Undisclosed foreign bank accounts exception preserves Revenue appeals, while unexplained foreign account credits were remanded for fresh inquiry.

The low-tax-effect bar did not apply where the Revenue's appeals fell within the CBDT exception for undisclosed foreign bank accounts, so the appeals were maintainable. On the merits, credits in a foreign bank account standing in three names had been taxed without proper apportionment, while the record also showed inadequate inquiry into the source and disclosure of the deposits. Because the first appellate order overlooked material circumstances and the assessment required deeper verification, the quantum additions and related penalty were set aside and remanded for fresh adjudication by the Assessing Officer.

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Issues: (i) whether the Revenue's appeals were maintainable despite the low tax effect in view of the CBDT circular exception relating to undisclosed foreign bank accounts; (ii) whether the additions arising from credits in the foreign bank account and the consequential penalty required to be sustained or the matter required further examination.

Issue (i): whether the Revenue's appeals were maintainable despite the low tax effect in view of the CBDT circular exception relating to undisclosed foreign bank accounts.

Analysis: The monetary limit for departmental appeals did not control cases falling within the specified exception for additions relating to undisclosed foreign assets or bank accounts. The existence of a foreign bank account, the manner in which it was opened, and the absence of a satisfactory disclosure to foreign tax authorities supported the invocation of the exception. The challenge that the appeals were mechanical was therefore not accepted.

Conclusion: The appeals were held to be maintainable.

Issue (ii): whether the additions arising from credits in the foreign bank account and the consequential penalty required to be sustained or the matter required further examination.

Analysis: The account stood in the names of three persons, yet the full credits had been treated as taxable in the hands of the two assessees without proper apportionment. At the same time, the surrounding facts raised a serious doubt about the source and disclosure of the deposits, and the record did not contain adequate inquiry into the origin of the credits. The deletion by the first appellate authority was found to have ignored material circumstances, while the assessment order also required deeper verification. In these circumstances, the matter was considered fit for fresh investigation and reconsideration by the Assessing Officer.

Conclusion: The quantum additions and the related penalty were set aside for fresh adjudication and remand to the Assessing Officer.

Final Conclusion: The Revenue succeeded to the extent that the appeals were entertained and the matter was sent back for de novo examination, but no final adjudication on the merits of the additions or penalty was reached.

Ratio Decidendi: Where an appeal falls within a recognized CBDT exception for undisclosed foreign bank accounts, the low-tax-effect bar does not apply, and where the source of foreign account credits is inadequately examined, remand for fresh inquiry is justified.

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