Foreign exchange remittances were excluded from income-tax proceedings despite missed immunity procedure, and unexplained deposit addition failed.

Remittances received under the special foreign exchange enactment were treated as outside income-tax proceedings under section 4, even where the assessee did not obtain immunity under section 3 and the declaration was filed late. Section 4 was read as operating independently of section 3: it excludes such remittances from consideration in proceedings under the Income-tax Act, while the Explanation preserves taxability only of income arising from those remittances. The Board's circular was treated as binding on tax authorities and consistent with that reading. Foreign exchange receipts received during the scheme period therefore could not be treated as unexplained deposits, and the addition under section 69 failed.

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Issues: Whether remittances received under the special foreign exchange enactment were exempt from consideration in income-tax proceedings under section 4, even if the assessee did not satisfy the immunity procedure under section 3 and the declaration was filed beyond the prescribed time.

Analysis: The provisions of the special enactment were construed as dealing with two distinct matters: immunity under section 3 and exemption from income-tax proceedings under section 4. Section 4 was held to operate independently of section 3, because it declares that remittances received under the Chapter shall not be taken into account in any proceeding under the Income-tax Act, while the Explanation preserves taxability only of income arising from such remittances. The Board's circular was treated as supporting this interpretation and binding on the tax authorities. Since the receipts were remittances in foreign exchange received during the operative period of the scheme, they could not be treated as unexplained deposits for income-tax purposes.

Conclusion: The assessee was entitled to exemption under section 4, and the addition under section 69 could not be sustained.

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