Circular No. 439

What this is

Circular No. 439 was issued by the Central Board of Direct Taxes on 15 November 1985. Its subject is 439 dated 15 11 1985.

What it does

An appeal to wealth-tax payers to come forward voluntarily. Noting that the Finance Act, 1985 rationalised personal and corporate income-tax rates and considerably liberalised the Wealth-tax Act, the Board tells taxpayers liable to wealth-tax to file returns showing their true net wealth whatever they may have done earlier, and assures them that they will not face penalty or prosecution so long as they come forward on their own before the Department detects the default. The same assurance is given for earlier years where assets were suppressed or undervalued: the taxpayer should disclose it to the Commissioner, whether the assessments for those years are pending or completed, and must pay wealth-tax on those assets at the rates applicable to those years, but will not be penalised or prosecuted. The Board adds that this liberal attitude cannot be expected to last, and that the immunity will be available only to those who show their true wealth and pay the tax by March 1986.

Why it was issued

The Board wanted to draw a voluntary response from wealth-tax payers following the liberalisation of the Wealth-tax Act by the Finance Act, 1985.

Who it reaches

• Persons liable to wealth-tax who had not filed returns
• Assessees who had suppressed or undervalued assets in earlier years
• Commissioners receiving such disclosures
• Wealth-tax Officers with pending or completed assessments for those years

The instrument, as the Board published it

Effect of higher returns for the assessment year 1986-87 in respect of wealth-tax assessments - The Finance Act, 1985 has rationalised the rates of personal income-tax and corporate tax and has also liberalised the provisions of the Wealth-tax Act considerably. Taxpayers liable to wealth-tax should avail of this opportunity to come forward and file returns of wealth showing their true net wealth irrespective of what they might have done earlier. They need not have any apprehension that they will be subject to penalty or prosecution so long as they come forward suo motu before detection by the department. Similarly, where for earlier years there has been any suppression of assets or undervaluation of assets for the purposes of wealth-tax the taxpayers would be well advised to come forward and disclose such underval­uation or suppression now to the Commissioner whether the wealth-tax assessments for those years are pending or completed. They will, of course, have to pay wealth-tax on those assets at the rates applicable to those years, but will not be subject to any penalty or prosecution. Taxpayers would appreciate that this liberal attitude on the part of the Government should elicit response from the wealth-tax payers within a reasonable time and cannot be expected to continue for all time to come. Such immuni­ty from penalty and prosecution will be available only to such persons who come forward and show their true wealth and pay tax thereon by March 1986.
Circular: No. 439 [F. No. 225/86/85-IT(A-II)], dated 15-11-1985.

What to watch

• This is a wealth-tax circular; nothing in it touches income-tax liability.
• The immunity is expressly conditional on coming forward before detection by the Department, and on paying the tax by March 1986, a date long past.
• Tax at the rates of the earlier years still has to be paid; only penalty and prosecution are given up.
• Wealth-tax has since been abolished, so this belongs entirely to its own period.

Where you meet it

In an old wealth-tax penalty or prosecution record where a voluntary disclosure of that period is pleaded.

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