Case Law Details
ACIT Vs Ansul Darshan Shah (ITAT Ahmedabad)
No Black Money Act Penalty as Section 153A Return Replaced Original Return; ITAT Rejects BMA Penalty Due to Voluntary Disclosure of Foreign Assets After Search; Foreign Asset Disclosure in Section 153A Return Bars Section 43 BMA Penalty: ITAT.
The Revenue filed four appeals against separate orders dated 27.06.2024 passed by the Commissioner of Income Tax (Appeals)-11, Ahmedabad, relating to Assessment Years 2016-17 to 2019-20. Since the issue involved in all appeals was identical, the Tribunal considered the facts of Assessment Year 2016-17, with its decision applying equally to the remaining years.
The assessee had acquired foreign assets in the USA from funds earned while being a non-resident in India. However, these foreign assets were not disclosed in Schedule FA of the original returns filed under section 139(1) of the Income Tax Act. Following a search and seizure action under section 132 conducted on 10.04.2019, the assessee voluntarily disclosed the foreign assets and reported them in returns filed under section 153A for Assessment Years 2016-17 to 2019-20, as well as in the return filed under section 139(1) for Assessment Year 2020-21.
The Assessing Officer imposed a penalty of Rs.10 lakh under section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, on the ground that the foreign assets had not been disclosed in the original returns.
The CIT(A) deleted the penalty, holding that a return filed under section 153A substitutes the original return filed under section 139(1). Relying on judicial precedents, including the Gujarat High Court’s decision in Kirit Dahyabhai Patel and the Tribunal’s decision in Leena Gandhi Tiwari, the CIT(A) concluded that once foreign assets were disclosed in the section 153A returns, penalty under section 43 of the BMA was not leviable. The CIT(A) also noted that the disclosure was voluntary, the foreign income had been offered to tax, no additions were made during assessment proceedings, and there was no intention to evade tax.
The Tribunal upheld the CIT(A)’s order. It observed that the disclosure made in the returns filed under section 153A had been accepted by the Revenue and no additions relating to the foreign assets were made in assessments completed under section 153A read with section 143(3). Following the cited judicial precedents, the Tribunal held that penalty under section 43 of the BMA could not be sustained merely because the disclosure was absent in the original return. Accordingly, all appeals filed by the Revenue were dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned four appeals have been filed by the Revenue against the separate appellate orders of even dated 27.06.2024 passed by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, relating to the Assessment Years 2016-17 to 2019-20. Since the issues involved in all the appeals are common and identical, we extract the grounds of appeal raised in BMA No.01/Ahd/2024 for Assessment Year 2016-17 for the purpose of adjudication. The decision rendered in the said appeal shall apply mutatis mutandis to the other appeal bearing BMA Nos. 2 to 4/Ahd/2024 for Assessment Years 2017-18 to 2019-20.
BMA No.1/Ahd/2024 for AY 2016-17
2. The Revenue has raised the following grounds of appeal:
1) On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition of Rs.10,00,000/- u/s. 43 of the Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015 ignoring the facts of the case that assessee had not disclosed Foreign Assets and Income from outside India in his original I.T.R but disclosed the same only after search and seizure action carried out u/s.132 of the Act in the case of the assessee.
2) The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal.
3. The brief facts of the case are that the assessee had acquired foreign assets in USA out of funds earned when he was a non-resident in India. However, while filing return of income under section 139(1) of the Income Tax Act, 1961, the assessee did not disclose such foreign assets in Schedule FA. A search and seizure action under section 132 of the Act was conducted in the case of ADS Group on 10.04.2019. During the course of search proceedings, the assessee voluntarily disclosed foreign assets held in USA and thereafter disclosed the same in Schedule FA in the return of income filed under section 153A of the Act for Assessment Years 2016-17 to 2019-20 and also in the return filed under section 139(1) for Assessment Year 2020-21. The Assessing Officer observed that the assessee had failed to disclose such foreign assets in the original return filed under section 139(1) of the Act and accordingly levied penalty of Rs.10,00,000/-under section 43 of the BMA.
4. Aggrieved by the penalty order, the assessee preferred appeal before the Ld.CIT(A).
5. The Ld.CIT(A), after considering the submissions of the assessee, deleted the penalty by observing that the return filed under section 153A substitutes the original return filed under section 139(1) of the Act and therefore, once the foreign assets were duly disclosed in the return filed under section 153A, penalty under section 43 of the BMA was not leviable. The Ld.CIT(A) relied upon the decision of the Hon’ble Gujarat High Court in the case of Kirit Dahyabhai Patel Vs. ACIT reported in 80 com 162 (Gujarat), wherein it was held that return filed under section 153A is to be treated as return filed under section 139 of the Act for the purpose of penalty proceedings. The Ld.CIT(A) further relied upon the decision of the Hon’ble ITAT in the case of Leena Gandhi Tiwari reported in 136 taxmann.com 409, wherein it was held that once disclosure of foreign assets is made in the return filed under section 153A, the assessee cannot be penalized for non-disclosure in the original return filed under section 139(1) of the Act. The Ld.CIT(A) also observed that the assessee had voluntarily disclosed the foreign assets during search proceedings, the foreign income was duly offered to tax in India, no adverse inference or addition was made in assessment proceedings under section 153A, the lapse was technical and bona fide in nature, there was no intention to evade tax. Accordingly, the Ld.CIT(A) deleted the penalty of Rs.10,00,000/- levied under section 43 of the BMA.
6. We have heard the rival submissions and perused the material available on record. The undisputed facts are that the assessee had not disclosed the foreign assets in Schedule FA of the original return filed under section 139(1) of the Act. However, pursuant to search proceedings under section 132, the assessee disclosed the foreign assets in the return filed under section 153A of the Act and such disclosure has been accepted by the Revenue. No addition has been made in relation to such foreign assets in the assessment framed under section 153A read with section 143(3) of the Act. The principal issue before us is whether penalty under section 43 of the BMA can be levied despite disclosure of foreign assets in the return filed under section 153A of the Act. We find that the Hon’ble Gujarat High Court in the case of Kirit Dahyabhai Patel Vs. ACIT (supra) has categorically held that return filed pursuant to notice under section 153A is to be treated as return filed under section 139 of the Act. Therefore, once the return filed under section 153A substitutes the original return, the disclosure made therein cannot be ignored while examining levy of penalty. We further find that the coordinate bench of the Tribunal in the case of Leena Gandhi Tiwari (supra) has held that once disclosure of foreign assets is made in the return filed under section 153A, penalty under section 43 of the BMA cannot be levied merely because such disclosure was absent in the original return filed under section 139(1). In the present case also, the assessee has voluntarily disclosed the foreign assets in the return filed under section 153A and such return alone has been acted upon by the Assessing Officer. Further, no material has been brought on record to demonstrate any deliberate attempt on the part of the assessee to evade taxes.
7. The Ld.CIT(A) has rightly appreciated that the omission was a bona fide and technical lapse. It is also an admitted fact that no addition was made in assessment proceedings in respect of such foreign assets and income. Considering the entirety of facts and circumstances of the case and respectfully following the judicial precedents referred above, we do not find any infirmity in the order of the Ld.CIT(A) deleting the penalty levied under section 43 of the BMA.
8. Accordingly, the grounds raised by the Revenue in all the appeals are dismissed.
The order is pronounced in the open Court on 27.05.2026.
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