TMI Blog2018 (4) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by the Enforcement Directorate accepting the plea of the assessee. We uphold the impugned addition to the extent the same is relatable to US $ 21,000, which, by adopting the conversion rate of 1 US $= ₹ 43.62- as adopted by the Assessing Officer, works out to ₹ 0,16.020. AO is directed to delete the balance amount out of the impugned addition. - Decided partly in favour of assessee - ITA 1310/AHD/2009 - - - Dated:- 27-2-2018 - MR. PRAMOD KUMAR, ACCOUNTANT MEMBER AND MR. S. S. GODARA, JUDICIAL MEMBER For The Appellant : Urvashi Shodhan For The Respondent : V. K. Singh ORDER Pramod Kumar, Accountant Member By way of this appeal, the assessee appellant has challenged correctness of learned CIT(A) s order dated 11th December, 2008 in the matter of assessment under section 143(3) of the Income Tax Act. 1961, for the assessment year 2006-07. 2. Grievance of the assessee is that learned CIT(A) has erred in law and on facts in adding a sum of ₹ 9,46,952 under section 69A of the Act. being alleged acquisition of foreign currency from undisclosed sources . 3. Briefly stated, the relevant material facts are like thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... US$ 5000/- Shri Mitul M Desai Shri Devang Sheth US$ 2000/- With reference to the above referred gift I am enclosing herewith the of the notarized gift declarations and the copies of passport of the relevant donners. As regards Euro - 440. the same is the unspent amount out of Germany Tour of my wife in October 2004. As regards Yuan 255 and Yen 2000, the same are unspent amount of foreign exchange purchased for visit to China in June 2005. As regards UAE Dirham 30, the foreign currency in the form of UAE Dirham is the unspent portion out of the foreign exchange purchased in. connection with the foreign lour to Doha in May 2005. AS regards violation of The Exchange Control Act, the relevant proceedings under the foreign Exchange Control Act has been finalized by Dy. Director, Director of Enforcement, Ahmedabad vide his order No. Ad//61/DD/AKL/A/2006/2233 dt. 14.09.2006 and we have preferred an appeal against the said decision to the Sp. Director of Appeals, Fema Commissioner of Income-tax, New Delhi vide our appeal memo dt. 30.10.2006. Any other information/expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has contended that the Yuan and Yen are unspent amount out of foreign exchange purchased at the lime of his visit to China in June, 2005. Similarly, as regards 30 UAE Dirham. the assessee has contended that they arc unspent amount out of foreign exchange purchased at the tune of his visit to Doha in May, 2005. Thus, if a person is in possession of 22.000 USD since December, 2003 onwards in India, there is no justification for purchasing of foreign exchange in October, 2004, May, 2005 and June, 2005. Finally, on perusal of lire so called gift deeds claimed to have been notarized, it transpires that the Notary who has notarized declaration of Shri Cyrus K. Mistry for alleged gift of USD 5000 to Mrs. Ketkiben Sheth has put the stamp on the declaration. On perusal of the stamp it can be noticed that the authority of the Notary expired as Notary on 26.02.2007 whereas the declaration has been executed and signed on 12.04.200 . Therefore, there is no sanctity of such declaration. Similarly, on perusal of the signature in the case of Cyrus K. Mistry as per his passport and in the declaration dated 12.04,2007, a clear discrepancy of the signatures in the passport and on the decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . in the gift declaration as well as such other inconsistencies in the approach of the assessee or the circumstantial evidences like purchase of foreign currencies in spite of having sufficient funds if gifts are believed as genuine etc., the assessee does not gel any support from his findings because such authority was acting under a different statute and for them the confiscation of the foreign currencies was the prime consideration in their order. As against in the Income-tax assessment order, the sources of investments and their substantiation is of prime importance and in case of failure to substantiate the same, the income shall have to be treated as out of undisclosed sources. . . . 5. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) confirmed the action of the Assessing Officer, and, while doing so, reasoned as follows: 4.1 I have carefully considered the contentions of Ld. Counsel as well as gone through the records. It has been noticed that the assessee has invested in mutual fund by obtaining overdraft against fixed deposits. The interest on FOOD was claimed as deduction u/s.57 against the interest inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a person is in possession of 22.000 USD since December, 2003 onwards in India, there is no justification for purchasing of foreign exchange in October. 2004: May, 2005 and June. 2005. On perusal of the photocopy of the gift deeds (submitted during Appellate proceedings but not produced original Gift Deeds as mentioned by Learned Counsel in his pleadings which is false) have been notarized. It is evident from the stamp of Notary Public of State of Texas that commission expires on 26.02.2007 whereas declaration of Shri Cyrus K. Mistry for alleged gift of USD 5000 to Mrs. Ketkiben Sheth claimed to have been executed on 12.04.2007. Therefore, this declaration cannot he treated as valid declaration in the eyes of law. The signature in the case of Cyrus K. Mistry as per his passport and in the declaration dated 12/04/200 . do not tally. Thus, neither the signature tallies nor the Notary was authorized on the dale of declaration. Similarly on perusal of the declaration of gift by Kavas K. Mistry to the assesses it transpires that there is a last line in the declaration that in witness whereof I have signed a ever sign or notarize any document without putting date on such declaration . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Chirag K Mitsry and Mitul M Desai gave gifts of US $ 5,000 and US $ 2,000 respectively to Devang S Sheth, assessee s son. Out of these donors. Cyrus was just 19 year old (DOB .7.1963). Mitul was 23 year old (DOB 2.3.1980) and Cherag was just 23 year old (DOB 24.4. 1979) when gift was said to have given in the USA. The parents of Cyrus and Chirag had also given gifts at the same time when these young boys gave gift to the well settled businessman that the assessee is. These arc incredible stories of love and affection that US based young children, whose sources of income are not even known, decide to give huge amounts in US Dollars to a well off businessman from India. Its also a coincidence that this most improbable acts of kindness by US based young boys towards well off Indian businessman takes place at the same time when their parents also follow the same path. The source of earning of these noble people and their bank statements are nowhere in sight in the material on record. While the assessee had received these gifts in 2002 and 2003, the assessee did not remember anything about these gifts as on the time when search operation was carried out on 30th August 2005. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant s claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably We will be superficial in our approach in case we examine the claim of the assessee simply on the basis of documents and affidavits filed by the assessee and overlook clear theunusual pattern in the documents filed by the assessee and pretend to be oblivious of the ground realities. As Hon ble Supreme Court has observed, in the case of Durga Prasad More(supra), .................. it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on a reci tal in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve to be accepted. We uphold the action of the authorities below. 9. As regards learned counsel s contention that this explanation has been accepted by the Dy Director in Enforcement Directorate, and. accordingly, the said foreign exchange is treated as explained, all we can say is that we have very carefully perused the said order dated 14th September 2006. and we are not persuaded by the reasoning or approach adopted in the I said order. It is not and it cannot be, the case of the assessee that the said order constitutes a : binding judicial precedent. If at all it has any value, it can only be a persuasive value. At the cost of repetition, we may add that having perused the order, we are not at all persuaded. Nothing, therefore, turns on the order passed by the Enforcement Directorate accepting the plea of the assessee. 10. In view of the above discussions, and bearing in mind entirety of the case, we uphold the impugned addition to the extent the same is relatable to US $ 21,000, which, by adopting the conversion rate of 1 US $= ₹ 43.62- as adopted by the Assessing Officer, works out to ₹ 0,16.020. The impugned addition, to this extent, is upheld. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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