Shantanu Bhowmick Vs ADIT (Investigation) (ITAT Delhi)
Notice for the Wrong Assessment Years Cannot Sustain a Black Money Assessment: Section 81 Cannot Cure the Defect
Black Money Assessment and Penalty Quashed for Absence of Valid Notice: Delhi ITAT
Background
The assessee invested USD 3,00,000 in Global Dynamic Opportunities Fund Limited, Bermuda, on 19 May 2015. The investment was redeemed on 16 March 2016 for USD 3,14,608.15.
The Department received information concerning the investment on 18 October 2018 and initiated proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, by issuing a notice under section 10(1) dated 1 November 2018.
The assessee explained that the investment was funded from his employment income earned in Singapore. He also claimed, based on advice received, that the gain on redemption was not taxable in India under the India–Singapore tax treaty.
The Assessing Officer rejected the treaty claim and considered the source of investment insufficiently substantiated by bank statements and other documentary evidence.
Assessment and Substantial Penalty
The Assessing Officer treated the investment as an undisclosed foreign asset and assessed its value at ₹2,04,57,080, taxable at 30% under section 3(1), for AY 2019-20.
A further penalty of ₹1,84,11,360 was imposed under section 41. The CIT(A) dismissed the assessee’s appeals against both the assessment and penalty orders.
Before the Tribunal, the assessee raised a fundamental jurisdictional objection: no notice under section 10(1) had been issued for AY 2019-20.
The Notice Mentioned AYs 2016-17 and 2017-18
The assessee pointed out that the original notice referred specifically to previous years 2015-16 and 2016-17, corresponding to AYs 2016-17 and 2017-18.
Nevertheless, the assessment was ultimately completed for AY 2019-20.
The assessee therefore argued that a notice concerning the earlier assessment years could not support an assessment for a different year. The absence of a valid notice for the year assessed was a jurisdictional failure, rather than a minor irregularity capable of correction under section 81.
Revenue’s Defence: Same Assessee, Same Asset, Statutory Year of Charge
At the Tribunal’s direction, the Department furnished a detailed report defending the assessment.
It acknowledged that the original notice mentioned the earlier years but argued that a section 10(1) notice had nevertheless been issued to the correct assessee by the competent officer concerning the same foreign investment.
The Department relied on the proviso to section 3(1), under which an undisclosed foreign asset is chargeable in the previous year in which it comes to the Assessing Officer’s notice. Since the information was received in October 2018, it contended that AY 2019-20 was the statutory year of charge.
It also invoked section 72(c) concerning assets acquired before commencement of the Act, subsequent correspondence identifying the investment, and the assessee’s participation in the enquiry.
According to the Revenue, the reference to earlier years was merely an erroneous description. The assessee understood the transaction under examination, had responded on its source and taxability, and suffered no substantive prejudice.
Section 81 Could Not Supply the Missing Notice
The Department relied particularly on section 81, which protects notices and proceedings from invalidity arising merely from a mistake, defect or omission, provided they conform in substance and effect to the Act’s intent and purpose.
The Tribunal rejected that defence.
It recorded that the Revenue had not produced any notice issued under section 10(1) for AY 2019-20. It held that absence of a valid notice for the relevant assessment year was not a curable defect under section 81.
Thus, the detailed enquiry into the same investment and the Department’s explanation of the statutory charging year did not overcome the absence of the requisite notice for the year actually assessed.
Decision
The Tribunal quashed the section 10 proceedings, the consequential assessment order and the penalty order as invalid.
Both appeals were allowed. The relief followed from the notice defect; the Tribunal did not adjudicate the source of investment, treaty claim or substantive taxability on merits.
Author’s Comments
Identifying the correct year of charge and validly initiating assessment for that year are distinct requirements. The Revenue explained why it considered AY 2019-20 chargeable, but that explanation did not replace a valid notice for that assessment year.
The decision draws a firm boundary around section 81. A provision protecting proceedings against procedural mistakes cannot, on the Tribunal’s reasoning, cure the absence of the foundational notice for the year assessed.
Practitioners should therefore compare the years specified in the original section 10(1) notice with the year stated in the final assessment order. The continuity of correspondence or identity of the foreign asset may not answer a mismatch.
The ruling should also be cited within its limits. It does not hold that the investment was explained, that the India–Singapore treaty exemption was available, or that the asset escaped the Black Money Act. The assessment and the substantial consequential penalty failed because the required notice for AY 2019-20 was absent.
Cases Discussed
- Smt. Elangovan Malarmangai @ Swetha v. Additional Commissioner of Income Tax (ITAT Chennai), BMA Nos. 7, 8, 9, 10 and 11/CHNY/2024: Relied upon by the assessee concerning the inapplicability of section 81 to the alleged absence of a valid notice under the Black Money Act. The Tribunal recorded this reliance while considering the jurisdictional objection.
FULL TEXT OF THE ORDER OF ITAT DELHI
These two BMA appeals by the assessee are directed against the orders both dated 19.01.2023 of the ld. Commissioner of Income Tax (Appeal)-3, Gurugram, Black Money (UFIA) and Imposition of Tax Act, 2015, [hereinafter referred to as the BM Act pertaining to Assessment Year (A.Y.) 2019-20. These appeals are being heard together, for the sake of convenience and brevity and disposed vide a consolidated order.
2. The assessee has raised the following grounds of appeal (BMA No.- 4/Del/2025):
“1. The order passed by Ld. CIT(A) and Ld. A.O. is bad in law and against the facts of the case.
2. That the Id. AO erred in initiating penalty proceeding u/s 46(1) without serving notice u/s 46(1) of the Black Money (UFIA) and Imposition of Tax Act, 2015.
3. That the Ld. CIT(A) erred in confirming the penalty imposed by the Id. AO amounting Rs. 1,84,11,360/-
4. That the Ld. CIT(A) erred in confirming the penalty imposed by the Id. AO without considering the fact that penalty for the transaction stated is for a period prior to commencement of Black Money (UFIA) and Imposition of Tax Act, 2015.
5. That the Ld. CIT(A) and erred in confirming the penalty without considering the fact that the Ld. AO imposed the penalty without considering the reply of the assessee dated 30th March, 2022.
6. That the appellant carves leave to add, alter, modify or delete any of the ground of appeal.”
2.2 The assessee has raised the following grounds of appeal (BMA No.- 6/Del/2023):
“1. The order passed by Ld. CIT(A) and Ld. A.O. is bad in law and against the facts of the case.
2. That the Id. CIT(A) erred in sustaining the addition of Rs. 2,04,57,080/-
3. That the Ld. CIT(A) erred in not considering the fact that the Ld. AO has passed the assessment order without serving the notice u/s 10(1) of the Black Money (UFIA) and Imposition of Tax Act, 2015.
4. That the Ld. CITA and Ld. AO erred in considering the fact that the transaction stated is for a period prior to commencement of Black Money (UFIA) and Imposition of Tax Act, 2015.
5. That the Ld. CIT(A) erred in considering the fact that the Ld. AO has make the addition without considering the DTAA (Double taxation Avoidance Agreement) with Singapore.
6. That the Ld. CIT(A) erred in considering the fact that the Ld. AO has make the addition without considering the reply of the appellant.
7. That the Ld. CIT(A) erred in considering the fact that the Ld. AO has issued the notices without mentioning Document Identification Number (DIN) which was mandated by the CBDT vide circular no. 19/2019, dated 14.08.2019.
8. That the Ld. AO erred in making the addition without bringing anything adverse on records.
9. That the Id. AO erred in imposing the penalty s 41 of the Black Money (UFIA) and Imposition of Tax Act, 2015.
10. That the appellant carves leave to add, alter, modify or delete any of the ground of appeal.”
3. Both these appeals pertain to A.Y. 2019-20 against the order u/s 10 and 46 of the BM Act making addition in respect of undisclosed foreign assets and levy of penalty on the same respectively. Since common facts are involved, both the appeals are being disposed off by a common order.
4. Brief facts are that the assessment proceedings under the BM Act were initiated by the AO by issuing notice u/s 10(1) dated 1.11.2018 seeking details of his investments held abroad. As per the information available with the department, the assessee had invested USD 300000 with M/s Global Dynamic Opportunities Fund Ltd, Bermuda on 19.05.2015 and the investment was redeemed on 16.03.2016. The assessee received USD 314608.15 as redemption value of the above investment. The assessee in his submissions dated 29.10.2020 explained that he was informed by his advisors that the capital gains on difference of purchase and sale of investment in M/s Global Dynamic Opportunities Fund was not taxable in India. The source of investment was explained and of his funds from his employment in Singapore. The assessee relied upon the tax treaty between India and Singapore for his claim.
4.1 The claim of the assessee was examined by the AO with reference to the provisions of the revised tax treaty of India and Singapore. However, it was found that the case of the assessee was not covered by the treaty since neither the investee company (M/s Global Dynamic Opportunities Fund Ltd.) was situated in India nor the saver (the assessee) was a tax resident of Singapore during FY 2015-16.
4.2 In the absence of requisite documentary evidences and as no response to the show cause notice was received from the assessee, the AO treated the offshore investment of the assessee as unexplained and taxed its fair market value of Rs. 2,04,57,080/- @ 30% u/s 3(1) of the B.M. Act for A.Y. 2019-20. Further, penalty notice u/s 46(1) was issued and subsequently penalty of Rs. 1,84,11,360/- was also imposed.
4.3 The assessee’s appeals against the assessment and penalty orders were dismissed by the CIT(A). Aggrieved, the assessee is in appeal before the Tribunal.
5. Before us, Ld. AR, at the outset, has raised the legal issue of validity of the assessment order. He has submitted that no notice for A.Y. 2019-20 was issued to the assessee u/s 10(1) of the Act. The notice u/s 10(1) issued by the AO, only mentioned A.Y. 2016-17 and 2017-18. It has therefore, been contended that the proceedings u/s 10(1) were invalid in the absence of a notice for the relevant year and hence the assessment and penalty orders are liable to be quashed. Ld. AR has placed reliance on the decision of the Chennai Bench in the case of Smt. Elangovan Malarmangai @ Swetha, vs. The Addl. Commissioner of Income Tax, in BMA Nos. 7,8,9,10 & 11/CHNY/2024, regarding non applicability of section 81 in the facts of the present case.
6. In response to the directions issued by the Bench, Ld. DR has furnished a report of the AO on the contention of the assessee regarding non issue of notice. Relevant portion of the report dated 27.07.2026 is reproduced below:
“1. In this regard, it is submitted that the assessee has contended that the assessment order dated 31.03.2021 for AY 2019-20 is invalid because the original notice dated 01.11.2018 issued under section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, hereinafter referred to as “the BMA”, referred to Previous Years 2015-16 and 2016-17, relevant to AYs 2016-17 and 2017-18, and did not expressly mention AY 2019-20.
2. The matter has been examined with reference to the original notice under section 10(1), subsequent notices and communications issued during the assessment proceedings, submissions furnished on behalf of the assessee, the final show-cause communication dated 22.03.2021, the assessment order dated 31.03.2021 and the provisions of sections 2(11), 3, 10, 11, 41, 46, 72(c), 76 and 81 of the BMA.
3. At the outset, it is acknowledged that the original notice dated 01.11.2018 positively referred to Previous Years 2015-16 and 2016-17, relevant to AYS 2016-17 and 2017-18 respectively. However, the reference to the said earlier years did not amount to complete absence of a notice under section 10(1). particularly when the notice was issued to the correct assessee, by the competent Assessing Officer, in relation to the very same foreign asset which was ultimately assessed.
4. The assessment order records that Shri Shantanu Bhowmick was a resident individual and that information available with the Department revealed an offshore investment in M/s Global Dynamic Opportunities Fund Ltd., Bermuda, account No. 168512, with a reported balance of Rs.2,02,68,280.16 during 2016. On the basis of this information, proceedings under the BMA were initiated by issuance of notice under section 10(1).
5. The assessment order further records that the information in the case was received on 18.10.2018. Since the information regarding the undisclosed foreign asset came to the notice of the Assessing Officer under the BMA during FY 2018-19, the Assessing Officer treated FY 2018-19 as the relevant previous year and AY 2019-20 as the corresponding assessment year. The order also records that the original notice under section 10(1) was issued on 01.11.2018.
6. The assessment order was not based solely on the original notice. Further opportunities were afforded through notices dated 04.06.2019 and 17.09.2020 seeking details of foreign investments, the sources thereof and income derived therefrom. Additional opportunities were provided through emails dated 07.10.2020 and 22.10.2020, followed by a final show-cause communication dated 22.03.2021. The assessee filed responses from time to time.
7. The communication dated 07.10.2020 specifically informed the authorised representative that proceedings under the BMA were continuing and required documentary evidence regarding the source of investment made by Shri Shantanu Bhowmick in Global Dynamic Opportunities Fund Ltd., account No. 168512. Thus, the particular foreign fund, the account number and the issue concerning the source of investment were expressly identified and communicated to the assessee.
8. The assessee thereafter furnished submissions dated 29.10.2020. The communication dated 24.11.2020 records that the assessee claimed that the investment had been made from tax-paid foreign income but had not furnished the bank statements or documentary evidence establishing the actual source and flow of funds. The assessee also claimed that the capital gains arising on redemption of the GDOF investment were not taxable in India under the India-Singapore DTAA. The Assessing Officer examined the claim and required further evidence regarding the source of investment, residential status and foreign income
9. The final show-cause communication dated 22.03.2021 recorded the Department’s prima facie finding that the assessee was tax resident in India during FYs 2015-16 and 2016-17 and had not declared his foreign income and assets in the Indian returns. The assessee was specifically called upon to show cause why the unexplained source of investment in Global Dynamic Opportunities Fund, the Singapore employment income and the maturity or redemption receipts from the said investment should not be brought to tax under the BMA. A final opportunity was granted to produce supporting documents by 24.03.2021.
10. The assessment order records that the assessee had invested USD 3,00,000 in Global Dynamic Opportunities Fund Ltd. on 19.05.2015 and redeemed the investment on 16.03.2016 for USD 3,14,608.15. The assessee claimed that the investment was sourced from his employment services in Singapore but failed to substantiate that explanation by producing the relevant bank statements or other documentary evidence showing that the investment had actually been made out of such income.
11. Section 2(11) defines an “undisclosed asset located outside India” as an asset, including a financial interest in any entity, located outside India and held by the assessee in his name or beneficially owned by him, where he has no explanation regarding the source of investment or the explanation furnished is, in the opinion of the Assessing Officer, unsatisfactory.
12. The finding in the assessment order is thus not based merely on non-disclosure in Schedule FA. The decisive finding is that, although the assessee admitted the foreign investment and claimed that it had been made from Singapore employment income, he failed to furnish the primary documentary evidence establishing the source. The Assessing Officer therefore concluded that the explanation was not satisfactory and that the investment acquired the character of an undisclosed foreign asset within the meaning of section 2(11).
13. The chargeability of such an asset is governed by section 3 of the BMA, which provides: “3. (1) There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent. of such undisclosed income and asset:
Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer.
(2) For the purposes of this section, ‘value of an undisclosed asset’ means the fair market value of an asset (including financial interest in any entity) determined in such manner as may be prescribed.”
14. The proviso to section 3(1) creates a special statutory rule for an undisclosed foreign asset. Such asset is chargeable on its value in the previous year in which it comes to the notice of the Assessing Officer. The date of the original investment or the date of its redemption does not determine the year of charge under the proviso. Those dates are relevant for examining the source, ownership, transaction history and valuation of the asset, whereas the charging year is statutorily linked to the year in which the asset comes to the Assessing Officer’s notice.
15. In the present case, the information came to the Assessing Officer on 18.10.2018, falling in FY 2018-19. Therefore, under the proviso to section 3(1), FY 2018-19 was the previous year in which the value of the undisclosed foreign asset was chargeable, and the corresponding assessment year was AY 2019-20. This is the precise finding recorded in paragraph 3 of the assessment order.
16. Section 72(c) independently reinforces the same statutory result. It provides: “Where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly.”
17. The investment in question was made on 19.05.2015, prior to commencement of the operative provisions of the BMA, and the notice under section 10 was issued on 01.11.2018, during FY 2018-19. Consequently, by the express legal fiction contained in section 72(c), the asset was deemed to have been acquired or made during FY 2018-19, relevant to AY 2019-20. Thus, both relevant statutory provisions lead to the same year. Under the proviso to section 3(1), the date on which the information came to the Assessing Officer places the charge in FY 2018-19. Under section 72(c), the issuance of the section 10 notice on 01.11.2018 also deems the asset to have been acquired in FY 2018-19. AY 2019-20 was, therefore, not selected arbitrarily by the Assessing Officer; it was the assessment year mandated by the statute.
18. Section 10, which governs the assessment procedure, provides:
“10. (1) For the purposes of making an assessment or reassessment under this Act, the Assessing Officer may, on receipt of an information from an income-tax authority under the Income-tax Act or any other authority under any law for the time being in force or on coming of any information to his notice, serve on any person, a notice requiring him on a date to be specified to produce or cause to be produced such accounts or documents or evidence as the Assessing Officer may require for the purposes of this Act and may, from time to time, serve further notices requiring the production of such other accounts or documents or evidence as he may require.
(2) The Assessing Officer may make such inquiry, as he considers necessary, for the purpose of obtaining full information in respect of undisclosed foreign income and asset of any person for the relevant financial year or years.
(3) The Assessing Officer, after considering such accounts, documents or evidence, as he has obtained under sub-section (1), and after taking into account any relevant material which he has gathered under sub-section (2) and any other evidence produced by the assessee, shall by an order in writing, assess theundisclosed foreign income and asset and determine the sum payable by the assessee.
(4) If any person fails to comply with all the terms of the notice under sub-section (1), the Assessing Officer shall, after taking into account all the relevant material which he has gathered and after giving the assessee an opportunity of being heard, make the assessment of undisclosed foreign income and asset to the best of his judgment and determine the sum payable by the assessee.”
19. The language of section 10 shows that the jurisdictional trigger is receipt of information or information otherwise coming to the Assessing Officer’s notice. The statutory notice is intended to require the production of accounts, documents and evidence for the purposes of the Act. The Assessing Officer may issue further notices from time to time and may conduct an inquiry for the relevant financial “year or years”. Section 10 does not prescribe a statutory form of notice, nor does it expressly provide that mention of a particular assessment year is an indispensable condition for the existence of a notice.
20.In the present case, a notice under section 10(1) was actually issued. It was issued to the correct assessee, bore the correct PAN, was issued by the officer exercising the powers of Assessing Officer under the BMA and arose out of specific information concerning the GDOF investment. The proceedings did not subsequently travel to any different or unrelated asset. The information received, the original notice, subsequent questionnaires, the assessee’s replies, the final show-cause communication and the assessment order all concerned the same foreign investment.
21. The erroneous reference to AYs 2016-17 and 2017-18 in the original notice could not confer authority to charge the asset in those years when the proviso to section 3 and section 72(c) required the assessment to be made for AY 2019-20. The year of charge is created by the statute and cannot be displaced by an incorrect recital made by the Assessing Officer in one notice. The final order also mentioned the correct the legal year by applying the charging and deeming provisions.
22. Section 81 specifically addresses mistakes, defects and omissions in assessments and notices. It provides:
“81. No assessment, notice, summons or other proceedings, made or issued or taken or purported to have been made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such assessment, notice, summons or other proceeding if such assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.”
23. The language of section 81 expressly covers an “assessment”, “notice”, “summons” and “other proceeding”. The statutory test is whether, despite the mistake, defect or omission, the notice or proceeding is in substance and effect in conformity with the intent and purpose of the BMA. The provision would be rendered substantially ineffective if every mistake in the description of a year were treated as necessarily equivalent to complete absence of jurisdiction, irrespective of the contents of the notice, identity of the asset, participation by the assessee and the statutory year in which the assessment was ultimately made.
24. In the present case, the requirements for application of section 81 are satisfied. There was an actual section 10(1) notice; it was issued by the competent officer to the correct assessee; it arose from information regarding the very same foreign asset; it was issued during the financial year which, under section 72(c), determined AY 2019-20; further evidence was repeatedly called for; the assessee understood the precise investment and furnished substantive explanations; a final show-cause opportunity was granted; and the final order assessed the asset in the year mandated by sections 3 and 72(c).
25. Section 81 is not being invoked to validate an assessment made in a statutorily impermissible year. It is invoked to protect an assessment made in the legally correct year where the original notice concerning the same assessee and the same foreign asset contained an erroneous description of the assessment years. Jurisdiction to assess the asset in AY 2019-20 arose from the information received, the notice issued during FY 2018-19, the proviso to section 3 and section 72(c). Section 81 operates only to prevent the erroneous recital of earlier assessment years from defeating the substantive proceeding.
26. No prejudice was caused to the assessee by the incorrect year-description in the original notice u/s 10. The assessee knew that the inquiry concerned Global Dynamic Opportunities Fund Ltd., account No. 168512. He asserted that the investment had been made from tax-paid Singapore employment income, invoked the India-Singapore DTAA, furnished Singapore-related material and responded on the merits of taxability. The defence taken by the assessee shows that he understood the precise asset, transaction, source allegation and tax consequences that he was required to meet.
27. The subsequent communications establish that there was no change in the foundational information, identity of the asset or case made out by the Department. They also establish that the assessee had repeated and meaningful opportunities to produce the documentary trail of the investment.
28. Section 76 provides an additional answer to any objection regarding service or manner of service. It states that a notice required to be served for the purposes of assessment shall be deemed to have been duly served if the person has appeared or cooperated in the inquiry. It further precludes an objection that thenotice was not served, was not served in time or was served improperly, unless such objection was raised before completion of the assessment.
29. The assessment order also complies with the limitation prescribed under section 11(1), which provides:
“No order of assessment or reassessment shall be made under section 10 after the expiry of two years from the end of the financial year in which the notice under sub-section (1) of section 10 was issued by the Assessing Officer.
30. The notice under section 10(1) was issued on 01.11.2018, during FY 2018-19 The period of two years from the end of that financial year expired on 31.03.2021. The assessment order was passed on 31.03.2021 and was therefore within the statutory period. The limitation was computed with reference to the same operative notice dated 01.11.2018 which is now sought to be treated by the assessee as non-existent for AY 2019-20.
31.On merits, the assessment order records that the assessee could not establish the source of investment through bank statements or other contemporaneous evidence. The fair-market value was determined at USD 3,14,608.15. comprising the initial investment of USD 3,00,000 and subsequent accretion of USD 14,608.15. The amount was converted into Indian currency and the value of the undisclosed foreign asset was determined at Rs.2,04,57,080, chargeable in AY 2019-20.
32. The final operative finding is that the offshore investment remained unexplained and that its fair-market value of Rs.2,04,57,080 was taxable at 30% under section 3(1). The order further directed charging of interest under section 40 and issuance of notice under section 46(1) for imposition of penalty under section 41. Section 41 provides:
“The Assessing Officer may direct that in a case where tax has been computed under section 10 in respect of undisclosed foreign income and asset, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum equal to three times the tax computed under that section.”
33. Section 46 further provides that the tax authority shall issue a notice requiring the assessee to show cause why penalty should not be imposed; that the notice relating to section 41 is to be issued during the pendency of proceedings for the relevant previous year; and that no penalty order can be passed without affording the assessee an opportunity of being heard.
34. The assessment order records that a notice under section 46(1) was issued to the assessee for showing cause against imposition of penalty under section 41. The penalty is consequentially connected with the tax computed under section 10. Therefore, if the assessment for AY 2019-20 and the finding that the GDOF investment was an undisclosed foreign asset are sustained, the penaltyproceedings do not become invalid merely because the original assessment notice contained an erroneous recital of the assessment years.
35. In view of the foregoing, it is respectfully submitted that the original notice dated 01.11.2018 contained an error in referring to AYs 2016-17 and 2017-18, but the said error did not amount to absence of a notice under section 10(1). The notice was issued to the correct assessee by the competent officer, in relation to the precise foreign asset subsequently assessed, and during the financial year which, by operation of sections 3 and 72(c), resulted in AY 2019-20. The assessee participated in the continuous inquiry, furnished explanations concerning the source of the same investment, relied upon the DTAA, was repeatedly required to furnish the supporting bank statements and was afforded a final show-cause opportunity. No unrelated transaction was introduced for the first time in the final order and no substantive prejudice was caused by the erroneous year-description. The final assessment order was passed for the legally correct assessment year, namely AY 2019-20, and within the limitation prescribed under section 11. The proceeding was therefore, in substance and effect, in conformity with the charging provision, the assessment procedure and the deeming provision of the BMA. The mistake in the description of the assessment years in the original Section 10 notice is accordingly protected by Section 81. The additional contention raised by the assessee may, therefore, be rejected and the assessment order dated 31.03.2021 for AY 2019-20, as well as the consequential penalty proceedings under section 41, may kindly be upheld.”
7. We have heard the rival submissions and perused the material available on record. Submissions made by both the parties have been carefully considered. We note that the Revenue has not been able to produce any notice issued to the assessee u/s 10(1) for A.Y. 2019-20. We are of the considered view that absence of a valid notice for the relevant assessment year is not a curable defect u/s 81 of the Act. Accordingly, we hold that the proceedings u/s 10 and consequent assessment order as well as the penalty order are rendered invalid in the absence of a valid notice u/s 10(1) and hence the same are hereby quashed.
8. In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 11.08.2026
