Case Law Details
Arpit Gupta Vs DDIT/ADIT (ITAT Jaipur)
The Income Tax Appellate Tribunal (ITAT), Jaipur, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), which had confirmed a penalty of Rs.10 lakh imposed under Section 42 read with Section 46 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
The penalty was levied by the Assessing Officer on the ground that during the financial year relevant to Assessment Year 2019-20, an amount of Rs.7,86,852 was credited to the assessee’s account from a source outside India. According to the Assessing Officer, the assessee neither filed a return of income for the relevant year nor disclosed the said amount. The Commissioner of Income Tax (Appeals) upheld the penalty.
Before the Tribunal, the assessee explained that he had worked as an employee of an offshore company in Dubai from 2016 to April 2018. During that period, he was neither a resident nor taxable in India. After returning to India, he did not earn any income in India and therefore did not file a return of income.
The assessee submitted that the amount of Rs.7,86,852 credited to his account was not income earned during the relevant financial year. Instead, it represented the maturity proceeds of a retirement plan funded through deductions made from his salary by his foreign employer during his employment in Dubai. According to the assessee, the amount was remitted by the foreign employer after he had left the job, and he was not aware of the remittance. He stated that he was under the bona fide belief that since he had not earned any income during the financial year 2018-19, he was not required to file a return of income.
The Departmental Representative did not dispute these factual submissions but argued that under the provisions of the Black Money Act, the assessee was liable to penalty for failing to disclose the foreign asset represented by the remittance through a valid return of income.
After considering the submissions and examining the record, the Tribunal observed that the assessee had not earned any foreign income or acquired any foreign asset during the relevant financial year. It noted that the remittance of Rs.7,86,852 was made by the foreign employer out of earlier deductions from the assessee’s salary towards a severance and retirement plan. Since the assessee had already left the employment, the accumulated amount was remitted to him later.
The Tribunal accepted the assessee’s explanation that he genuinely believed no return of income was required because the remitted amount did not represent income earned during the relevant year. It also referred to the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, noting that the threshold for amounts that need not be disclosed in a bank account was earlier Rs.5 lakh and was increased to Rs.20 lakh with effect from 01.10.2024 after considering the difficulties faced by bona fide assessees, particularly salaried persons.
Considering the overall facts and circumstances, the Tribunal held that the case did not involve concealment of foreign income or foreign assets. Instead, it concerned a salaried employee acting under a bona fide belief that, since he had not earned any income during the relevant year, he was not required to file a return of income.
Accordingly, the Tribunal held that the case was not fit for levy of penalty under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. It deleted the Rs.10 lakh penalty and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been preferred by the assessee against the order of Ld. Commissioner of Income Tax (Appeal), Jaipur-4(hereinafter referred to as “Ld. CIT(A)”) dated 28.08.2025,passed u/s 250 of the Income Tax Act,1961 (hereinafter referred to as “the Act”).
2. The assessee in his appeal has taken following grounds of appeal:-
1. In the facts and circumstances of the case and in law, Id. CIT(A) has erred in confirming the action of Id. DDIT/ADIT(Inv.) FAIU Jaipur, levying penalty under Section 42 read with Section 46 of Black Money (UFIA) and Imposition of Tax Act, 2015 of Rs. 10.00 lacs. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please begranted by deleting the entire penalty levied by Id. DDIT/ADIT(Inv.) FAIU Jaipur and confirmed by Id. CIT(A).
2. In the facts and in the circumstances of the case and in law, the ld.DDIT/ADIT(Inv.) FAIU Jaipur has grossly erred in mechanically levying penalty under Section 42 read with Section 46 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, without appreciating the merits, facts, and explanations furnished during the proceedings. The imposition of penalty being mechanical, arbitrary. unjustified, and contrary to the settled principles of law deserves to be quashed. Appropriate relief may kindly be granted by deleting the penalty imposed.
3. The assessee craves his rights to add, amend or alter any of the grounds on or before the hearing.
3. The assessee, in this appeal, is aggrieved by the action of the ld. Commissioner of Income-tax (Appeals) (hereinafter referred to as “the CIT(A)”) in confirming the penalty levied by the Assessing Officer (in short, “the AO”) of Rs. 10 lacs u/s 42 r.w.s 46 of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The Assessing Officer imposed impugned penalty on the ground that during the financial year relevant to A.Y 2019-20, an amount of Rs.7,86,852/- was showing credited in the account of the assessee the source of which was out of India. However, the assessee neither filed his return of income for the year under consideration nor disclosed the said amount. The ld. CIT(A) confirmed the penalty so levied by the A.O.
4. We have heard rival contentions and gone through the record. The ld. Counsel for the assessee has demonstrated before us that the assessee was an employee in an Offshore company at Dubai and served there from the year 2016 to April, 2018; that the assessee was neither resident nor taxable in India during his service at Dubai; that after shifting to India, the assessee did not earn any income in India, therefore, the assessee did not file any return of income; that the aforesaid amount of Rs. 7,86,852/- was credited to the account of the assessee which was deducted towards some retirement plan by his foreign employer when the assessee was in the job in Dubai, and that the said amount was credited by the foreign employer to the account of the assessee on maturity in the year under consideration, however, the assessee was not aware of the same. The assessee was under the bona fide impression that since the assessee had not earned any income during the Financial Year 2018-19, therefore, the assessee was not liable to file any return of income. The ld. Counsel for the assessee, therefore, has submitted that the aforesaid remittance of Rs. 7,86,852/-was not earned by the assessee during the year under consideration, rather, the same was the receipt of past deductions out of his salary during the earlier period which was deducted by the foreign employer towards retirement plan of the assessee and was remitted during the year, which escaped the attention of the assessee.
5. Ld. DR, though, could not rebut the aforesaid facts on the file, however, has contended that as per the provisions of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, the assessee is liable to be penalized for not disclosing the foreign asset in the shape of aforesaid remittance into his account, by way of filing a valid return of income.
6. We have considered the rival submissions and gone through the record. It is the matter of record that the assessee has not earned any foreign asset or income during the financial year under consideration, but, the aforesaid remittance of Rs. 7,86,852/- was remitted by his foreign employer out of the past deductions out of the salary of the assessee towards severance and retirement plan. Since the assessee had left the job, therefore, the said amount was remitted to the assessee by the company later on and the assessee was under bona fide belief that since the said amount was not out of any income earned during the year, therefore, he was not required to file any return of income. Even as per the provisions of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, earlier the limit prescribed for the amount which need not to be disclosed in the bank of the assessee was of Rs. 5 lacs and after considering the problems faced by bona fide assessee sespecially the salaried persons, the limit of the said amount was increased from Rs.51acs to Rs.201acs w.e.f. 01.10.2024. Hence, considering the overall facts and circumstances of the case, it is not a case of any concealment of foreign asset or income, rather it is a case of salaried employee, who was of bona fide belief that during the year, since he has not earned any income, he was not required to file any return of income. We, therefore, do not deem it a fit case for levy of penalty under Black Money (Undisclosed Foreign Income and Assets) Imposition of Tax Act, 2015 and the same is accordingly ordered to be deleted.
7. In the result, the appeal of the assessee stands allowed.
Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 26/05/2026.
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