SHAMA RAISING CHANDEL Vs. INCOME TAX OFFICER
LAWS(IT)-1992-1-33
INCOME TAX APPELLATE TRIBUNAL
Decided on January 24,1992

Appellant
VERSUS
Respondents

JUDGEMENT

B.M. Kothari, Accountant Member - (1.) ALL these appeals, relating to above named two assessees, involve consideration of common points. Hence these are disposed of by this common order.
(2.) The Income-tax Department conducted a search at the premises of Shri V.C. Shroff and Shri A.L. Ghael on 23rd September, 1986 and 24th September, 1986. The proceedings of search revealed that there was a racket which was involved in conversion of substantial amount of black money into white money by issuing bogus bank drafts shown as having been issued from NRE accounts. The parties willing to convert their black money by such device used to pay cash to V.C. Shroff and A.L. Ghael who provided such drafts in white money to those parties by issuing the same as loans or gifts received through such bank drafts of NRE accounts. The drafts so purchased were given to these parties through Shri A.L. Ghael along with a forged certificate prepared under the signature of nonresident donors with the connivance of the bank officials, who showed that the drafts have been given out of NRE accounts standing in the names of various parties. This was done to give colour of a genuine NRE account gift. The appellant, Shri S.R. Chandel had received such bogus bank drafts aggregating to Rs. 2,90,000 in assessment year 1985-86 and Rs. 1,00,000 in assessment year 1987-88. In similar manner the second appellant Shri C. V. Gaba had obtained gifts through such bogus bank drafts aggregating to Rs. 2,70,000 in assessment year 1985-86 and Rs. 1,00,000 in assessment year 1987-88. He also had certain unexplained cash deposits in his bank account amounting to Rs. 54,512 pertaining to assessment year 1987-88. 3.1 About one week after the said proceedings of search in the case of V.C. Shroff and A.L. Gheal, both the abovenamed appellants submitted returns of income for assessment year 1985-86 in which the amount received by such bogus drafts were surrendered as income liable to tax. Estimate of advance tax payable was also furnished in the prescribed form for assessment year 1987-88 in which the amount of such bogus gifts were shown as income liable to tax and tax was paid thereon. Return of income for assessment year 1987-88 in the case of C.V. Gaba was furnished on 31-3-1987 and in the case of S.R. Chandel on 23-2-1988 in which the amount of bogus gifts were shown as income liable to tax. These returns and the estimates of advance tax for assessment years 1985-86 and 1987-88 were submitted under the Amnesty Scheme. 3.2 The ITO, after examining the relevant facts and evidence came to the conclusion that after all the enquiries were concluded by the department in the case of V.C. Shroff and A. L. Ghael, enquiries were started in respect of persons who were given these drafts as loans or gifts. In the meantime these assessees filed the return claiming the benefit of the Amnesty Scheme. Since the amnesty started from 15-11-1985 and the appellants did not voluntarily disclose the amount of such bogus gifts as their income until the action under Section 132 was taken in the cases of V.C. Shroff and A.L. Ghael, such disclosure of income in respect of bogus gifts made by these assessees after the aforesaid proceedings and after the further enquiries had started, cannot be said to be in consonance with the intention and spirit of the amnesty scheme. He, therefore, taxed the said amounts of bogus gifts as income from undisclosed sources and levied interest under Sections 139(8) and 217 and also initiated penalty proceedings under Section 271(1)(c) and under other relevant provisions of law.
(3.) THE appellants preferred appeals against those assessment orders before the CIT (A). THE CIT (A.) confirmed the findings of the ITO and held that the returns of income furnished by the assessee cannot be treated as returns under the amnesty scheme and are not eligible for immunity from penalty and interest assured in the circulars issued under the amnesty scheme.;


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