- (1.) In this appeal the assessee has raised the following grounds: "1. One the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming the addition of Rs. 2,57,000 made by the assessing officer to the total income of your Appellant in respect of credit to this capital account invoking the provisions of section 68 of the Income Tax Act, 1961. 2. The lower authorities failed to appreciate that your Appellant has satisfactorily explained the nature and source of the credit in his capital account out of foreign remittance under the Remittance in Foreign Exchange (Immunities) Scheme, 1991 and therefore, the recipient is eligible for the immunities granted under the said Act."
(2.) The main grievance of the assessee is that the assessing officer has not granted immunity to him under Foreign Exchange Immunity Scheme 1991 and has added the sum of Rs. 2,57,000 as his income under section 68 of the Income Tax Act. The facts of the case are described by the assessing officer in his order passed under section 143(3) read with section 147 of the Act. In brief assessee claimed before the assessing officer that it received a remittance of Rs. 2,57,000 from NRE A/c of one Shri Vinod Goel on or about 1-1-1992. The said receipt was credited in his saving bank A/c. No. 21999 of Dena Bank, Parel, on account of realisation of DD No. 734768 dated 1-1-1992 issued by ANZ Grindlays Bank, 90, M.G. Road, Mumbai branch. The money was transferred from NRE saving bank A/c No. OIS/BP/23639/00 of Mr. Vinod Goel/Ms. Ciril Goel. The assessee claimed immunity before him under "Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds" (Immunities and Exemptions) Act, 1991 (Act No. 41 of 1991) and contended that no enquiries can be made for nature, source and purpose of the remittances received under said scheme. In support of his claim orders from FER Appellate Board were filed. The assessing officer, however, did not accept the contention of the assessee on the ground that FERA authorities had conducted searches at the premises of Vinod Goel and his associated five parties, viz., Sanjeev Goel, Thomas Cook (I) Ltd., and their officers, Shri Deepak Malwani, C.A., Shri Rajnesh Parmar and M/s. ANZ Grindlays bank and its officers. They had found that huge sum of Rs. 9,26,42,399 was deposited in NRE A/c of Vinod Goel as per enquiries carried by RBI. The FERA authorities issued notices to Shri Vinod Goel and blocked his NRE A/c. Shri Vinod Goel challenged the said blocking of his A/c through writ petition which and revision petition was dismissed. In their order in Revision Petition Honourable Bombay High Court held that the claim of Vinod Goel brought foreign exchange in India and deposited in NRE account was not acceptable because he did not obtain Currency Declaration Form for the foreign currency in access of US $ 10,000, which he allegedly brought in India as per requirement under FERA. Based on this finding their lordship further held that neither the petitioner (Vinod Goel) nor any person claiming to be recipient from his enjoy any immunity. Further a person receiving foreign exchange from his NRE account cannot be covered by definition of "recipient" and cannot thus enjoy immunity. The assessing officer did not place any reliance on the order from FER Appellate Board given in 37 such recipients because assessees case was not covered in the said order and the same is not final. The said orders only remanded cases back to the assessing officer of the ED to be redone in the light of observation made in that order. Thus the assessing officer treated the said sum of Rs. 2,57,000 undisclosed income of the assessee and taxed it under section 68. In appeal, the CIT(A) confirmed the order of the assessing officer by observing as under : "4. I have carefully considered the submissions made by the learned counsel for the appellant, the legal position in the matter and the facts available on record. I do not find any force in the arguments put forth on behalf of the appellant. The assessing officer has relied on the order of the Hon. Bombay High Court passed on 14-2-1996, which is a recent one. He has also considered in detail the submission made by the appellant vide his letter dated 30-8-1999. I agree with the finding of the assessing officer that the order passed by the FERA Board is not applicable to the facts of the appellants case. In fact, the appellant was also a part of the Foreign Exchange Racket, which was unearthed by the Enforcement Directorate, Mumbai. The Enforcement Authorities discovered that one Shri Sanjiv Goel holding power of Attorney to operate the NRE account of Shri Vinod Goel, a Canadian citizen was operating the said account by flouting the various provisions of FERA. The large amount of foreign currencies were purchased from the local market and credited to the NRE account of Shri Vinod Goel, through M/s. Thomas Cook. These amounts were then, utilised for issuing chequcs to the various persons as gifts under the Immunity Scheme, 1991, after charging the beneficiaries the amount of NRE cheques plus the premium. Shri Sanjiv Goel admitted before the Enforcement Authorities that the said NRI account was being misused for issuing bogus cheques. 5. The assessing officer has passed a well reasoned and a speaking order. He has discussed all aspects of the case. The submissions made by the appellant before him has been duly considered by him. 6. Having regard to the facts and circumstances stated above, I hold that the provisions of section 68 are applicable to the facts of the present case and accordingly, the addition of Rs. 2,57,000 made to the total income of the appellant by the assessing officer is hereby confirmed."
(3.) Before us the learned counsel of the assessee submitted that the assessment of the assessee was originally completed under section 143(1). Later the assessment was reopened on 22-12-1997 under section 148. The said sum of Rs. 2,57,000 was received by the assessee in foreign exchange. The FERA authorities have not taken any action against assessee for violation of the FER Act, which means that the assessee has not committed any offence and his transactions from Vinod Goel were, therefore, in order. The assessee has filed a declaration with the assessing officer, which is placed at page No. 5 of his Paper Book. This declaration was accepted by Dena Bank, Parel Branch, who were the authorised dealer. They have accepted the declaration by endorsing "issued under the Remittances in Foreign Exchange (Immunities) Scheme, 1991 (not valid for refund reconversion purpose)". The Assistant Director, ED has given finding on identical facts in the case of one Smt. Meenu Agrawal. According to the Asstt. Director, it is not permissible for the investigating officer to investigate or enquire into the matter of the receipt of that remittance or for the adjudicating officer to adjudicate any transaction on the fact of receipt of such remittances even in all those cases where gift cheques were received and the recipient thereof has been granted immunity. According to learned AR Smt. Meenu Agrawal obtained a NRI gift cheque for a sum of Rs. 2,57,200 during January, 1992 from the A/c of Shri Vinod Goel and Mrs. Cirilla Goel for which a sum of Rs. 2,82,920 was paid to Shri Sanjeev Goel on behalf of Shri Vinod Goel, Smt. Meenu Agrawal claimed immunity under FERA Exchange Immunity Act. It was on this plea the Asstt. Director recorded finding that investigation cannot be done. Learned AR for the assessee further submitted that in the case of Ramesh C. Mehta v. Director of Enforcement,1999 104 Taxman 421, (FERAB) decided by Foreign Exchange Regulation Appellate Board that no enquiry was done against Sanjeev Goel (who used to collect Indian rupees, as alleged, and the money deposited worth Rs. 10.08 crores was not charged for violation of FERA). Then cheques issued and credited to NRE A/c would have to be treated as valid. According to the learned counsel his assessee has also obtained cheques from the NRE A/c of Vinod Goel and, therefore, as are in Ramesh C. Mehtas case (supra), the credit into the A/c of assessee from NRE A/c should be treated as valid. In particular, learned counsel referred to para 25 of the above order [Ramesh C. Mehtas case (supra)]. The FER Appellate Board held that the remittances contemplated for the immunities is the remittance to a recipient from a NRE A/c and not the remittances into the NRE A/c. From this learned counsel inferred that remittances from NRE A/c of Vinod Goel to his client should get immunity. In brief, the learned counsel emphasized that similarly placed persons like Smt. Meenu Agrawal and Shri R.C. Mehta have been given immunity by the FERA Appellate Board. In view of this the assessee is also entitled for immunity. The learned counsel then referred to sections 3 and 4 of the Remittance of Foreign Exchange Immunity Act, 1991 to highlight the point that such remittances cannot be questioned under Income Tax Act.;