Foreign asset penalty relief under the Black Money Act where omission to disclose was found bona fide and supported by reasonable cause.

Penalties under sections 41 and 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 were held unsustainable where foreign shares had already been reflected as perquisite income, the related dividend was received through the assessee's Indian bank account, and the later sale proceeds were disclosed and taxed in a subsequent year. The omission to report the foreign asset and income in the return was treated as bona fide and inadvertent, influenced by a return form that did not contain the relevant foreign asset schedule and by the assessee's lack of familiarity with the cross-border tax implications. The Tribunal accepted reasonable cause and deleted the penalties.

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Issues: Whether penalty imposed for non-disclosure of foreign asset and foreign income under sections 41 and 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was sustainable in the facts of the case.

Analysis: The foreign shares were already reflected as perquisite income under the Income-tax Act, 1961 and the related dividend income had been received through the assessee's Indian bank account, with the subsequent sale proceeds also disclosed and taxed in the later assessment year. The omission to report the asset and income in the relevant return was found to be bona fide and inadvertent, influenced by the use of a return form that did not contain the relevant foreign asset schedule and by the assessee's lack of familiarity with the cross-border tax implications. The Tribunal treated the penalty provisions as discretionary and accepted that the assessee had shown sufficient reasonable cause for the lapse.

Conclusion: The penalties under sections 41 and 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 were not sustainable and were deleted.

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