PURSHOTTAM KHATRI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an application filed by the assessee/applicant under Section 261 of the IT Act, 1961 (for short 'the Act') for a certificate from the High Court that the appeal against the judgment of the Hon'ble High Court dt. 25th Jan. , 2006 in MA (IT) No. 114 of 2000 [reported as CIT v. Purshottam Khatri (2006) 203 CTR (MP) 1--Ed. ] delivered under Section 260a of the Act is a fit one for appeal to the Supreme Court.

(2.) THE relevant facts briefly are that the assessee left India in 1968 and was employed in Muscat and Dubai till the year 1992-93 and returned to India thereafter. A search was carried out under Section 132 in the premises of the assessee at Bhopal for a period of 13 days from 18th Oct. , 1996 to 30th Oct. , 1996. On the basis of the said search, an assessment was made under Section 168bc read with Section 143 (3) of the Act for the asst. yrs. 1992-93 to 1997-98. In the said assessment, the AO found that the assessee was a person not ordinarily resident in India and had made several deposits in foreign currency in his NRE accounts in different banks in India. The AO excluded from the said deposits remittances of foreign currency directly received from abroad, foreign currency which had been brought by the assessee from outside India after making declarations under the notifications issued under the Foreign Exchange Regulations Act and foreign currency within the limits beyond which the declarations had to be made at the time of visiting India and held remaining deposits of foreign currency in the NRE accounts of the assessee totalling to Rs. 1,03,50,020 as unexplained deposits and treated the same as undisclosed income of the assessee in the assessment order dt. 29th Oct. , 1997. By the said assessment order, the AO also added interest of Rs. 1,45,000 on such unexplained deposits in the NRE bank accounts of the assessee as part of the income of the assessee.

(3.) THE assessee filed an appeal before the Tribunal making a grievance that prior to the block period, he visited India number of times and on each such occasion, had brought foreign currency with him in the form of pounds and dollars either in cash or traveller cheques and had produced declarations and exchange vouchers with regard to such foreign currency brought into India before the AO to prove that the foreign currency was retained by him in India and was not taken back by him outside India and was ultimately deposited in the NRE accounts during the block period, but the AO had included such foreign currency as unexplained deposits of Rs. 1,03,50,020. The Tribunal held that such foreign currency brought by the assessee covered by the declarations made under the Foreign Exchange Regulations Act and also by the foreign exchange vouchers showing conversion of foreign exchange represented the income which had been earned by the assessee outside India and accordingly deleted the said addition of Rs. 1,03,50,020 in its order dt. 7th June, 2000. By the said order, the Tribunal also deleted the addition of interest of Rs. 1,45,000 on such unexplained deposits in the NRE accounts of the assessee from the income of the assessee.