2013 (5) TMI 683 - HC - Income Tax

Re opening of assessment - receipt of remittances of foreign exchange, thus assessee claimed immunity that he is not bound to disclose the name of the person who remitted the amounts - ITAT allowed the immunity by deleting the addition made by on account of unexplained cash credit in the assessee s bank account - Held that - A reading of clause (C) of section 3(1) of the Act leaves no room for doubt that the fact that the recipient has received a remittance shall not be taken into account and shall be inadmissible in evidence in any proceedings relating to any offence or the imposition of any penalty under any such law. Such remittance has been made inadmissible in evidence in any proceeding it shows the intention of legislature to provide the complete immunity to the recipient from inquiry. The Central Board of Direct Taxes has also issued a circular no.611 dated 30th September, 1991 prefaced with the remark that the identity of the NRI/OCB would not be required to be disclosed at all, and, in fact, must not be disclosed.Thus immunity granted by ITAT was absolute - in favour of assessee.

Issues:
1. Interpretation of immunity under the Remittance of Foreign Exchange & Investment in Foreign Exchange Bonds (Immunities & Exemptions) Act, 1991.
2. Deletion of addition of Rs.28,683,289/- in the assessee's income.
3. Levying of interest under section 234B and 234C of the Income Tax Act, 1961.

Issue 1: Interpretation of immunity under the Remittance of Foreign Exchange & Investment in Foreign Exchange Bonds (Immunities & Exemptions) Act, 1991:
The case involved a search and seizure operation where the assessee, a member of Lalwani group cases, had taxable income but had not filed the return for the Assessment Year 1992-1993. The assessee claimed immunity under the Remittance of Foreign Exchange & Investment in Foreign Exchange Bonds (Immunities & Exemptions) Act, 1991, stating that he received foreign exchange remittances covered under the Act and was not required to disclose the source of remittance. The Assessing Officer made additions to the income by rejecting the explanation. The Tribunal held that the immunity granted under the Act was absolute, preventing any inquiry or investigation regarding the remittances. The Act's provisions provided complete immunity against inquiry or investigation, as evidenced by Section 3(1) of the Act. The Finance Minister's speech and the circular issued by the Central Board of Direct Taxes supported this interpretation, emphasizing the Act's purpose to increase foreign exchange remittances in India. The Tribunal's decision was upheld, concluding that no inquiry could be made about the remittances under the Act.

Issue 2: Deletion of addition of Rs.28,683,289/- in the assessee's income:
The Tribunal correctly deleted the addition of Rs.28,683,289/- in the assessee's income, representing foreign remittances. The Tribunal's decision aligned with the interpretation of the immunity granted under the Act, which prevented any inquiry into the remittances. Therefore, the deletion of this addition was upheld based on the Act's provisions and the purpose behind its enactment.

Issue 3: Levying of interest under section 234B and 234C of the Income Tax Act, 1961:
The question regarding the levy of interest under sections 234B and 234C of the Income Tax Act did not arise from the Tribunal's order. Additionally, the Tribunal had already awarded interest on the part of the remittance received by the assessee after the due date. Therefore, this issue was not considered further, as it was not relevant to the Tribunal's decision. The appeal was ultimately dismissed without any costs, as no merit was found in the appeal based on the interpretations and findings discussed in the judgment.

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