Akshay Bhan Vs ACIT (ITAT Chandigarh)
Mere non-disclosure of Foreign Asset in the Income tax return, by itself, does not lead to Penalty u/s 43
Assessee is an individual who made investments through legitimate sources through banking channels under Liberalized Remittances Scheme for resident individuals in a foreign company in FY 2011-12, 2012-13 & 2015-16. AO imposed a penalty of Rs. 10 Lakhs u/s 43 of the Black Money Act for the AYs 2016-17, 2017-18 & 2018-19 on the grounds that these investments were not disclosed in schedule FA of the ROI which was also confirmed by the CIT.
Assessee submitted that the above mistake was an inadvertent mistake which arose due to the fact that the disclosure requirement arose only from AY 2016-17 wherein the Act was new & still not familiar, hence there was no mala fide motive by Assessee. However, AO held that ignorance of law could not be an excuse & accordingly, levied penalty of Rs.10 Lacs.
Tribunal held that Assessee would not stand to gain anything by not reporting these investments since they were out of accounted sources of income only. The imposition of penalty is not mandatory since Sec 43 uses the expression “the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees” as against expression “shall” which would show that element of discretion was included in the provisions itself & the levy of penalty was to be examined with reference to specific facts of the case.
