No Penalty on Wife When Foreign Investment Already Disclosed by Husband: Bombay HC

PCIT Vs Aditi Avinash Athavankar (Bombay High Court)

The Bombay High Court considered an appeal concerning the levy of penalty under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The Revenue argued that the assessee, the wife, failed to disclose a foreign investment in Schedule FA for the assessment year 2017–2018. However, the record showed that her name appeared only as a joint holder in an investment made by her husband for administrative convenience. It was also undisputed that the husband had already disclosed the investment in his return of income and included it in Schedule FA.

Although the tax effect in the appeal was only Rs. 10 lakhs, the Revenue submitted that the case fell under an exception in CBDT circulars due to its connection with penalty proceedings under the Black Money Act. The Court therefore examined the matter on merits. The Tribunal had earlier held that the imposition of penalty was discretionary and, considering the circumstances of joint holding and full disclosure by the husband, found no justification to levy penalty on the wife. The High Court observed that the Tribunal’s decision reflected a proper exercise of discretion and that no perversity was shown in its reasoning.

The Court concluded that the appeal raised no substantial question of law. As the factual findings established that the assessee was only a joint holder and the investment had already been disclosed by the husband, the penalty could not be sustained. Consequently, the Court dismissed the appeal, holding that no interference with the Tribunal’s order was warranted. No order as to costs was made.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. Heard Mr. Kumar, learned Counsel for the Appellant and Ms. Bora, learned counsel for the Respondents.

2. Kumar urges the admission of this appeal on the substantial questions of law set out in paragraph No. 4 of the Appeal Memo.

3. However, upon hearing the learned Counsel for the parties, we are satisfied that no substantial question of law is involved in this Appeal. The only allegation against the Assessee (wife) was that she failed to disclose the foreign investment holding in Schedule FA along with her return for the assessment year 2017–2018. However, the record shows that the Respondent–Assessee was only named in the investment holding made by her husband for administrative convenience. The record bears out that the Assessee’s husband, Mr. R. Venkataraman, had declared the said investments in Schedule FA along with his return of income.

4. Kumar pointed out that though the tax effect in this Appeal is of Rs. 10 Lakhs, still the Appeal falls within one of the exceptions carved out in the CBDT Circulars because it relates to penalty under the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Therefore, we have heard the learned Counsel for the parties on merits.

5. The Tribunal has held that the levy of penalty is at the discretion of the authorities. After taking into consideration the circumstances, that this was a case of joint investment by the husband and the wife, and the husband had clearly disclosed this investment in his return of income, no penalty came to be levied. The above situation, which is mainly the result of the exercise of discretion, does not give rise to any question of law.

6. This is not a case of any perversity in the exercise of discretion. Accordingly, on the ground that this Appeal involves no substantial question of law, we dismiss this Appeal.

7. No costs.