Case Law Details
Shiva Shankar Mathur Vs DDIT/ADIT (Inv.) (ITAT Jaipur)
Summary: The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeal and deleted the penalty imposed under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for non-disclosure of foreign assets in the income tax return. The assessee challenged the order of the Commissioner of Income Tax (Appeals), who had upheld the penalty levied by the Assessing Officer for failure to disclose foreign bank deposits in the return of income for Assessment Year 2019-20.
The assessee, aged 80 years, had worked in the United Kingdom from 1966 to 1994 before returning to India. During his employment abroad, he accumulated deposits in bank accounts in the UK and Germany from income earned while working there. After becoming a tax resident of India in 1994, he continued to earn interest on those deposits and consistently disclosed the interest income in his Indian income tax returns while paying the applicable taxes. According to the assessee, he filed his return in ITR Form 1 (Sahaj) as advised because he had only income from other sources and no business or professional income. He contended that the ITR-1 applicable for Assessment Year 2019-20 neither stated that it was inapplicable to individuals holding foreign assets nor contained any column requiring disclosure of such assets. He also pointed out that later versions of ITR-1 specifically excluded individuals with foreign assets, indicating that the relevant clarification was introduced subsequently. The assessee submitted that the omission resulted from a bona fide belief and lack of awareness rather than deliberate non-compliance.
The Tribunal observed that although Section 6 of the Black Money Act required disclosure of foreign assets and failure attracted penalty under Section 43, the Act was enacted to address concealment of offshore income and assets created from black money. In the present case, the foreign bank deposits had originated from income earned during the assessee’s employment abroad and were not alleged to represent black money or concealed income. The Tribunal noted that the interest earned from those deposits had been regularly disclosed in India and taxed accordingly. It accepted that the assessee genuinely believed there was no separate disclosure requirement, particularly when the prescribed ITR-1 for the relevant assessment year contained neither a specific note nor a disclosure column for foreign assets. Considering the assessee’s age, the absence of deliberate concealment, the subsequent amendment to the ITR form, and the peculiar facts of the case, the Tribunal held that it was not a fit case for levy of penalty under Section 43 of the Black Money Act. The penalty was therefore deleted. The Tribunal clarified that its observations were confined to the peculiar facts of the case and would not constitute a binding precedent.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been preferred by the assessee against theorder of Ld. Commissioner of Income Tax, (Appeals),(hereinafter referred to as “Ld. CIT(A)”) dated 20.03.2025passed u/s 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as “BMA Act”).
2. The assessee in this appeal is aggrieved by the action of Ld. CIT(A) in confirming the penalty levied by the Assessing Officer (in short, “the AO”) u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as “BMA Act”) for non-disclosure of the Foreign Asset in the return of income.
3. At the outset, the learned Counsel for the assessee has submitted that the assessee is an 80 years old person; that had he worked in UK from 1966 to 1994 and thereafter shifted to India. That the assessee had deposits in bank accounts in UK and Germany made out of the income earned during his stay and work in these countries; that the assessee earns interest income thereupon. After 1994, the assessee has been residing in India and has become tax resident of India. The assessee has been duly disclosing the interest income earned on the said deposits lying in the Foreign Banks and duly paying the due taxes in India. As the assessee was advised, a person who has income from other sources only and no business or professional income, is supposed to file his return of income in ITR Form 1 (Sahaj). This is a simplified form for the persons who have not to claim any business deductions, exemptions etc. In the ITR Form 1, for the assessment year under consideration, (A.Y. 2019-20), there was no mention that the said Form No.1 was not applicable to the persons who have Foreign Assets or deposits in Foreign Banks. Even there was no column in the ITR 1 under which the assessee was supposed to declare the said deposits in the Foreign Bank.
That this ITR Form 1 was later on amended. The assessee in this respect produced on file the ITR Form 1 (Sahaj) for Assessment Year 2025-26, wherein, it has been specifically mentioned that this Form is not for an individual who has assets including financial interest in any entity located outside India; however, there is no such mention in the ITR Form 1 for Assessment Year 2019-20. The learned counsel for the assessee has submitted that the assessee was not aware that the assessee has to fill some other ITR form having column about the Foreign Deposit/Assets and that there was no intentional non-compliance of any provisions of the BMA Act.
4. We have considered the rival submissions. Though, as per the Section 6 of the BMA Act, the assessee was supposed to declare the Foreign Assets in his return of income, the nondisclosure of which invites penalty u/s 43 of the Act, however, it is to be noted that the ‘Black Money Act’ was introduced in the statute to curb the practice of concealment of offshore income and assets created out of the Black Money in Foreign Countries, and that is why, an assessee who is resident of India has been directed to disclose his Foreign Assets in the return of income, and a failure to which, invites penalty u/s 43 of the Act. In the case, in hand, the Foreign Assets of the assessee are not out of any black money transferred from India or out of any concealed income earned in Foreign Country. The assessee had bank deposits in his Foreign Country, upon which the assessee is earning interest income and the interest income is duly disclosed by the assessee in his returns of income and due tax are duly paid upon the said interest income. The assessee was of bona fide belief that there was no other requirement for the assessee to disclose his Foreign Assets and there was even no column or note in the prescribed form requiring the assessee to disclose said Foreign Asset/Deposits. Though, apparently it appears a violation of provision of Section 43 of Black Money Act, however, the above facts and circumstances of the case would show that it is not the case of a person who has earned any black money in offshore Country or who has concealed his Foreign Assets deliberately to avoid tax liability in India. It is a case of bona fide mistake on the part of an old aged person, who was not aware of technicalities of the BMA Act and even there was no note or separate column in the prescribed ITR Form 1 for mentioning such foreign assets. The said form was, admittedly, amended later on to insert such note. Therefore, the overall facts and circumstances of the case, suggest that it is not a fit case for levying any such penalty against the assessee under the Black Money Act. Considering the peculiar facts and circumstances of the case, the impugned penalty is order to be deleted. However, the observations made above in the case of the assessee will not be having any binding precedent as the same are given in the peculiar facts and circumstances of the case of the assessee.
5. With the above observations, the impugned penalty is order to be deleted.
6. In the result, the appeal of the stands allowed.
Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 26/05/2026.
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