SEN, J. In this appeal, by special leave, from the judgment of the Karnataka High Court, the only issue between the parties is as to the legality and propriety of the order of confiscation passed by the Deputy Commissioner, Belgaum, of a consignment of 7,200 kg.

D of groundnut oil seized for contravention of sub-els. (2) (a) and (b) of cl. 3 of the Edible Oil, Edible Oil Seeds and Oil Cakes (Declaration of Stocks) Order, 1976 (hereinafter called the Order).

Briefly stated the facts are these: On 6.61977 at about 11.30 a.m., the Sub Inspector of Police, Hukeri, intercepted a truck bearing registration No. MHL 2675 laden with 40 barrels of ground nut oil weighing 7,200 kg. which were being transported from Kampli to Nippani, without furnishing a declaration in Form II to Tahsildar, Hospet, as required under sub-els. (2) (a) and (b) of cl.3 of the Order. The Sub Inspector of Police, after seizing the vehicle and the oil registered a case and thereafter reported the matter to the Deputy Commissioner, Belgaum.

He forwarded the report together with the seized vehicle and the oil to the Deputy Commissioner, Belgaum for taking action under s. 6-A of the Essential Commodities Act, 1955 (hereinafter called the Act). The truck was released to the owner on his executing an indemnity bond, and the groundnut oil released to the Respondent 4, Gopinath Manikchand Dharia, Proprietor, Messrs Anant Oil Mills, Nippani on his furnishing a bank guarantee for Rs. 70,000/- towards the price thereof.

The Deputy Commissioner gave notices as required under s. 6-B of the Act to the parties concerned. During the enquiry, the respondent No. 4 produced before him a copy of the invoice dated 5.6.1977 issued by Sri Satyanarayana Oil Mills, Bellary Road, Kampli, show-

A ing the sale of 7,200 kg. of groundnut oil to Messrs Anant Oil Mills, Nippani. He also produced a copy of the declaration in Form No. 39 prescribed under the Mysore Sales Tax Act, 1957. The Deputy Commissioner, after affording the parties an opportunity of hearing, held that the respondents had contravened the provisions of sub-cl. (2) (a) and (b) of cl.3 of the Order and accordingly confiscated B 40 barrels of groundnut oil and the truck bearing registration No.

MHL 2675.

The respondents preferred an appeal under s. 6-C of the Act before the II Additional Sessions Judge, Belgaum, who was the Appellate Authority. But he, by his well-considered judgment, confirmed the order of confiscation passed by the Deputy Commissioner un, der s. 6-A of the Act.

Thereupon, the respondents preferred a revision before the High Court and a learned Single Judge has, by his judgment, set aside the order of the Appellate Authority as' well as the Deputy Commissioner on the ground that there was substantial compliance of the requirements under sub-els.

(2) (a) and (b) of cl. 3 of the Order inasmuch as the respondents had sent the prescribed declaration in Form II to the Tahsildar, Hospet on 7.6.1977.

According to the High Court, no such declaration could be furnished on 5.6.1977 as it was a holiday being Sunday.

Upon that view, the High Court set aside the order of confiscation passed by the. Deputy Commissioner under s. 6-A of the Act and directed restoration of all the properties to the persons concerned.

Hence this appeal by special leave.

The State was not interested in the confiscation of the truck and, therefore, special leave is confim:d to the question of the legality and' propriety of the order of confiscation passed by the Deputy Comn:iissioner under s. 6-A of the Act in respect of the seized groundnut oil.

On the admitted facts, there can be no doubt whatever that there was a contravention of sub-els. (2) (a) and (b) of cl.3 of the order.

Sub-els. (2) (a) and (b) of cl. 3 are as follows :

3. (2) A stock holder who transports Edible-Oils, Edible Oil Seeds and Oil Cakes shall make a declaration in Form II to the Officer specified in Sub-Clause (1) in respect of such Edible Oils, Edible Oil Seeds and Oil

Cakes,-

(a) at the place from where such Edible Oils, Edible Oil

Seeds and Oil Cakes are transported, before such

Edible Oils, Edible Oil Seeds and Oil Cakes leave the A said place; and

(b) at every check post on the route, immediately after their arrival there;

Provided that the declaration at a check post shall be made B in person by the stock holder or by the person in charge of such Edible Oils, Edible Oil Seeds and Oil Cakes to such Officer, as the Government may by special or general order specify.

The expression 'stock-holder' has been defined in the Order as meaning "Every person who is in possession or control of 150

kilograms or more of groundnut oil. ........ (b) 15 quintals or more of groundnut oil or cake ......... (c) 15 quintals or more of groundnut seeds ......... and (d) 20 quintals of groundnut shell. The Explanation thereto provides that edible oil, edible oil seeds and oil cakes in transit shall be presumed to be under the control of the owner thereof.

The order passed by the High Court setting aside the order of confiscation made by the Deputy Commissioner under s. 6-A of the Act can hardly be supported. In reaching the conclusion that it did, the High Court observes that 5.6.1977 being Sunday, the declaration in Form II could not be delivered to the Tahsildar since the Taluka Office was closed. Nor could it be sent by registered post acknowledgment due as the Post Office could not have been working on that day. It then goes on to observe:

Then, the question is, whether a stock-holder should not at all transport his stock on a Sunday, though the contractual terms of his business of such transaction required that it should be dorie, as the stock should reach the consignee on a particular date. It is impossible to conceive that .law expects any citizen to perform what is impossible to be performed in law. Now the fact that Form II has been received in the office of the Tahsildar on 7.6.1977, clearly indicates that it must have been sent by registered post on 6.6.1977. Anyhow, when once it is seen that it was impossible for the stock-holder (petitioner-4) to submit Form-II on 5.6.1977 before transporting groundnut-oil in that truck on that day, it cannot at all be said that petitioner-4 has committed any breach of the provisions of the order.

834 SUPREME COURT lltEPORTS [1981] 3 s.c:a.

It is difficult to subscribe to the view expressed by the High Court.

When the parties were entering into a transacti.on of such magnitude there was a duty cast on them to comply with the requirements of sub-els. (2) (a) and (b) of cl. 3 of the Order before the consignment left the place. If the consignment was to be loaded on 5.6.1977 which was a Sunday, nothing prevented the parties from furnishing a declaration on 4.6.1977.

The High Court appears to be labouring under a belief that there need be no strict observance of the laws on a Sunday.

There is no warrant for this view.

Faced with the situatiop. that it was rather difficult, if not impossible, to support the view taken by the High Court, Shri Ram Jethmalani, learned counsel for the respondent No. 4 made a valiant effort to avert the order of confiscation passed under s.6-A of the Act, by advancing the following thrt:e contentions: (I) The poer conferred on the Deputy1Commissioner under s. 6-A of the Act, by the use of the word 'may', makes it a discretionary power which had to be used according to sound judicial principles. It is urged that Messrs Anant Oil Mills to whom the groundnut oil belonged had committed no breach of sub-els. (2) (a) and (b) of cl.3 of the order and therefore, the order of confiscation of the entire consignment passed by the Deputy Commissioner was wholly arbitrary and excessive.

(2) The power of confiscation entrusted to the Deputy Commissioner under s.6-A of the Act is exercisable in relation to an essential commodity seized in pursuance of an order made under s. 3. There was nothing to show that the groundnut oil in question had been seized or that a report of such seizure had been made without unreasonable delay to the Deputy Commissioner under the Order and, therefore, the Deputy Commissioner had no power to direct its confiscation under s. 6-A of the Act. (3) It is not established that the Deputy Commissioner had complied with the statutory requirements of s. 6 B of the Act, by giving a show cause notice to the persons concerned against the action proposed to be taken or afforded them an opportunity of hearing and, therefore, the order of confiscation passed by him under s. 6-A was a nullity.

We are afraid, none of these contentions can prevail.

As to point No. (!), it is axiomatk that the power of confiscation of an essential commodity seized for contravention of an order issued under cl.3, is a discretionary power. The use of the word 'may', however, does not necessarily mean that the Deputy Com- . missioner cannot, in the given circumstances of a particular case, direct the confiscation of the entire consignment of an essential commodity in relation to which there is a contravention of any of the orders issued under s.3 of the Act. It all depends on the facts

and circumstances of each case whether the confiscation should be A of an entire consignment or part of it, depending upon the nature of the .contravention. The power conferred on the Deputy Commissioner under s.6-A of the Act, by the use of the word 'may', makes the power coupled with a public duty. Sometimes it may be in the public interest to direct confiscation of the entire consignment of an essential commodity when there is deliberate contravention of B the provisions of an order issued under s.3 of the Act.

In the facts and circumstances of the present case, it cannot be doubted for a moment that the Deputy Commissioner acted in the public interest to direct confiscation of the entire consignment of the groundnut oil, as it was being transported from one place to another without furnishing the requisite declaration in Form II. AU systems of control, supply and distribution of essential commodities would fail unless the various control orders issued by the Central Government under s. 3 of the Act in relation thereto are strictly observed. These control orders are issued under s. 3 when the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of essential commodities or for securing equitable distribution and availability at fair prices etc. Sub-els. (2) (a) and (b) of cl. 3 of the Order enjoin that the stock-holder shall make a declaration in From II in relation to movement of edible oil, edible oil seeds and oil cakes, to the Tahsildar in-charge of the taluka of the place from where such edible oil, edible oil seeds and oil cakes are transported before such edible oil, edible oil seeds or oil cakes, leave the place. The whole purpose is to maintain a control over the stock of such essential commodities at a place with a view to secure their equitable distribution and availability at fair prices.

The requirements of sub-els. (2) (a) and (b) of cl. 3 of the the Order are clearly mandatory.

We fail to comprehened the contention that there was only a technical breach.

Under sub-els. (2)(a) and (b) of cl. 3 of the order, a stock-holder is required to furnish a declaration in Form II in relation to movement of edible oil, edible oil seeds and cakes, to the Tahsildar in-charge of the taluka at the place from where such commodity is sought to be transported before sucb commodity leaves the place. The definition of 'stock-holder' certainly means the consignor who holds such stock of edible oil, oil seeds and cakes and also may include a purchaser of such oil, seeds and cakes who is in possession or control thereof. Explanation to the definition of

'stock-holder', by a legal fiction, treats the owner to have control over the edible oil, edible oil seeds and cakes, in transit.

The respondent No. 4, being the purchaser, also comes within the definition of 'stock-holder' by reason of the said Explanation. There is nothing to show that the consignor had reserved the }us disponendi by the terms of the contract or appropriation and, therefore, the property in the goods passed to the respond1mt No. 4 on their delivery to a common carrier under s. 25 of the SaJe of Goods Act, 1930.

The allegation in the complaint is that 40 barrels of groundnut oil weighing 7,200 kg. were being transported by the truck bearing No. MHL 2675 without furnishing the requisite declaration in Form U and it was intercepted at the Hukeri check-post by the Sub- Inspector of Police. In response to a notice issued by the Deputy Commissioner under s. 6-B of.the Act, the respondent No. 4 produced before him the documents of title in relation to the goods. From these documents, it is clear that the consignor was Sri Satyanarayana Oil Mills, Kampli and the consignee was Messrs Anant Oil Mills, Nippani and that the truck was laden with the consignment.

These facts were also borne out by the particulars furnished in the declaration in Form 39 under the Mysore Sa]es Tax Act, 1957.

It appears from these documents that Sri Satyanarayana Oil Mills, after despatching the consignment, purported to furnish 'the declaration in Form II to the Tahsildar, Hospet, which was received by him on 7.6.1977, requesting for the release of the groundnut oil in question. The respondent No. 4 contended before the Deputy Commissioner that there was substantial compliance of the requirements of sub-els. (2)(a) and (b) of cl. 3 of the_ Order and, therefore, the seized groundnut oil be released, but he re]epted the contention on the ground that the declaration in Form II was required to be filed before the specified officer before the goods left the place. The Deputy Commissioner requisitioned the form produced before the Tahsildar, but it did not bear any date. He was of the view that the declaration was not sent by registered post on 6.6.1977 as asserted, but had apparently been handed over in the Taluka office and acknowledgment obtained for the same.

The Deputy Commissioner observed that the requirement of law was that the declaration in Form II had to be produced at every check-post during transit, and this was not done. The driver of the truck did not have a copy of the declaration in Form II, but only the declaration in Form 39 which could not be taken to be in compliance of law.

Obviously, the stock-holder, Sri Satyanarayana Oil Mills, after despatching the

consignment of groundnut oil, purported to furnish the declaration A in Form II. This was in complete breach of the requirements of sub-els. (2) (a) and (b) of cl. 3 of the Order. The Deputy Commissioner, therefore, held that the respondents having con•ravened the provisions of sub-els. (2) (a) and (b) of cl. 3 of the Order, the seized truck alongwith the entire consignment of the groundnut oil was liable to be confiscated under s. 6-A of the Act. The learned Sessions B Judge, in our opinion, rightly confirmed the order of confiscation passed by the Deputy Commissioner under s. 6-A of the Act as it was unassailable.

At no point of time was there a contention raised that the Deputy Commissioner had failed to exercise his discretion as to the quantity of the groundnut oil liable to be seized. It is now too .late in the day to urge the point before this Court.

As to point No. (2), there is no warrant for the submission that there was nothing to show that the groundnut oil had been seized and, therefore, the power of confiscation was not exercisable by the Deputy Commissioner under s. 6-A of the Act. It is manifest from the order of the Deputy Commissioner that there was a contravention of sub-els. (2) (a) and (b) of cl. 3 of the Order and that the Sub Inspector of Police seized both the truk and the consignment of groundnut oil, an.d forwarded the same to him along with his report for taking action under s. 6-A of the Act.

The contention of the Public Prosecutor before the Deputy Commissioner was that the seized truck and the groundnut oil were liable to be confiscated. The very fact that the seized groundnut oil was released to the respondent No. 4 on his furnishing a bank guarantee for Rs. 70,000 for the price of the consignment ofthe groundnut oil clearly shows that it had been seized. It is, therefore, idle to contend that the power of confiscation under s. 6-A of the Act was not exercisable for want of seizure.

As to point No. (3), from the narration of facts above, it is amply clear that there was no breach of the requirements of s. 6-B of the Act on the part of the Deputy Commissioner. The record shows that the Deputy Commissioner, on receipt of the report of the Sub

Inspector of Police mentioning the fact of contravention of sub-els.

(2) (a) and (b) of cl. 3 of the Oroer and forwarding the seized true!<

and the consignment of groundnut oil, issued notice to the parties concerned under s. 6-B of the Act'to show cause against their confiscation. In response to the notice, the respondent No. 4 appeared before the Deputy Commissioner and filed a copy of the invoice together with a copy of the declaration in Form 39 under the Mysore

A Sales Tax Act, 1957.

The Deputy Commissioner sent for the declaration in Form II as furnished to the Tahsildar which did not bear a date. He also gave a hearing to the parties. That being so, the validity of the order of confiscation under s. 6-C cannot be challenged on the ground that the requirements of s. 6-B had not been fulfilled.

The result, therefore, is that the appeal succeeds and is allowed.

The judgment of the High Court is set aside and that of the II Additional Sessions Judge, Belgaum, upholding the order of confiscation passed by the Deputy Commissioner, Belgaum, is restored, insofar as it relates to the confiscation of the consignment of groundnut oil weighing 7,200 kg. under s. 6-A of the Essential Commodities Act, 1955.

P.B.R.

Appeal allowed.

A

STATE OF KARNATAKA

KRISHNA BHIMA WALVAKAR & ANR

May 7, 1981

0. CHINNAPPA REDDY

A.P. SEN

Essential Commodities Act, 1957

Sections 6A, 6B & 6C

Clause 3(2)(a)

section 6B

Essential Commodities Act, 1955

Mysore Sales Tax Act, 1957

clause 3(2)

section 6A

section 6A

section 6B

section 6A

section 3

section 6A

clause 3

section 25

Sale of Goods Act, 1930

clause 3

clause 3

section 6A

section 6B

section 6C

B.R.L. Iyengar

N. Nettar

A.L. Wahi

K.C. Dua

Ram Jethmalani

Rani Jethmalani

SEN

cl. 3

Hukeri

Kampli

Nippani

Belgaum

s. 6

Essential Commodities Act, 1955

Gopinath Manikchand Dharia

s. 6

Anant Oil Mills, Nippani

Mysore Sales Tax Act, 1957

s. 6

II Additional Sessions Judge, Belgaum

s. 6

cl. 3

s. 6

s. 6

cl. 3

s. 6

cl. 3

Ram Jethmalani

s. 6

Anant Oil Mills

s. 3

s. 6

s. 6

s. 6

Central Government

s. 3

s. 3

cl. 3

cl. 3

cl. 3

s. 25

SaJe of Goods Act, 1930

s. 6

Satyanarayana Oil Mills, Kampli

Tax Act, 1957

Satyanarayana Oil Mills

cl. 3

Taluka

cl. 3

cl. 3

s. 6

s. 6

s. 6

cl. 3

s. 6

s. 6

s. 6

cl. 3

s. 6

Sales Tax Act, 1957

s. 6

s. 6

s. 6

Essential Commodities Act, 1955


839 A

..,

JAGRUP SINGH

v •

STATE OF HARYANA

May 7, 1981

[D.A. DESAI AND A. P. SEN, JJ.]

Penal Code-Section 300, clause Thirdly-When applicable-Accused hit the deceased in the heat of moment, without premeditation, resulting in death-Whether falls under Exception 4 to section 300 J.P. C.

The appellant and the deceased were collaterals. On the death of his brother,

~ the deceased was looking after the affairs of his brother's wife and children.

Some while before on the day of occurrence, the deceased attended the marriage of bis brother's daughter.

The prosecution case against the appellant was that he nursed a grievance against the deceased that it was he who induced his sister-in-law not to invite him, (the appellant) and his brothers to the marriage and incensed by such insult he wanted to teach the deceased a lesson. After the marriage, armed with a gandhala (a common agricultural implement with a flat, rectangular iron strip with three sides blunt, embedded in a wooden handle which is used for digging holes) the appellant and his brothers emerged suddenly and in a joint assault the appellant struck a blow on the head of the deceased with the blunt side of the gandhala.

_., The Sessions Judge held that the appellant struck the blow on the head with intent to cause such bodily injury as was sufficient in the ordinary course of nature to cause death and that, therefore, he was guilty of culpable homicide amounting to murder punishable under section 302 I.P.C.

Affirming the conviction and sentence the High Court was of the view that there was no specific and positive evidence as to the motive for the murder but that it was more probable that the accused had joined the marriage and that "something happened on the spur of the. movement'', which resulted. in the infliction of the injury leading to the death of the deceased.

In appeal it was contended that the offence amounted to culpable homicide not amounting to murder punishable under section 304 part II I.P.C. because all that could be attributed to the appellant was knowledge that a blow struck on the head with the blunt side of the gandhala would cause an injury, which

was likely to cause death but that in any event when be struck the blow he could not be attributed with intention to cause death.

Allowing the appeal,

HELD : The appellant having been found to have struck the deceased with the blunt side of the gandhala in the heat of the moment without premeditation

and in a sudden fight all the requirements of Exception 4 to section 3(0 are met.

Having held that it was more probable that the appellant had also atte.nded the marriage but that something had happened on the spur of the moment resulting in the infliction of the injury and eventual death of the deceased the High Court erred in applying clause Thirdly of section 300.

Giving a solirary blow on a vital part of the body resulting in death cannot always necessarily reduce the offence to culpable homicide not amounting to murder punishable under section 304 part II of the Code. If a man deliberately struck another on the head with a heavy log or an iron rod or a lathi so as to cause a fracture of the skull, in the absence of any circumstances negativing the presumption, he must be deemed to have intended to cause death or such bodily injury as is sufficient to cause death. The intention must be gathered from the kind of weapon used, the part of the body hit, the amount of force employed and the circumstances attendant upon death. [843 B-C]

Under clause Thirdly of section 300 culpable homicide is murder if the act which causes death is done with intention of causing a bodily injury and that -1 injury is sufficient in the ordinary course of nature to cause death i.e. the injury found was one that was intended to be inflicted. [844 F-G)

Virsa Singh v. State of Punjab [1958] S.C.R. 1495 at 1503 applied.

Gudur Dusadh v. State of Bihar [1972] 3 S.C.R. 505, Chahat Khan v. State of Haryana, A.LR. 1972 S.C. 2574, Chamru Budhwa v. State of Madhya Pradesh, A.LR. 1954 S. C. 652, Willie (Williams) Slaney v. State of Madhya Pradesh [1955) 2 S.C.R. 1140, Harjinder Singh (alias Jinda) v. Delhi Admn. [1968] 2 S.C.R. 246 & Lakshman Ka/u Nikalje v. State of Maharashtra [1968) 3 S.C.R. 685 referred to.

In the instant case the genesis of the quarrel was not known. The prosecution alleged that the appellant and his brothers had a grouse against the deceased and that they went to the marriage armed with weapons to teach the deceased a lesson. The defence version, on the other hand, was that they were invited to the marriage. In a controversy of such a nature the prosecution should have examined the sister-in-law of the deceased who was a material witness to ascertain the truth, failure to do which made the prosecution case infirm. [847 BC)

Secondly when the appellant struck a blow with blunt side of the gandha/a it could not be said that he intended to cause such bodily injury as was sufficient in the ordinary course of nature to cause death. If a man is hit with the blunt side on the head with sufficient force it is .bound to cause death. The fact that the gandhala was used with sufficient force was not by itself sufficient to raise an inference that lhe appellant intended to cause such bodily injury as was sufficient to cause death. He could only be attributed with the knowledge that it was likely to cause an injury which was likely to cause death. Therefore, the case does not fall within clause Thirdly of section 300 J.P.C. [845 E-H]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 403 of 1981.

From the judgment and order dated the 10th October, 1980 A of Punjab & Haryana High Court in Crl. A. No. 954 of 1979.

Sushi! Kumar for the Appellant.

K.C. Bhagat and R.N. Poddar for the Respondents.

The Judgment of the Court was delivered by

SEN, J. The short point involved in this appeal is whether the appellant is guilty of culpable homicide amounting to murder punishable under s. 302, Indian Penal Code, or only of culpable homicide not amounting to murder punishable under s. 304, Part II, Indian Penal Code (hereinafter called 'the Code'). It is not disputed that the appellant, Jagrup Singh, struck a blow with the blunt side of a gandhala on the bead of the deceased, Chanan Singh, who was his uncle, resulting in his death. It appears that after the death of Joginder Singh, the deceased Chanan Singh was looking after the family of his brother, Joginder Singh consisting of his widow Mst.

Dalip Kaur and her children. He had settled the betrothal and marriage of Mst. Dalip Kaur's daughter, Tej Kaur. The prosecution case is that the appellant Jagrup Singh and bis brothers, Billaur Singh, Jarmail Singh and Waryam Singh, co-accused, although they were collaterals of Joginder Singh, were not invited by Mst. Dalip Kaur to the marriage of her daughter Tej Kaur, at the instance of the deceased Chanan Singh. On account of this, there was ill-feeling between the parties.

On the fateful evening, i.e. on 20.3.1978, at 5.15 p.m. the marriage of Tej Kaur was performed. It is alleged that shortly thereafter, the appellant Jagrup Singh armed with a gandhala, his brothers Billaur Singh armed with.a gandasa and Jarmail Singh and Waryam Singh armed with lathis emerged suddenly and made a joint assault on the deceased Chanan Singh and the three eyewitnesses, Gurdev Singh, PW 10, Sukhdev Singh, PW 11 and Makhan Singh, PW 12.

The deceased along with the three eye-witnesses was rushed to the Rural Dispensary, Rori where they were examined at 6 p.m by Dr. Bishnoi, PW 3, who found that the deceased had a lacerated wound 9cm x Hem bone deep on the right parietal region, 9 cm away from the tip of right pinna; margins of wound were red, irregular and were bleeding on touch; direction of wound was anterior-posterior. The deceased was in a serious condition and, therefore, he was referred by Dr. Bishnoi to the Civil Hospital, Sirsa, where he died on the morning of 21.3.1978 at 2.10 a.m.

Dr. Karan Singh, Senior Medical Officer, Civil Hospital, Sirsa, PW 1, performed an atopsy on the dead body of the deceased. He found the following external injuries :

A stitched contused wound 9! cm long situated on right side of the head; 9 cm above the top of pinna and 9 cm above the eye brow.

Skull deep.. direction anterioposterior.

On dissection, he found the following internal injury :

A fracture line running starting from the lower and the anterior part of parietal bone injuring the middle meningeal artery near its entrance into the , skull and traversing medially across the base of right middle fossa, crossing the mid-line and extending slightly to the left of mid-line.

There was a dark red haemotoma (extra-dural) 3" 2x3"

overlying the parietal ahd temporal lobes of brain on right side and the area was compressed.

In his opinion, the death of the deceased was due to cerebral compression as a result of the head injury which was sufficient in the ordinary course of nature to cause death.

he High Court of Punjab and Haryana, agreeing with the E Additional Sessions Judge, Sirsa, held that the appellant struck a blow on the head of the deceased with the blunt side of the gandhala with the intent of causing such bodily injury which was sufficient in the ordinary course of nature to cause death and that being so, the appellant was guilty of culpable homicide amounting to murder punishable under s. 302 of the Code.

In assailing the' conviction, learned counsel for the appellant contends that the appellant having struck a solitary blow on the head of the deceased with the blunt side of the gandhala, can be attributed with the knowledge that it would cause an injury which was likely to cause death and not with any intention to cause the death of the deceased. The offence committed by the appellant, therefore amounted to culpable homicide not amounting to murder, punishable under s. 304, Part IT of the Code.

He further contends, in the alternative, that there could be no doubt that the appellant acted in the heat of the moment when he hit the deceased and is, therefore, entitled to the benefit of Exception of s. 300 of the Code.

On the other hand, learned counsel for the State contends that the matter

squarely falls within Clause Thirdly of s. 300 of the Code. He A submits that merely because the appellant rendered a solitary blow with the blunt side of the gandhala on the head would not necessarily imply that the offence amounted to culpable homicide not amounting to murder punishable under s. 304, Part II of the Code.

There is no justification for the assertion that the giving of a solitary blow on a vital part of the body resulting the death must always necessarily reduce the offence to culpable homicide not amounting to murder punishable 'under s. 304, Part II of the Code.

If a man deliberately strikes another on the head with a heavy log of wood or an iron irod or even a lathi so as to cause a fracture of the skull, he must, in the absence of any circumstances negativing the presumption, be deemed to have intended to cause the death of tbe victim or such bodily injury as is sufficient to cause death. The whole thing depends upon the intention to cause death, and the case may be covered by either Clause Firstly or Clause Thirdly. The nature of intention must be gathered from the kind of weapon used, the part of the body hit, the amount of force employed and the circumstances attendant upon the death.

The ingredients of Clause Thirdly of s. 300 of the Code were brought out by Vivian Bose, J. in Virsa Singh v. State of Punjab (1) in his terse language :

"To put it shortly, the prosecution must prove the following facts before it can bring a case under s. 300 "3rdly".

First, it must establish, quite objectively, that a bodily injury is present;

Secondly, the nature of the injury must be proved.

These are purely objective investigations.

Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was not accidental or unintentional, or that some other kind of injury was intended.

Once these three elements are proved to be present, the enquiry proceeds further and,

(!) [1958] SCR 1495 at 1503.

Fourthly, it must be proved that the injury of the type just described made up of the three elements set out above is sufficient to cause death in the ordinary course of nature.

This part of the enquiry is purely objective and inferential and has nothing to do with the intention of the offender".

B The learned Judge explained the third ingredient in the following words:

The question is not whether the prisoner intended to inflict a serious injury or a trivial one but whether he intended to inflict the injury that is proved to be present.

If he can show that he did not, or if the totality of the circumstances justify such an inferencr, then, of course, the intent that the section requires is not proved.

But if there is nothing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it.

Whether he knew of its seriousness, or intended serious consequences, is neither here nor there.

The question, so far as the intention is concerned, is not whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the injury in question; and once the existence of the injury is . proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite conclusion.

These observations of Vivian Bose, J. have become locus classicus.

The test laid down in Virsa Singh' s case (supra) for the applicability of Clause Thirdly is now ingrained in our legal system and has become part of the rule of law.

Under Clause Thirdly of s. 300 of the Code, culpable homicide is murder if both the following conditions are satisfied : (a) that the act which causes death is done with the intention of causmg a bodily injury; and (b) that the injury intended to be inflicted is sufficient in the ordinary course of nature to cause death.

It must .be proved that there was an intention to inflict that particular bodily injury which, in the ordinary course of nature, was sufficient to cause death, viz. that the injury found to be present was the injury that was intended to be inflicted.

H The decision in Virsa Singh's case (supra) has throughout been followed as laying down the guiding principles. The decisions

....

are too numerous and we may notice only two of them : Gudur Dusadh v. State of Bihar (1) and Chahal Khan v. State of Haryana. (2)

In Gudur Dusadh' s case, the day before the occurrence, the accused had killed a goat and on the advice of the deceased, the complainant lodged a report. On the next morning, while the deceased was returning from his fields along with his son, they were assaulted by the accused persons who had been hiding on the route. Thereafter, the accused set fire to the hut of the deceased. On these facts it was held that the act of the accused who had waylaid the deceased was a pre-meditated act, and, therefore, the accused had the necessary intention to commit murder. In Chahat Khan's case also, the deceased was waylaid by the accused who were armed with lathis. That case is destructive of the theory that a solitary blow on the head reduces the offence to culpable homicide not amounting to murder punishable under s. 304, Part II. From the evidence it emerged that the accused had both gun and a lathi, and he made full use of the lathi by using both the hands and struck a blow on the head of the deceased with sufficient force.

The solitary blow with the lathi was sufficient in the ordinary course of nature to cause his death, and there was no occasion for using the gun which was hanging on his shoulders. Both these cases fell within Clause Thirdly as there was clear intention to cause such bodily injury which in the ordinary course of nature waS' sufficient to cause death.

Looking at the totality of the evidence, it would not be possible to come to the conclusion that when the appellant struck the deceased with the blunt side of the gandhala, he intended to cause such bodily injury as was sufficient in the ordinary course of nature to cause death.

A gandhala is a common agricultural implement consisting of a flat, rectangular iron strip, three sides of which are blunt, embedded in a woodden handle. The length of the iron strip is in continuation of the woodden handle and the end portion is sharp, which is used to dig holes in the earth to set up fencing on embankments in the field.

If a man is hit with the blunt side on the head with sufficient force, it is bound to cause, as here, death. There can be no doubt that it was used with certain amount of force because there was cerebral compression. But that by itself is not sufficient to raise an inference that the appellant intended to cause such bodily injury as was sufficient to cause death.

He could only be attributed with the knowledge that it was likely to cause an injury which was

(1) [1972] 3 SCR 505. (2)

AIR 1972 SC 2574.

A likely to cause the death. The matter, therefore, does not fall within Clause Thirdly of s. 300 of the Code.

In Chamru Budhwa v. State of Madhya Pradesh (1) in somewhat similar circumstances, where there was exchange of abuses between the two parties both of whom were armed with lathis, they came to blows and in the course of the fight that ensued, the accused struck a lathi b!ow on the head of the deceased which caused a fracture of the skull resulting in the death. In view of the fact the accused had given only one blow in the heat of the moment, it was held that all that can be said was that he had given the blow with the knowledge that it was likly to cause death and, therefore, the offence fell under s. 304, Part II of the Code.

In Willie (Williams) Slaney v.

State of Madhya Pradesh (2) there was, as here, a sudden quarrel leading to an exchange of abuses and in the heat of the moment a solitary blow with a hockey-stick had been given on the head. The court held that the offence amounted to culpable homicide not amounting to murder punishable under s. 304, Part II.

At this stage, we think, it desirable to refer to two other decisions in Harjinder Singh (alias Jinda) v. Delhi Admn. (3) and Lakshman Kalu Nikalje v. State of Maharashtra (4), where the court, relying upon the principles enunciated by Vivian Bose, J. in Virsa Singh's case (supra), excluded the application of Clause Thirdly, E because the third ingredient laid down, viz. the intention to cause the particular injury which was likely to cause death, was not

present. ,

In Harjinder Singh's case (supra) there was a sudden commotion when the accused took out a knife and stabbed the deceased who intervened in a fight.

At this stage, the deceased was in a crouching position presumably to intervene and separate the two persons fighting. It could not, therefore, be said with any definiteness that the accused aimed a blow at a particular part of the thigh that it would cut the femoral artery which would result in the death of the. deceased. It was, therefore, not possible to apply Clause Thirdly of s. 300 of the Code. In Laxman Kalu Nikalje's case (supra) there was a sudden quarrel and the accused lost his temper and whipped out a knife and gave one blow.

Although it was given on the chest,

(1) AIR 1954 SC 652 .

. (2) [1955] 2 SCR 1140.

(3) [1968] 2 SCR 246.

(4) [1968] 3 SCR 685.

it was not on a vital part of the chest and but for the fact that the A knife cut the auxiliary artery, death might not have ensued.

In the present case, there is no doubt that there was a sudden 'quarrel and the appellant assaulted the deceased with the blunt side of the gandhafa on the head in the heat of the moment.

What actually was the immediate cause for the assault by the appellant on the deceased at the marriage ceremony of Tej Kaur, is nnt clear.

The genesis of the quarrel resulting in the head injury to the deceased is not known.

The prosecution came with a positive""case that the appellant, together with his three brothers,. who had not been imited to the marriage of Tej Kaur by Mst. Dalip Kaur at the-· instigation of deceased Chanan Singh, came armed with different weapons to teach the deceased a lesson.

But the prosecution has failed to examine Mst. Dalip Kaur and the defence version is that the appellant and his brothers had been invited to the marriage of Tej Kaur by Mst. Dalip Kaur.

In view of these infirmities in the prosecution case, the High D Court was constrained to observe :

In the absence of any specific and positive evidence whether oral or documentary, it is not possible to arrive at any positive conclusion that this circumstance furnished any motive for the accused to attack Chanan Singh [(deceased) and three other prosecution witnesses.

After a careful perusal of the entire prosecution evidence, it appears more probable that the accused had also joined in the marriage as the collaterals, but something happened on the spur of the moment which resulted in the infliction of injury by Jagrup Singh on the person of Chanan Singh which resulted into his death. In the first information report, it had not been disclosed, as was subsequently made out at the trial, that the accused had come from the house of Jarmail Singh, accused, armed with weapons.

(emphasis supplied)

In our judgment, the High Court having held that it was more probable that the appellant Jagrup Singh had also attended the marriage as the collateral, but something happened on the spur of the moment which resulted in the infliction of the injury by Jagrup Singh on the person of the deceased Chanan Singh which resulted in his death, manifestly erred in applying Clause Thirdly of s. 300

of the Code. On the finding that the appellant when he struck the deceased with the blunt side of the gandhala in the heat of the moment, '.}'itbout pre-meditation and in a sudden fight; the case was covered by Exception 4 to s. 300. It is not suggested that the appellant had taken undue advantage of the situation or bad acted in a cruel or unusual manner.

Thus, all the requirements of Exception 4 are clearly met.

That being so, the conviction of the appellant Jagrup Singh, under s. 302 of the Code cannot be sustained.

The result, therefore, is that the conviction of the appellant under s. 302 is altered to one under s. 304, Part II of the Indian Penal Code. For the altered conviction, the appellant is sentenced to suffer rigorous imprisonment for a period of seven years.

P.B.R.

Appeal allowed.

JAGRUP SINGH

STATE OF HARYANA

D.A. DESAI

A. P. SEN, JJ.

Penal Code

Section 300

section 300

section 302

I.P.C

section 304

I.P.C

[1972] 3 S.C.R. 505

[1955) 2 S.C.R. 1140

[1968] 2 S.C.R. 246

[1968) 3 S.C.R. 685

section 300

A of Punjab & Haryana High Court

Sushi! Kumar

K.C. Bhagat

R.N. Poddar

SEN

s. 302

Indian Penal Code

s. 304

Indian Penal Code

Jagrup Singh

Chanan Singh

Joginder Singh

Dalip Kaur

Tej Kaur

Billaur Singh

Jarmail Singh

Waryam Singh

Gurdev Singh

Sukhdev Singh

Makhan Singh

Rori

Bishnoi

Bishnoi

Civil Hospital, Sirsa

Karan Singh

High Court of Punjab and Haryana

s. 302

s. 304

Part IT of the Code

s. 300

s. 300

s. 304

Part II of the Code

s. 304

Part II of the Code

s. 300

Vivian Bose

s. 300

Vivian Bose

Virsa Singh

s. 300

Gudur Dusadh

Chahat Khan

s. 304

[1972] 3 SCR 505

AIR 1972 SC 2574

s. 300

s. 304

Part II of the Code

s. 304

Harjinder Singh

s. 300

Laxman Kalu Nikalje

AIR 1954 SC 652

[1955] 2 SCR 1140

[1968] 2 SCR 246

[1968] 3 SCR 685

Jagrup Singh

s. 300

s. 300

s. 302

s. 302

s. 304

Part II of the Indian Penal Code


--"--,--

JAMNAPRASAD KANHAIYALAL

COMMISSIONER OF INCOME-TAX,

M.P., BHOPAL

May 8, 1981

( R.S. PATHAK, A.P. SEN AND E.S. VENKATARAMIAH, JJ.]

Voluntary Disclosure Scheme under section 24 of the Finance (No. 2) Act, 1965, Scope and effect of-Whether the acceptance of a disclosure statement made

by a declarant under section 24 of the Finance Act, 1965 confers immunity on another person from tax liability in respect of the same sum of money-Whether section 24 has an overriding effect over section 68 of the Income Tax Act, 1961-Bar of double taxation-Section 18 of the Voluntary Disclosures of Income and Wealth Act, 1976 (Act 8of1976).

During the course of the assessment proceedings of the assessee-firm for the assessment year 1967-68, the Income Tax Officer"noticed cash credits of Rs. 9,250 each in the names of five sons of the Managing Partner, in the books of the assessee. The Income Tax Officer found that these creditors, who were minors, had no independent source of income. The assessee contended before the ITO that the five creditors had voluntarily disclosed the credits under section 24 of the Finance (No. 2) Act, 1965 and that the disclosures were accepted by the Commissioner. The ITO rejected the contention of the assessee and held that the cash credits in question were unexplained cash credits, that they represented the income of the assessee from undisclosed source, and accordingly made an addition of Rs. 46,250. The Appellate Assistant Commissioner held that the acceptance of the voluntary disclosures under section 24(3) of the Act and the payment of tax thereon precluded the Department from disputing the fact that the income belonged to the creditors, and, as the same income could not be taxed twice once in rhe hands of the creditors and again in the hands of the assesseee, set aside the order of the ITO. The Tribunal disagreed with the Appellate Assistant Commissioner and upheld the order of the ITO. Hence the reference at the instance of the assessee under section 257 of the Income Tax Act, 1961.

Answering the reference against the itssessee, the Court

HELD : Per Sen, J.

l. Section 24 of the Finance (No. 2) Act, 1965 cannot be construed as conferring any benefit, concession or immnnity on any , person other than the person making the qeclaration under the provisions of the Act. The scheme of the Act makes it abundantly clear that it was to protect only those who preferred H to disclose the income they themselves bad earned in the past and which they had failed to disclose at the proper time. The scheme only permitted the bringing

forward or income to tax; it did not require investigation of the claim of the declarant. The Act granted immunity only to the declarant and not to other persons to whom the income really belonged. [859 G-H, 860 A]

The legal fiction created by sub-s. (3) or s. 24 of the Finance (No. 2) Act, 1965 by virtue of which the amount declared by the declarant had to be charged to income-tax "as if such amount were the totalincome of the declarant", was limited in scope and it cannot be invoked in assessment proceedings relating to any person other than the person making the declaration, and did not take away the power vested in the ITO under section 68 of the Income Tax Act, 1961 to reject the explanation of an assessee for a cash credit on the ground that the explanation was not satisfactory in the case of such other person. (861 F-G]

3. The finality under sub-s. (8) of section 24 or the Act was to the order of the Central Board of Revenue under sub-s. (6) thereof and not to the assessment of tax made on the basis of a declaration made by the creditors under the scheme. There was, therefore, nothing to prevent an investigation into the true nature and source of the cash credits. (861 B, DJ

The acceptance or voluntary disclosures under s 24 of the Act and the payment of tax thereon by the creditors could not, in law, justify the deletion of the amount of Rs. 46,250 as_it represented the assessee's income from undisclosed sources. In a case of this description, there was no question of double taxation which was a situation of assessee's own making in getting false declarations made in the names ot the creditors with a view to avoid higher slab of taxation.

Once it was found that the income declared by the creditors did not belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it acrnally belonged. [ 861 H, 862 A-B, 863 CJ

Manila! Gafoorbhai Shah v. Commissioner of Income Tax, (1974) 95 I.T.R. 624 Gujarat; Badri Prasad & Sons v. Commissioner of Income Tax, (1975) 98 I.T.R. 657 Allahabad; Pioneer Trading Syndicate v. Commissioner of Income Tax, Lucknow, (1979) 120 J.T.R. 5 (Full Bench Allahabad) and Additional Commissioner of Income Tax v. Sa111arathmal Santoshchand, (1980) 124 I.T.R. 297 Madhya Pradesh, approved.

Rattan Lal & Ors. v. Income Tax Officer, 98 IT.R. 681 Delhi; Shakunta/a Devi & Ors. v. C.I.T., (1980) 125 I.T.R. 18 Delhi and Mohd. Ahsan Wani v. C.I.T.,

(1977) 106 I.T.R. 84 Jammu & Kashmir, overruled.

5. The declaration marle under sub-s. (2) of s.24 of the Income Tax Act, 1961 bad to relate to income actually earned by the assessee. It did not require any investigation into the correctness of the declarations or any determination of the amounts belonging to the declarant. The mere charge to tax on the amounts under the Voluntary Pisclosure Scheme could not have the effeet or converting the money from the deductions from the books of the assessee into the income of the declarants if it did not belong to it. It was, therefore, open to the Income Tax Officer to investigate into the source of the cash credit amounting to Rs. 46,250 standing in the books of the assessee in the names or the sons of the Managing Partner. (859 C-D, 860 F-G]

Per Pathak. J.

l. The making of an assessment against a declarant on his disclosure atatement under section 24 of the Finance (No. 2) Act, 1965 caMot dprive Income Tax Officer of jurisdiction to assess the same receipt in the hands of another person if, in a properly constituted assessment l'roceeding under the Income Tax Act, the receipt can be regrded as the taxable income of such other person. [852 G-H, 853 A]

2. The liability imposed under section 24 of the Finance (No. 2) Act, J 965 is identifiable with the income tax liability under the Income Tax Act.

The scheme for voluntary disclosure of income and its taxation is only another mode provided by law for imposing income tax and recovering it. Consequently the general principles which apply to assessments made under the Income Tax Act would, except for provision to the contrary, be applicable to assessments m;, de under section 24 of the Finance (No. 2) Act, 1965. Accordingly when the assessment to income tax is made under the latter enactment, it will be governed by the general principle that a finding recorded therein governs only the particuler person assessed. [852 B-D]

3. The finality enacted by subs. (8) of section 24 of the Finance (No. 2) Act, 1965 attaches to the assessment of the declarant only. It cannot in law operate in favour of or against any' other person. [852 F]

3:1. The jurisdidion of an Income Tax Officer when making an assessment is concerned primarily with the issue whether the receipt under conside: ration constitutes the income of the assessee before him. Any finding reached by the Income Tax Officer touching a person not the assessee in the process of determining that issue cannot be regarded as an operative finding in favour of or against such person. The only exception of this rule centres on the limited class, and for the limited purpose, defined by the Supreme Court in Income Tax Officer, A-Ward, Sitapur v. Mur/idhur Bhagwan Das, 52 I.T.R. 335 at 346. [852 D-F]

Ahmed Ibrahim S. Dhoraji v. The Commissioner of Wealth Tax Gujarat, [1981] 3 SCR p. 402 and Income Tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das, 52 ITR 335 at 346, applied.

C1vIL APPELLATE JURISDICTION: Tax Reference Case No. 19 of 1975.

Tax Reference u/s. 256 of the Income Tax Act, 1961 made by the Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur in R.A. No. 221/Jab/73-74 arising out ofl.T.A. No. 1560 (Jab)/1972-73 decided on IO-l-1974; Aseessment Year 1957-68.

S. T. De.•ai, B.L, Noma and K.J. John for the Petitioner.

852 SUl'REME COURT REPORTS (1981] 3 s.c.R.

A V.S. Desai, Champat Rai and Miss A. Subhashtni for the Respondent.

The Judgment of A.P. Sen and E. S. Venkataramiah, JJ. was delivered by Sen, J~ R.S. Pathak, J. gave a separate Opinion.

PATHAK, J: I agree.

The acceptance of a disclosure statement made by a declarant under s.24 of the Finance (No. 2) Act, 1965 cannot confer immunity on another person from tax liability in respect of the same sum of money.

As was held by this Court in Ahmed Ibrahim S. Dhoraji v. The Commissioner of Wealth Tax Gujarat (1) the liability imposed under s.24 of the Finance (No. 2) Act, 1965 is identifiable with the income tax liability under the Income-tax Act. The scheme for voluntary disclosure of income and its taxation is only another mode provided by law for imposing income tax and recovering it.

Consequently, the general principles which apply to assessments made under the Income-Tax Act would except for the provision to the contrary, be applicable to assessments made under s.24 of the Finance (No. 2) Act, 1965. Accordingly, when the assessment to income tax is made under the latter enactment, it will be governed by the general principle that a finding recorded therein governs only the particular person assessed.

The jurisdiction of an Income Tax Officer when making an assessment is concerned primarily with the issue whether the receipt under consideration constitutes the income of the assessee before him.

Any finding reached by the Income Tax Officer touching a person not the assessee in the process of determining that issue cannot be regarded as an operative finding in favour of or against such person. The only exception to this rule centres on the limited class, and for the limited purpose, defined by this Court in Income-Tax Officer, A-

Ward Sitapur v. Murl.d/wr Bhagwan Das.\') Viewed in the light of that principle it is apparent that the finality enacted by sub-section

(8) of section 24 of the Finance (No. 2) Act, 1965 attaches to the assessment of the declarant only. It cannot in law operate in favour of or against any other person.

I am of opinion that the making of an assessment against a declarant on his disclosure statement under s.24 of the Finance (No. 2) Act, 1965 cannot deprive an Income Tax Officer of jurisdiction to assess the same receipt in the hands of another person if, in

(I) (1981] 3 S.C.R. 402.

(2) 52 T.T.R. 335, 346.

a properly constituted assessment proceeding under the Income Tax A Act, the receipt can be regarded as the taxable mcome of such other person. I would answer the first question in the affirmative, in favour of the Revenue and against the assessee.

That being so, no answer is necessary to the second question. The Commissioner of Income-Tax is entitled to his costs of the reference.

SEN, J. This is a direct reference under s. 257 of the Income Tax Act, 1961 made by the Income Tax . Appellate (Tribunal, Jabalpur, for short, The Appellate Tribunal), at the instance of the assessee. The reference is necessitated due to divergence of opinion, as reflected in the various decisions of different High Courts, with respect to the scope and effect of the Voluntary Discosure Scheme under s. 24 of the Finance (No. 2) Act, 1965 (the 'Act', for short).

The assessee, Messrs. Jamnaprasad Kanhaiyalal, is a partnership firm. The firm consists of 4 partners, namely, Kanhaiyalal and his 3 major sons, Rajkumar, Swatantrakumar and Santoshkumar D with his minor son Satishkumar admitted to the benefits of the partnership. In the course of assessment proceedings for the assessment year 1967-68, the relevant accounting year of which was the year ending Diwali, 1966, the Income Tax Officer (ITO, for short) noticed in the books of account of the asssesee five Cash credits of Rs. 9,250 each in the names of five sons of Kanhaiyalal, as detailed br, low :

Rs.

Sailendrakumar 5 yrs. 9,250/-

Satishkumar _ 9 yrs. 9,250:'-

Sunilkumar 7 yrs. 9,250/-

Swatantrakumar 16 yrs. 9,250/-

Santoshkumar 18 yrs. 9,250/- ---- 46,250/- ----

The ITO accordingly called upon the assessee to explain the genui11eness as well as the source of the cash credits. On being questioned, Kanhaiyalal the Managing Partner, disavowed all knowledge as to the capacity of the creditors to advance the amounts in question.

A On the contrary, he admitted that the creditors had no independent source of income of their own. In fact, he further stated that he could not explain the source of the cash credits.

It was contended before the ITO that the creditors having made voluntary disclosures under the Voluntary Disclosure Scheme and the disclosures made by them having been accepted by the Commissioner of Income Tax and tax paid thereon, the amount of Rs. 46,250 could not be treated as income of the assessee from undisclosed sources.

The ITO, however, held that the disclosures made under the scheme granted immunity from frutper taxation only to the declarant, and not to person to whom the income actually belonged.

He further held that the assessee having failed to prove the genuineness and source of the cash credits, the amount of Rs. 46,250 credited in the books of account of the assessee in the names of the creditors, who had no income of their own must be treated as the assessee's income from undisclosed sources.

According to him, such cash credits were treated in their names after making false declarations under the Scheme, with a view to avoid a higher rate of taxation. He accordingly made an addition of Rs. 41;,250 as assessee's inpome from undisclosed sources.

The Appellate Assistant Commissioner disagreed with the ITO, holding that when an amount was disclosed by a person under s. 24 of the Act, there was an immunity not only as regards the declarant, but there was also a finality as to the assessment.

In his [view, the entire statement of Kanhaiyalal had to be ignored, as it was not clear in what capacity the questions were put to him and the answers elicited because any investigation into the source of the deposits was prohibited and illegal under the Act. He accordingly held that the acceptance of the voluntary disclosures made by the creditors in question to the Commissioner and the payment of tax thereon precluded the Department from disputing that the income belonged to the said creditors and as the same income cannot be taxed twice, once in the hands of the creditors and again in the hands of the assessee, the order passed by the ITO in that behalf was unsustainable. The Appellate Assistant Commissioner, therefore, directed the deletion of Rs. 46,250.

The Department went up in appeal before the Appellate Tribunal.

The Appellate Tribunal, however, disagreed with the Appellate Assistant Commissioner and upheld the decision of the ITO. It was of the opinion that the ITO was justified in treating the cash credits appearing in the books of account of the assessee in the names of

- - --,.-

the creditors as unexplained cash credits, since it was found that the income declared by the creditors did not belong to them, and there was nothing to prevent the same being taxed in the hands of the

- assessee to which it actually belonged.

According to the Tribunal the immunity under s. 24 of the Act was conferred on the declarant only, and there was nothing to preclude an investigation into the true nature and source of the credits. The Appellate Tribunal, after taking into consideration the statement of Kanhaiyalal, and having regard to the age of the creditors and the fact that none of them had any independent source of income at any time, held that the ITO was jus tilled in holding that the asssessee failed to discharge the burden of proof under s. 68 of the Income Tax Act, 1961 in regard to the nature and source of the cash credits and, therefore, it had to be treated as the assessee's income from undisclosed sources.

Thereupon, the assessee applied to the Appellate Tribunal under s. 256 of the Income Tax Act, l96l to refer the question of law arising out of its order, to the Madhya Pradesh High Court for its opinion.

There being a conflict of opinion between the different High Courts as to the true nature of the immunity granted under s. 24 of the Act, the Appellate Tribunal has made a reference under s. 257 of the Income Tax Act, 1961 to this Court, of the following questions of law, for its opinion, namely:

I. Whether on the facts and in the circumstances of the case, it was open to the Revenue authorities to investigate into the genuineness of the five credits aggregating to Rs. 46,250 and records a finding in regard thereto, when the Disclosure petitions made by the five creditors under Section 24 of the Finance (No. 2) Act, 1965, had been acted upon by the Revenue authorities ?

If the answer to the first question is in the negative and in favour of the assessee, whether the addition of Rs. 46,250 to the income of the assessee as representing its income from undisclosed sources, for the assessment years 1967-68, is valid and justified in law?

The main question in controversy lies within a narrow compass. The question, in fact, is whether the provisions of s. 24 of the Act can be construed as conferring any benefit, concession or

immunity on any person other than the person making the declaration under the provisions of the Act. It may be mentioned that to avoid any room for doubt, the legislature has introduced s. 18 in the Voluntary Disclosures of Income and Wealth Act, 1976 (Act No. 8 of 1976) which specifically provides that save as otherwise provided in the Act, nothing contained in the Act shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under the pro-. visions of the Act. The question for consideration is whether the absence of such a provision as is found in Act No. 8 of 1976 leads to the consequence that' acceptance of a declaration under s. 24 of the Act confers a benefit which is not provided by the Act on a person other than the declarants and takes away the power of the ITO under s. 68 of the Income Tax Act, 1961 to make an investigation as to the nature and source of a cash credit appearing in the books of the assesssee to reject the explanation offered by the assessee as unsatisfactory and to treat it as his income from undisclosed sources.

Section 24 of the Finance (No. 2) Act, 1965 provided for the making of voluntary disclosures in respect of amounts rep resenting income chargeable _to tax under the Income Tax Act, 1922 or the Income tax Act, 1961, for any assessment year commencing on or before April 1, 1964. On such disclosure being made under sub-s. (1) thereof, in the manner provided by sub-s. (2) the amount was to be charged to Income tax in accordance with sub-s. (3) which provided by a legal fiction that income tax shall be charged on the amounts of voluntarily disclosed income at certain specified rates "as if such amount were the total income of the declarant". There was a safeguard provided in sub-s. (4) that the benefit under the scheme would be available only in respect of the voluntarily disclosed income and not in respect of the amount detected or deemed to have been detected by the ITO before the date of declaration. When the Commissioner of Income Tax passed an order under sub-s. (4) there was an appeal provided to the Central Board of Revenue under sub-s. (5) and the Board was empowered under sub-s. (6) to pass such orders thereon as it deemed fit.

There was a finality attached to the order of the Board under su b-s. (8)

In support of the reference, learned counsel for the assessee has, in substance, put forth a three-fold contention.

It is submitted, firstly, that the ITO could not have treated the cash credits standing

in the names of the sons of Kanhaiyalal, the Managing Partner as the assessee's income from undisclosed sources, having regard to the fact that each one of them had made a declaration under sub-s. (I) and paid tax thereon under sub-s. (3).

The submission is that it is not permissible for the Department to go into the question of the nature and source of the amount so declared in a voluntary disclosure under s.24 of the Act, and to say that it does not represent the income of the declarant.

Secondly, it is urged that sub-s. (I) read with sub-s. (3) of s.24 of the Act has an overriding effect over s.68 of the Income Tax Act, 1961 and, therefore, the ITO could not make any investigation as to the nature and source of the cash credits, and thirdly, it is submitted that there cannot be double taxation of the same income, once in the hands of the creditors and again in the hands of the assessee.

These submissions proceed on a wrongful assumption that there is a finality attached under sub-s. (8) to the legal fiction created by sub-s. (3) for which there i~ no basis whatever.

The contentions cannot, in our opinion, prevail.

For an appreciations of the contentions raised, it is necessary to set out the relevant provisions of s.24 of the Act.

Sub-s. (I), insofar as relevant reads :

(I) Subject to the provisions of this section, where any person makes, on or after the 19th day of August, 1965, and before the 1st day of April, 1966, a declaration in accordance with sub-section (2) in respect of the amount representing income chargeable to tax under the Indian Income-tax Act, 1922 (11 of 1922), or the Income-tax Act; 1961 (43 of 1961), for assew ment year commencing on or before the 1st day of April, 1964-

(a) for which he has failed to furnish a retlirn within the time allowed under section 22 of the Indian Income-tax Act, 1922 (IJ of 1922), or section 139 of the Income-tax Act, 1961 (43of1961), or

(b) which he has failed to disclose iri a return of income filed by him on or before the 19th day of August, 1965, under the Indian Income Tax Act, 1922 (I I of 1922) or the Income Tax Act, 1961 (43 of 1961), or

(c) which has escaped assessment by reason of the omission or failure on the part of such person to make a return under either of the said Acts to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment.

he shall, notwithstanding anything contained in the said Acts, be charged income-tax in accordance with sub-section (3) in respect of the amount so declared or if more than one declaration has been made by a person the aggregate of the amounts declared therein, as reduced by any amount specified in any order made under sub-section (4) or, if such amount is altered by an order of the Board under sub-section (6), then such altered amount .............. .

Sub-s. (3) containing the legal fiction reads as follows :

(3) Income-tax shall be charged on the amount of the voluntarily disclosed income-

(a) where the declarant is a person other than a company, at the rates specified in paragraph A, and

(b) where the declarant is a company, at the rates specified in Paragraph F,

of Part I of First Schedule to the Finance Act (X of 1965) as if such amount were the total income of the declarant ........ .

Sub-s. (8) on which strong reliance is placed, runs thus :

(8) An order under sub-section (6) shall be final and shall not be called in question before any Court of law or any other authority.

The crux of the matter is whether the provisions of s.24 of the Act can be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under the provisions of the Act. The question is whether the non-obstente clause contained in sub-s. (I) of s. 24 of the Act precludes the Department from proceeding against the person to whom the income actually belonged. The contention that there was an immunity not only as regards the declarant, but there was also a finality as to the assessment under s.24 of the Act stems from a misconception of the nature and scope of the Voluntary Disclosure Scheme.

Under sub-s. ( 1) of s.24, a person was required to make a voluntary disclosure in respect of the amount representing the income chargeable to tax under the Indian Income Tax Act, 1922 or the Income Tax Act, 1961 for any assessment year commencing on or before April l, 1964.

Subs. (I) makes it clear that the declarations, which were expected to be made in the manner provided by sub-s. (2), were with regard to the income which was chargeable to tax under the Income Tax Acts of 1922 or 1961, but which was not disclosed at the proper time.

Neither under the Act of 1922 nor under the Act of 1961, was a person required to submit a return with regard to the income which was either not earned or deemed to have been earned by him. It, therefore, follows that the declarations under sub-s. (2) of s.24 had to relate to income actually earned by him. The scheme only permitted the bringing forward of income to tax it did not require investigation of the claim of the declarant. If a person made a declaration, the Commissioner was under an obligation to assess him to tax.

In respect of the voluntary disclosures made, a declarant acquired an immunity from further investigation as to the nature and source of the income.

He also acquired certain benefits. One of the distinct.ive features of the scheme was that tax was chargeable on the whole of the disclosed income taken as a single block at rates prescribed for personal income or for corporate income under the Act, and not at an ad hoc concessional rate.

Further, facilities were allowed to payment of tax in appropriate instalments extending over a period not exceeding four years, subject to a down payment of not less than 10% of the tax due and furnishing a security in respect of the balance. Income which had already been detected on the material available prior to the date of disclosure, was, however, to be assessed under the regular provisions of the Income Tax Act and not under the scheme.

Any admissions made by a person in the declarations filed by him under the scheme in respect of such income were not to be used in assessing that income under the Income Tax Act.

Under the scheme, the disclosed icome was not to be subject to any further proceedings of assessment.

The identity of the declarant was not to be revealed and he was also immune from penalty and prosecution for the past concealment of the disclosed income. It is, therefore, obvious that the Act granted immunity only to the declarant alone and not to other persons to whom the income really belonged.

The scheme of the Act makes it abundantly clear that it was to protect only those who preferred to disclose the income they

A themselves had earned in the past and which they had failed to disclose at the appropriate time. It is undoubtedly true that the Act was brought on the statute book to unearth the unaccounted money.

But there is no warrant for the proposition that by enacting the

same, the legislature intended to permit, or connive at, any fraud sought to be committed by making benami declarations. If the B contentions were to be accepted, it would follow that an assessee in the higher income group could, with imunity, find out a few near relatives who would oblige him by filing returns under s.24 of the Act disclosing unaccounted income of the assessee as their own and claiming that the said income was kept by them in deposit with the assessee. c

That takes us to the contention based on the legal fiction contained in sub-s. (3) of s.24 of the Act and the finality of the assessment, by virtue of sub-s. (8) thereof.

The legal fiction contained in sub-s. (3) of s.24 of the Act, construed in the light of the other provisions; must mean that the income voluntarily disclosed shall be deemed to be the income of the declarant. The words "as if such income were the total income of the declarant" can only mean that even though the income did not actually belong to the declarant It would be treated to be his income for purposes of payment of income tax under the scheme. If, therefore, a person made a false declaration with regard to income not earned by him, it is difficult to comprehend how the Department c;:iuld be prevented from proceeding against the person to whom the income actually belonged and during the course of whose assessment the concealed income is detected. It, therefore, logically follows that on a disclosure being made, the amount was not to be charged : to income tax in accordance with sub-s. (3) of s.24 of the Act, taking the disclosed income as the taxable income of the declarant.

The immunity under s. 24 of the Act was conferred on the declarant only, and there was nothing to preclude an investigation into the true nature and source of the credits. The ITO was, therefore, justified in treating the cash credits in the books of account of of the assessee in the names of the creditors as unexplained cash credits.

The finality under sub-s. (8) is :o the order of the Central Board of Revenue under sub-s. (6).

Under sub-s. (4) the Commissioner of Income Tax was required, within thirty days, if satisfied that the whole or any part of the income declared had been detected or deemed to have been detected by the ITO prior to the

IAMNAPRASAD V. CIT, M.P. (Sen, J.) 861

date of declaration, to make an order in writing to that effect and A forward a copy thereof to the declarant.

Any person who objected to such an order could appeal under sub-s. (5) to the Central Board

of Revenue stating the grounds for such an objection. The Board was empowered to pass suc_h orders as it thought fit under subs.

(6). This order of the Board under sub-s. (6) was final and con- . elusive by reason of sub-s. (8) •. Thus, the finality under sub-s. (8) B. was to the order of the Board under sub-s. (6) of s. 24 and not to the assessment of tax made on the declarations furnished by the creditors under the scheme, by virtue of the legal fiction contained in sub-s. (3) of s. 24 of the Act.

The next question that calls for determination is whether the non-obstante clause contained in sub-s. (I) of s. 24 of the Act precludes the Department from proceeding against the person to whom the income actually belonged. Under sub-s. (1) of s. 24 the declaration was required to be made in respect of the amount which represented the income of the declarant. The declaration could not be made in respect of an amount which was not the income of the declarant. If, therefore,:.:a person made a false declaration with respect to an amount which was not his income, but was the income of somebody else, then there was nothing to prevent an investigation into the true nature and sources of the said amount. There was nothing in s. 24 of the Act which prevented the ITO, if he was not satisfied with the explanation of an assessee about the genuineness or source of an amount found credited in his books, in spite of its having already been made the subject of a declaration by the creditor and then taxed under the scheme. We find no warrant for the submission that s. 24 had an overriding effect over s. 68 of the Income Tax Act, 1961, insofar as the persons other than the declar- ' ants were concerned.

In our judgment, the legal fiction created by sub-s." (3) of s. 24 of the Act by virtue of which the 'amount dclared by the declarant was to be charged to income tax "as if/ such amount were the total income of the declarant" was limited 'in its scope, and it cannot be invoked in assessment procedings relating to any person other than the person making the delcaration under the Act so as to rule out

the applicability of s. 68 of the Income Tax Act; 1961.

The last question that remains is whether the same income • cannot be taxed twice, once in the hands of the creditors and again H in the hands of the assessee. In a case of this description, there is

no question of double taxation. The situation is of the assessee's own making in getting false declarations filed in the names of the creditors with a view to avoid higher slab of taxation.

Once It was found that the income declared by the creditors did not belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it actually belonged.

It follows that the decisions of the Gujarat High Court in Manila{ Gafoorbhai Shah v. Commissioner of Income Tax (1), of the Allahabad High Court in Badri Prasad & Sons v. Commissioner of Income Tax, (2) and Poineer Trading Syndicate v. Commissioner of Income Tax, Lucknow (3) and of the Madhya Pradesh High Court in Addi. Commissioner of Income Tax v. Samrathmal Santoshchand(4J which lay down the true scope of the Voluntary Disclosure Scheme under s. 24 of the Act must be upheld. The decisions of the Delhi High Court in Rattan Lal & Ors v. Income Tax Officer (5) and Shakuntala Devi & Ors. v. C.I.T. (6) and of the Jammu & Kashmir High Court in Mohd. Ahsan Wani v. C.I.T. (7), taking a view to the contrary, are overruled.

The Income Tax Officer was entitled to determine whether the amount disclosed was or was not the income of the declarant, while dealing with the case of another assessee under s. 68 of the Income Tax Act, 1961. The legal fiction created by sub-s. (3) of s. 24 was restricted to the Voluntary Disclosure Scheme itself. The protection enjoyed by the declarant under that scheme extended only to the amounts so declared being not liable to be added, in any assessment, of the declarant. There was no absolute finality attached to the declaration especially when the nature and source of the sum declared was being determined for the purpose of its inclusion in the.income of an assessee other than the declarant. There was, therefore, nothing which prevented the Income Tax Officer from investigating into the nature and source of the sums credited in the books of account of an assessee and reject his explanation to the effect that

. (1) [I 674] 95 ITR 624. ..f.2) (1975] 98 !TR 657.

(3) (1979] 120 ITR 5 (FB. All).

(4) (1980] 124 !TR 297.

(5) [1975] 98 ITR 681.

(6) [1980] 125 ITR 18.

(7) [I 977] ITR I 06 ITR 84.

the sums belonged to the persons who had made declarations about A them under s. 24 of the Act.

Accordingly, the reference must be answered in favour of the Revenue and against the assessee. Our answer to the first question is that the legal fiction created by sub-s. (3) of s.24 of the Finance (No.2) Act, 1965 by virtue of which the amounts disclosed by the declarants had to be charged to income tax "as if such amount were the total income of the declarants" was limited in its scope and could not be invoked in the assessment proceedings relating to the assessee in whose books of account the cash credits appear. The answer to the first question is sufficient to dispose of the second. On the con

struction placed on subs. (3) of s. 24 of the Act, it must also be held that the ITO was justified in treating the cash credits appearing in the books of account of the assessee, amounting to Rs. 46, 250 as the assessee's income from undisclosed sources, since the assessee failed to discharge the burden of proof placed upon him under s. 68 of the Income Tax Act, 1961. The Commissioner of Income Tax shall be entitled to his costs of the reference.

S.R.

JAMNAPRASAD KANHAIYALAL

R.S. PATHAK

A.P. SEN

E.S. VENKATARAMIAH, JJ.

section 24

section 24

Finance Act, 1965

section 24

section 68

Income Tax Act, 1961

Section 18

section 24

section 24(3)

section 257

Income Tax Act, 1961

Section 24

s. 24

section 68

Income Tax Act, 1961

section 24

s 24

Income Tax Act, 1961

section 24

section 24

section 24

section 24

Supreme Court

s. 256

Income Tax Act, 1961

S. T. De.•ai,

B.L, Noma

K.J. John

A V.S. Desai

Champat Rai

A. Subhashtni

A.P. Sen

E. S. Venkataramiah

Sen

R.S. Pathak

PATHAK

Income-tax Act

Income-Tax Act

section 24

(1981] 3 S.C.R. 402

SEN

s. 257

Income Tax Act, 1961

s. 24

Jamnaprasad Kanhaiyalal

Kanhaiyalal

Rajkumar

Swatantrakumar

Santoshkumar D

Satishkumar

Sailendrakumar

Satishkumar

Sunilkumar

Swatantrakumar

Santoshkumar

s. 24

s. 24

s. 68

Income Tax Act, 1961

s. 256

Madhya Pradesh High Court

s. 24

s. 257

Income Tax Act, 1961

Section 24

s. 24

s. 18

s. 24

s. 68

Income Tax Act, 1961

Section 24

Income Tax Act, 1922

Income tax Act, 1961

Income Tax Act, 1961

19th day of August, 1965

1st day of April, 1966

Indian Income-tax Act, 1922

Income-tax Act

1st day of April, 1964-

section 22

Indian Income-tax Act, 1922

section 139

Income-tax Act, 1961

Indian Income Tax Act, 1922

Income Tax Act, 1961

s. 24

Indian Income Tax Act, 1922

Income Tax Act, 1961

s. 24

IAMNAPRASAD V. CIT

Central Board

of Revenue

s. 24

s. 24

s. 24

s. 24

s. 24

s. 24

s. 68

Income Tax Act, 1961

s. 24

s. 68

Gujarat High Court in Manila

Allahabad High Court

s. 24

Delhi High Court

Jammu & Kashmir High Court

s. 68

Income Tax Act, 1961

s. 24

s. 24

s. 24

s. 68

Income Tax Act, 1961