2023 (12) TMI 54

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....site order and BMA No. 22/Mum/2023 (AY 2016-17) as a lead case. 3. BMA No. 22/Mum/2023 (AY 2016-17)- The Assessee being a domestic company resident in India, having the nature of business as "services", declared its total income as "NIL" by filing its return of income on 30.11.2016. Subsequently during the course of investigation in the case of Mr. Vikram Nayak, Director of the Assessee-company it was observed that the Assessee had investment in foreign entities i.e. Helen Incorporated S.A., Panama, however has not reflected said investment in Schedule of "Foreign Assets" in its return of income filed, therefore, a notice dated 12.02.2021 under section 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (in short "B.M. Act") was issued and served upon the Assessee by the Addl. CIT, Range-2(3), Mumbai. Thereafter due to change of jurisdiction, another notice dated 27.12.2021 was issued to the Assessee by the DCIT, Central Circle-3(1), Mumbai (in short "AO"). 4. In response to the said notice dated 18.03.2021, the Assessee vide letter dated 27.01.2022 filed its submissions/details and claimed as under: "We would like to submit th....

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....tax Return but argued they have duly disclosed it in the Balance sheet for AY 2016-17. The assessee further stated that they have inadvertently missed reporting the same in the schedule FA. It may be noted that the section 43 of the Black Money Act clearly mandates the levy of penalty for failure to furnish the information about the foreign entity in the prescribed Income-tax Return. The prescribed Income-tax Return specifically contains a schedule FA for disclosing such information. The assessee's argument that it has furnished such information under "Non- current Investments" in schedule 'Part A-BS in the return of income for AY 2016-17 is not in line with the intent of legislation. The legislation clearly mandates the disclosure of information in the prescribed format. It may be noted that in the automated environment, the Income-tax Department, inter alia, relies on voluntary compliance of the assessee and the computer system for analyzing the risk parameters for the assessee. If the assessee has not disclosed the relevant information in the prescribed format, analysis of such information using artificial intelligence is not possible. Hence disclosure, other than the pr....

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....undant. The appellant has clearly defaulted on its obligation to discharge the onus cast on it to truly disclose the ownership of the foreign asset while filing its return of income. Also, the residential status of the assessee for the AY 2016-17 was that of 'resident' and so the disclosure obligation was very much applicable to it. Further, the facts in the case of the assessee are different from those in the case of Leena Gandhi Tewari (supra) and so the case law cannot be applied to the case of the assessee. 7.11 In light of the above discussion, I am convinced that the AO is correct in proceeding to levy the penalty under section 43 of the BMA. The action of the AO is upheld. Ground nos. 1 to 4 raised by the assessee are decided against it and stand dismissed." 8. The Assessee being aggrieved is in appeal before us. The Assessee mainly claimed that according to the provisions of section 43 of the B.M. Act, the Assessee is required to furnish the particulars qua any asset located outside India in the return of income filed under section 139(1) or (4) or (5) and if the Assessee fails to furnish any such information or furnish inaccurate particulars of such inc....

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....der consideration. Let us peruse the provisions of section 43 of the Act, which for ready reference and clarity reproduced hereinbelow: "If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of the said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, at any time during such previous year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum often lakh rupees: Provided that this section shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year. 3. Enactment of BMA for Te....