Kumar Ramanathan Vs DDIT/ADIT (ITAT Chennai)
ITAT Cancels Section 43 Penalty as Foreign Investment Came From Disclosed Sources; No Black Money Act Penalty for Inadvertent Foreign Asset Disclosure Lapse; ITAT Removes ₹10 Lakh Penalty Since Schedule FA Error Was a Technical Breach; Black Money Act Penalty Quashed as Non-Disclosure Was Not Deliberate: ITAT.
In a batch of appeals for Assessment Years 2020-21 to 2023-24, the Income Tax Appellate Tribunal (ITAT), Chennai, considered whether penalty under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 could be imposed for non-disclosure of a foreign investment in Schedule FA of the income tax return.
The assessee, a resident individual employed with Vodafone, had received Employee Stock Options (ESOPs) from Vodafone PLC, UK, and also invested in foreign listed securities. During investigation based on CRS information, the tax authorities found that while the assessee had disclosed other foreign assets, investments held in Silverdale Fund SPC were not reported in Schedule FA of the returns for AYs 2020-21 to 2023-24.
The assessee explained that investments in Silverdale Fund SPC were made through authorized banking channels under the Liberalised Remittance Scheme (LRS). The funds originated from redemption proceeds of Indian mutual funds, which had already been disclosed and taxed. The remittances were made through a disclosed ICICI Bank account. The assessee also pointed out that the investments were subsequently sold, the resulting capital loss was reported in AY 2024-25, and the foreign asset was disclosed in Schedule FA in that year. According to the assessee, the omission in earlier years was inadvertent and unintentional.
