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Assessee represented by Shri Bharat Jhaveri, A.R. Department represented by Shri Vinod Kumar, Sr. DR Date of Institution of Appeal 14/09/2023 Date of hearing 28/11/2023 Date of pronouncement 30/11/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (in short, the ld. CIT(A)) dated 14/07/2023 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on subject, the ld. CIT(A)-4, Surat erred in dismissing the appeal without properly considering the fact of the case, addition made by the Assessing Officer of Rs. 8,64,831/- on account of value of foreign currency found from the appellant’s office premises as well as Rs. 14,196/- short disclosure. On the facts and circumstances of the case, the order made by ld. CIT(A) should be cancelled.”
2. Brief facts of the case are that the case of assessee is a partnership firm engaged in the business of tour and travels, booking tickets for travelling, Visa & passport services, travel insurance, hotel booking and tour package, filed its return of income on 07/11/2017 declaring total income M/s Hallmark Tour Vs ACIT of Rs. 4,67,550/- for the A.Y. 2017-18. A search action was carried out under Section 132 of the Income Tax Act, 1961 (in short, the Act) on 18/03/2017. During search, a foreign currency of having value in Indian rupees of 8,64,831/- was found. Statement of partner of assessee Shri Manojkumar C. Patel was recorded. In response to question No. 13, he stated that 5,000 dollars belongs to him and 5,000 dollars belongs to Himanshu Kapadia, both are the partners and remaining foreign currency belongs to staff who are accompanying the tour parties. The Assessing Officer noted that the assessee failed to produce supporting documents or evidence in the form of withdrawal of capital accounts and currency conversion details to substantiate such foreign currency. The assessee also failed to produce supporting evidence in post search enquiries. During the assessment, the assessee was issued show cause notice to explain the source of such foreign currency with supporting evidence. In response to show cause notice, the assessee filed reply. In reply, the assessee stated that in the course of search proceedings, search party found foreign currency. On asking by authorised officer, they have informed that they are in the business of tour and travels and conduct tour outside India. While escorting the tour party, staff of assessee is going with the guests and on return, there was surplus of this currency out of which 10,000 dollars of two partners and remaining of staff members. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer held that during the search as well as in post search 2 M/s Hallmark Tour Vs ACIT enquiries, the assessee failed to produce supporting evidence and to show withdrawal from capital account or details of foreign currency conversion besides giving show cause notice, the assessee failed to produce any supporting evidence. In absence of such explanation or evidence, the currency valuing of Indian rupees of Rs. 8,64,831/- was treated as unaccounted income while passing the assessment order on 29/12/2018 under Section 143(3) of the Act.
3. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed detailed written submission. In the submission, the assessee submitted that during the course of search, authorised officer found cash in the form of foreign currency as well as certain documents. On being asked by authorised officer regarding the foreign currency, partner of firm explained it in detail that they are in the business of tower and travels in outside India. To escort the tour party, the partner of firm or staff members accompanied the group for the purpose of purchase of foreign currency from the bank to utilize during the tour and balance if any is left with the firm so that it can be utilized in the next tour. The authorised officer was convinced with the reply. The authorised officer not seized the foreign currency and not forced for disclosure regarding this amount. The assessee made disclosure of Rs. 3.81 crores under Pradhan Mantri Garib Kalyan Yojna “PMGKY” which covered this amount as well as discrepancies found and worked out by authorised officer. In the 3 M/s Hallmark Tour Vs ACIT statement of Manojkumar C. Patel, the assessee explained that 5,000 dollars belongs to him and 5,000 dollars belongs to Himanshu Kapadia and remaining from the staffs. During the post search enquiry, the partner of the firm explained the matter as explained before the authorised officer. After satisfaction, the authorised officer not asked for further disclosure of this amount and this amount was considered in total disclosure made by assessee. There is no question to add the said amount again as an unexplained money in the firm’s income as the assessee has already explained in detail during the search proceedings.
The ld. CIT(A) after considering the submission of assessee held that the assessee never tried to make any effort to furnish any documentary evidence to show the source of purchase of foreign currency in the form of purchase bill from Forex, agent or bank etc. Even the partner of the firm failed to produce any documentary evidence to show that the said currency was purchased by them from their own capital withdrawal from the firm or from their own savings. The assessee failed to discharge the onus to prove the source of foreign currency by bringing on record any cogent evidence and confirmed the action of Assessing officer. Further aggrieved, the assessee has filed present appeal before this Tribunal.
I have heard the submission of the learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that 4 M/s Hallmark Tour Vs ACIT during the search action, the assessee has declared additional income of Rs. 3.81 crores under PMGKY which covers this amount as well as other discrepancies found as worked out by the Authorised Officer. The Authorised Officer was satisfied during the search action on the detailed explanation given by the partner of the assessee in his statement, as recorded by search party. The authorised officer was duly satisfied and not asked for further disclosure as this amount was already considered while making disclosure otherwise the assessee would have disclosed this amount at the time of disclosure. The ld. AR of the assessee submits that no addition on account of foreign currency is to be made. The ld. AR of the assessee also filed his written submission, which may be considered. The written submissions are on similar line.
On the other hand, the ld. Sr. DR for the revenue supported the orders of the lower authorities. The ld. Sr. DR for the revenue submits that during the assessment as well as during the first appellate stage, the assessee failed to disclose the source of investment or acquisition of foreign currency. The assessee still has not filed any evidence to substantiate the source of such foreign currency. Mere self-serving statement is not sufficient that disclosure made by assessee includes about foreign currency found during the search action. The ld. Sr. DR for the revenue submits that all the submission of assessee was duly considered by the ld. CIT(A) while passing the impugned order.