Non-declaration of Foreign Assets and Income for Financial Year 2021-22

[KASTURI SETHI]

Dear Experts,

One of my friends forgot to declare foreign assets and foreign income in Income Tax return for the Financial Year 21-22. Is it compulsory to declare the same ? If so, can he declare now by way of filing ITR-U ? What is remedy ?

Thanks a lot.

[Padmanathan KV]

Sir,

let me share you a similar practical experience I had first:-

An assessee did not produce the details of 'barclays bank' held in Canada at the time of filing ITR of FY 21-22 as he was not having any continuing relationship with the banker. However, the account was not closed and there was some very small balance lying in that account which even the assessee had forgotten.

In Nov 2022 or so, he received a summons notice from IT Department stating that said a barclays bank account was operational in Canada and whether it was disclosed in return, whether income was included and so on. The Department had stated that this information was received via 'Exchange of Information'.

Since (fortunately), there was no income from that particular account, a reply was given stating the above facts and matter was closed.

Coming to the query,

If there is any tax payable on account of foreign asset in India, it is advisable to file ITR-U. However, if there is no tax implication, then it would not be possible to file ITR-U also.

[KASTURI SETHI]

Sh.Padmanathan Kollengode Ji,

I am deeply indebted to you for your help.

[Nanu Arora]

Most respected @KASTURI SETHI Ji Thanks for creating this thread and respected @Padmanathan Kollengode Ji thanks for replying. In the ITR-2 filed for FY 21-22 there is no taxable income, after taking into account all the deductions and the only source of income is interest income. For the ITR of FY 22-23 all the FA schedules etc. were filed. Now in FY 21-22 there is only dividend income and interest income from US stocks which is less than Rs. 460, combined. This amount is after the 25% tax deducted in the US under the DTAA with India. As far as what we have read, ITR-U is not applicable for this purpose. Revision of return can be done only before intimation u/s 143(1) is filed. Now there are doubts about rectification of return, some articles/youtube videos say that under rectification FA schedules etc. can be shown but some of them say that it cannot be shown as the tax liability will still be zero. The total initial value of the investment as per the data provided by the aggregator is 1.66 Lacs and the peak and closing values were around 4.72 lacs during FY 21-22, there were no capital gains. Kindly guide us how to proceed here?

AI Summary

Declaring Foreign Assets: Importance of Filing an Updated Tax Return (ITR-U) for 2021-22 if Tax is Payable A user inquired about the necessity and process of declaring foreign assets and income for the financial year 2021-22, having initially omitted them from their tax return. An expert shared a similar experience where non-declaration of a foreign bank account led to a summons from the tax department. They advised that if there is any tax payable, filing an updated return (ITR-U) is advisable. Another respondent clarified that ITR-U might not be applicable if there is no tax liability, and suggested that rectification of the return may be possible, though opinions on this are mixed.