ITAT Rules No Penalty for Foreign Income Disclosure

The ITAT ruled in favor of the assessee, finding that the penalty imposed under section 271(1)(c) of the Income Tax Act for non-disclosure of foreign income was unjustified. The assessee had disclosed the foreign income under the Black Money Act, which was accepted by the Commissioner of Income Tax. The ITAT determined that once compliance was made under the Black Money Act, the penalty under the Income Tax Act was not applicable. The ITAT held that the authorities had failed to consider this compliance, leading to the deletion of the penalty and overturning the decision of the CIT(A).

---

---

Issues:
Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for non-disclosure of foreign income.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad was regarding the penalty of Rs. 3,80,000 imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2013-14. The assessee had filed a return of income of Rs. 67,85,155 on 21st September 2013, and during scrutiny assessment, it was revealed that the assessee, a non-resident Indian, had not offered his global income in subsequent years. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the act, which the assessee contested, stating that the foreign income was disclosed suo moto during assessment. The CIT(A) upheld the penalty, leading to the appeal before the ITAT.

During the appellate proceedings, the assessee argued that the income was declared under the Black Money Act, 2015, and relied on relevant case laws to support the contention that there was no suppression or concealment of income. The Departmental Representative supported the lower authorities' decision. The ITAT examined the provisions of the Black Money Act, 2015, which allowed for a one-time compliance scheme for undisclosed foreign assets. The assessee had filed a declaration in Form 6 under this scheme, disclosing the foreign income and paying the requisite tax and penalty.

The ITAT observed that the declaration filed by the assessee under the Black Money Act was accepted by the Commissioner of Income Tax, and the penalty under the Income Tax Act was not applicable once compliance under the Black Money Act was made. It was noted that neither the Assessing Officer nor the CIT(A) had considered this aspect. The ITAT found that the authorities had not discussed the declaration of undisclosed assets made under the Black Money Act, and the Commissioner of Income Tax had acknowledged the compliance by the assessee.

Consequently, the ITAT held that the Assessing Officer did not properly consider the compliance made by the assessee under the Black Money Act, leading to the unjustified penalty under section 271(1)(c) of the Income Tax Act. The ITAT allowed the appeal of the assessee and deleted the penalty, concluding that the decision of the CIT(A) was unreasonable in sustaining the penalty.

---