Sadanand Bhalchandra Sule Vs Dy. Director of Income Tax (Inv.) (ITAT Mumbai)
Penalty u/s 43 Quashed – DDIT(Inv.) Lacked Jurisdiction to Levy ₹10 Lakh Penalty Beyond ₹5 Lakh Limit under CBDT Guidelines: Only Regular AO Can Levy Penalty Exceeding ₹5 Lakh under BMA- ITAT Mumbai
Assessee filed four appeals challenging the levy of penalty of ₹10,00,000 each u/s 43 of the Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015 (“BMA”) for non-disclosure of shareholdings in two Singapore entities—Manquist Holdings Pte. Ltd. & Aavishkaar International Ltd.—in Schedule FA of his ITRs.
Before Tribunal, Assessee raised an additional legal ground contending that DDIT(Inv.)-6(1), Mumbai lacked jurisdiction to pass the penalty order as per CBDT Guidelines dated 23-01-2018, which stipulate that after completion of assessment, penalty proceedings where JCIT approval is required must be handled by the regular AO, not by DDIT(Inv.). The penalty exceeding ₹5 lakh required JCIT approval u/s 46(4)(b) of the BMA, & hence DDIT(Inv.) could not lawfully levy it.
Department argued that DDIT(Inv.) had concurrent jurisdiction under CBDT Notification No. 39/2017 dated 16-05-2017 & Pr.DIT(Inv.)-2’s order dated 16-09-2020; that CBDT guidelines were administrative; & that the approval by Addl. DIT(Inv.) was valid being from a higher-ranked officer.
