PCIT Vs Shrem Alloys Pvt Ltd (Bombay High Court)
The Bombay High Court heard an appeal concerning an imposed penalty of Rs.10 lakhs relating to disclosure of foreign asset acquisition. Although the tax effect was limited, the appellant argued that the matter fell within exceptions under CBDT Circular No. 3 of 2018. The Court proceeded to hear the matter on merits without deciding the applicability of the exceptions. The appellant contended that although the assessee had disclosed the acquisition of foreign assets, the disclosure was not made in the prescribed format, justifying the penalty.
The respondent argued that the acquisition had been properly disclosed in the returns filed for Assessment Year 2013–14, when the assets were acquired, and again in the return filed under Section 153A. It was submitted that the books of account also consistently reflected the acquisition. The respondent emphasized that the return under Section 153A containing the disclosure was filed before any notice for penalty could be issued, and therefore the matter was covered by the High Court’s earlier ruling in JSW Steel Limited.
The Court noted that this was not a case of non-disclosure. It found that disclosures had been made in the returns for A.Y. 2012–13 and 2013–14, and again in the Section 153A return, all filed before issuance of any penalty notice. The books of account also recorded the asset. The Court observed that in JSW Steel Limited, it had been held that a return filed under Section 153A is treated as a return under Section 139(1). Relying on this principle, the Commissioner (Appeals) and the Tribunal had concluded that there was no failure to disclose and that no penalty could be imposed for a technical non-compliance that had been rectified even before a penalty notice was issued.
