Fema & air

This query is : Resolved

gaurav (Querist)
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01 December 2013 If a person 'A" Brought 10000 Dollars in 10 times journey total 1 lac dollars in one financial year from abroad and exchanged with his relative 'B' in Delhi for Rs. 60 Lacs because B use to go to Abroad (same country) frequently. Than person A deposited total Rs. 60 lacs in his normal saving Bank account in Delhi in the same year. Now his case falls in scrutiny through AIR in Delhi. My queries are:

a) Whether It is legal to exchange foreign currency with relatives in above informal manner or it is mandatory to exchange through some authorised money changer?
b) According to Income Tax Act, whether ITO can ask the sources of Dollars brought from Foreign country.

Vishal D Shah

Vishal D Shah (Expert)
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02 December 2013 It should have been exchanged with authorised dealer only. Hence it would be FEMA violation . department can surely ask for source of funds if Mr a is an assessee.