2025 (11) TMI 1172 - HC - Income Tax

Penalty not imposed where foreign asset disclosure, though formally defective, was made and remedied before notice under section 153A

Pr. Commissioner of Income Tax Central 3 Versus Shrem Alloys Pvt. Ltd.

The HC held that the assessee had disclosed the foreign asset, albeit not in the prescribed format; factual findings showed disclosure in returns for the ... Assessment u/s 153A - though the assessee may have disclose the acquisition of the foreign assets, such disclosure was not in the prescribed format and therefore, there was justification for imposing penalty - HELD THAT:- This is not a case where no disclosure of the acquired foreign assets was ever made by the respondent assessee. Her only contention was that such disclosure was not made in the prescribed format and this warranted the imposition of the penalty of Rs. 10 Lakhs. The record indeed shows that the disclosure was made in the returns filed for the AYs 2012-13 and 2013-14, at the time when the asset was actually acquired. The disclosure was also made in the return filed u/s 153A, even before any penalty notice could be issued to the respondent assessee. Even the books of account produced from time to time clearly reflected the acquisition of this asset. In the case of JSW Steel Limited [2020 (2) TMI 307 - BOMBAY HIGH COURT] has taken the view that the return filed u/s 153A is also a return for the purposes of Section 139(1). Commissioner (Appeals)-I and ITAT have relied upon this decision to hold that there was no failure to disclose and in any event, no penalty was warranted based upon some technical glitch which was remedied even before the notice for penalty could be issued. No substantial questions of law. The tax effect is Rs. 10 Lakhs; the appellant contended that disclosure of acquired foreign assets was not in the prescribed format, justifying penalty. The respondent showed disclosure in returns for Assessment Years 2012-13 and 2013-14 when the asset was acquired, disclosure in the return filed under Section 153A 'even before any notice for penalty could be issued,' and reflection of the acquisition in books of account. Reliance was placed on the decision that a 'return filed under Section 153A is also a return for the purposes of Section 139(1)' (Principal Commissioner of Income Tax, Central-II v. JSW Steel Ltd.), where a coordinate Bench held technical defects remedied pre-notice did not constitute failure to disclose. Given those facts, the court found the challenge did not raise 'substantial questions of law' and that a mere format irregularity, remedied prior to penalty notice, did not warrant imposition of penalty. The appeal was dismissed on that ground; no costs.