Vijendra Kedia Vs DDIT (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata, decided two appeals filed by the assessee against the orders of the Commissioner of Income-tax (Appeals) for Assessment Year 2018-19 arising from proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. One appeal challenged the assessment under Section 10(3) of the Act, while the other challenged the penalty levied under Sections 41 read with 46.
The dispute related to an addition of Rs. 21,63,645 made by the Assessing Officer in respect of 33,333 shares of Arvis Trading Co. Ltd., an offshore company incorporated in the British Virgin Islands (BVI). The Assessing Officer held that the assessee, as the beneficial owner of the shares, had failed to disclose the foreign asset in Schedule FA of the income tax return and treated the value of the shares as an undisclosed foreign asset while determining the assessment under Section 10(3) of the Black Money Act. The CIT(A) dismissed the assessee’s appeal ex parte after recording non-response to notices and confirmed the assessment.
The assessee submitted before the Tribunal that he was a Non-Resident during financial years 2007-08, 2008-09 and from 2010-11 to 2016-17, and was a Not Ordinarily Resident during financial year 2017-18. It was contended that he was not required to disclose foreign assets in Schedule FA in the return of income filed in India. The assessee further submitted that 16,667 shares were issued under debt obligation and payment for those shares was made only on 12.05.2012 from a foreign bank account when he was a Non-Resident. The remaining 16,666 shares acquired from another shareholder had not been paid for, as payment was also under debt obligation. It was also argued that the company neither carried on business nor maintained any bank account and was eventually struck off under the BVI Business Companies Act for non-payment of annual fees.
