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TMI Blog2002 (8) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... raised similar questions and, therefore, all these appeals were heard together and we dispose of the same by this common consolidated order. 3. The details are slightly different in all the appeals. However, the questions raised in all the appeals are similar. Therefore, instead of reproducing the grounds of appeal of all the appeals, we would like to mention the grounds of appeal as well as facts raised by the revenue in ITA No. 2419 (Alld) of 1995 in the case of Shri V.K. Gupta. The grounds of appeal are as under: "1. That the Ld. CIT(A) erred in law and on the facts in deleting the additions of unexplained amounts of gift Rs. 1,00,000 credited in the Bank a/c of the assessee ignoring the facts that the assessee was not covered by the immunity under the "Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities Exemptions) Act, 1991" in respect of the said deposit and the assessee failed to explain the source of the deposits as per the provisions of section 69 of the IT Act. 2. That the ld. CIT(A) erred in law and on the facts in not appreciating the CBDT Circular No. 611 dated 30-9-1991 and gave a perverse finding that 'The Boards Circular cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge Bonds (Immunities and Exemption) Act, 1991" (in short, 'Special Act'). The assessee deposited the aforesaid amount in his Savings Bank with Bank of India, Varanasi. The Assessing Officer required the assessee to explain as to why the immunity provided under the aforesaid Special Act be not disallowed because the assessee failed to file declaration within 15 days as per provision of section 3 of special Act for claiming immunity in respect of the remittances received in foreign exchange. The Assessing Officer found that the declaration, according to the scheme of the Act, was not filed within 15 days. Therefore, no immunity was available to the assessee under the aforesaid Act. Accordingly, the Assessing Officer directed to explain the details in respect of the donor, i.e., the name and address, capacity of the donor and the genuineness of the transaction. The statement of the assessee was recorded. However, the assessee reiterated that he had immunity not to disclose anything. The assessee also claimed that the assessee was entitled for benefit provided under section 4 of the aforesaid Act. Ultimately the Assessing Officer came to the conclusion that the assessee has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pto January 31, 1992, copy of the Notification dated 22-10-1991, copies of the Bank Drafts and Bank Slips, copies of the extract from Taxman Publication by Rakesh Bhargava and detailed chart of remittances received and deposited in the accounts of various assessees in the appeal alongwith the copy of the Bank a/c of different assessees. 6. The learned D.R. strongly supported the findings of the Assessing Officer. The learned D.R. argued that section 3 of the Special Act will override section 4 and, as such, assessee is not entitled to exemption under section 4 of the Special Act. The learned D.R. further argued that sections 3 and 4 of the Special Act will have to be read together and since the assessee is not entitled to the immunities under section 3 of the Special Act, therefore, remittances were exempt under section 4 of the Special Act. The learned D.R. further argued that no declaration was filed by the assessee within 15 days according to the scheme of the Special Act, therefore, assessee is not entitled to any relief. The learned D.R. further argued that the Assessing Officer has relied on the cases of Income-tax Appellate Tribunal, Bombay Bench, in support of his finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al v.CIT [1985] 156 ITR 497 (SC) (2) Kantal Kishore Co. v. CIT [1998] 232 ITR 668 (MP) (3) Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC) The learned counsel for the assessee lastly argued that the details, as furnished in Paper Book, clearly show that the remittances were received within the period of the Special Act deposited in the account of the assessees within the prescribed period and, as such, they were entitled to exemption under section 4 of the Special Act. 8. We have bestowed our careful consideration to the rival submission, facts of the case and the material available on record. The name of the Special Act, as given in the title, is "Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities an Exemptions) Act, 1991 (Act No. 41 of 1991). The preamble of this Special Act provides, "An Act to provide for certain immunities to persons receiving remittances in foreign exchange and to persons owning the Foreign Exchange Bonds and for certain exemptions from direct taxes in relation to such remittances and bonds and for matters connected therewith or incidental thereto. Whereas the position relating to balance of payments h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k that the specified date for the purpose of remittances under the Special Act, 1991 has been fixed as February 1, 1992. Before this date the remittances should be received in India or the investment in foreign exchange bonds should be made abroad. The Government has thus extended the provisions of the Special Act till January, 1992. Section 3 of the Special Act provides immunities. This section is reproduced as follows: "3. Immunities.-(1) Notwithstanding anything contained in any other law for the time being in force, (a) no recipient, who claims immunity under this Chapter in accordance with such scheme as the Reserve Bank of India may, by notification in the Official Gazette, specify for the purposes of receiving remittances under this Chapter, shall be required to disclose, for any purpose whatsoever, the nature and source of the remittance made to him; (b) no inquiry or investigation shall be commenced against the recipient under any such law on the ground that he has received such remittance; (c) the fact that the recipient has received a remittance shall not be taken into account and shall be inadmissible as evidence in any proceedings relating to any offence or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any assessment year commencing before the 1st day of April, 1992." 9. The Reserve Bank of India in exercise of the powers conferred by clause (a) of sub-section (1) of section 3 of the Special Act, which is reproduced above, specified the Scheme, 1991 which provides section 3 (a) with regard to issue of certificate of remittances. This section provides, "3. (a) Issue of certificate of remittances.--The recipient of a remittance in foreign exchange, desirous of claiming immunity under sub-section (1) of section 3 of the Act, shall, not later than 15 days from the date of receipt of such remittance, file a declaration in the Form with the authorised dealer through whom the remittance is received." 10. We may note here that the aforesaid Special Act received the assent of the President of India on 18th September, 1991 and came into existence at once. The facts and circumstances of this case have already been incorporated above and the facts are not in dispute regarding the assessee having received the remittances in foreign exchange after the commencement of the Special Act and before the specified date. It is also not in dispute that the assessee has received the gift in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that since the declaration was filed by the recipient after the specified date, therefore, they are not eligible for immunity under the scheme and hence rejected the claim of the assessee under section 3 of the Special Act. The assessee himself has not claimed any benefit under section 3 of the Special Act. The claim of the assessee had been that though the assessee is not eligible for immunity under section 3 of the Special Act but the case of the assessee is covered by exemption provided under section 4 of the Special Act. Therefore, the only point in issue left for consideration before us is that whether the assessee is entitled for exemption under section 4 of the Special Act. Section 4 of the Special Act deals with remittances not to be taken into account in certain cases. Thereafter, the language of section 4 starts with "without prejudice to the generality of the provision of section 3", "(a) any remittance received under this Chapter shall not be taken into account for the purpose of any proceeding under the Income-tax Act, 1961......." The plain reading of this section clearly shows that the provisions of section 4 are not dependent upon the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this CBDT circular provides that section 4 of the Special Act further provides "that any remittance of the nature referred to above will not be taken into account for the purpose of any proceeding under the Income-tax Act, 1961. Clause (7) also provides that the relevant provision of the Act, as briefly explained above, makes it very clear that the Assessing Officer in any proceedings under the Direct Taxes Laws will not make any enquiry with regard to the remittances in foreign exchange received under the Special Act or gift of any India Development Bonds from non-resident Indian/Overseas Corporate Body. There should, therefore, be no apprehension of any prejudice against the person in receipt of remittances under scheme for donees of India Development Bonds. There should also be no fear of any harassment by the taxing authorities". This CBDT circular is clearly applicable to the case of the assessee and is binding upon the Income-tax authorities. This circular clearly provides that the Special Act deals with two different propositions and once it is proved that the assessee had received remittances as per the Special Act, then it would not be subject-mater of enquiry under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to the conclusion that the assessee is entitled for exemption under section 4 of the Special Act and allowed the appeal of the assessee. 14. Keeping in view the above discussion, we are of the considered view that the case of the assessee is clearly covered under section 4 of the Special Act and the assessee is entitled to exemption of the remittances in foreign exchange and the remittances received by the assessee under the Special Act shall not be taken into account for the purpose of any proceeding under the Income-tax Act. We, therefore, find no infirmity or illegality in the order of the CIT(A). We uphold his finding. Since we have held that the case of the assessee is covered by section 4 of the Special Act, therefore, there is no need to decide about the applicability of section 69 of the Income-tax Act in which the Assessing Officer has made the addition. Once the remittances cannot be the subject-matter of the proceeding under the Income-tax Act, no addition under section 69 of the Income-tax Act could be made. The learned counsel for the assessee referred to some of the judgments of the Hon'ble M.P. High Court and Hon'ble Supreme Court which we have referred to abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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