TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 276
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.... and are being disposed of by this common order. BMA NO. 4 & 6/KOL/2024 for AY: 2014-15 & BMA Nos. 7, 8 & 9/Kol/2024 for AY 2015-16. 4. BMA Nos. 04 & 09/Kol/2024 are relating to imposition of tax u/s. 10(3), BMA Nos. 6/Kol/2024 and 7/Kol/2024 are relating to imposition of penalty u/s. 41, whereas BMA Nos. 05 and 08/Kol/2024 are relating to imposition of penalty u/s. 43 of the BMA Act, 2015. 5. Assessee's appeal BMA No. 4 /Kol/2024 is taken as the lead case for the purpose of narration of facts. 6. Brief facts of the case are that the assessee, an Indian citizen, travelled to the USA in 1993 for higher studies. After completing his education, he worked at Siebel Systems and Oracle Corporation from 1999 to 2007, during which he was a tax resident in the USA, filing tax returns as required. He invested/ accumulated a Non-Retirement Fund (NRF) with a corpus of $29,000 between January 22, 2003, and September 8, 2005, derived from savings from his employment in the USA. The assessee returned to India in the financial year 2007-08, leaving his job in the USA. Subsequently, he received dividends on the NRF fund, which as per the plan were reinvested in the same fund in USA and not remi....
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....sset has come to the notice of the AO. Thus, cognizance of any information regarding undisclosed foreign income assets can be taken by the A.O. under BMA, 2015, for the years when Act has become operative and A.O. have been notified under BMA, 2015 to implement the Act. In this case, information was received in November, 2018. Thus, the information came to the notice of the A.O. in AY. 2019-20. Thus, as per the Act, A.O. could have assumed jurisdiction to process the information, for A.Y. 2019-20. However, A.O. has made a grave mistake by initiating proceedings for A.Y. 2014-15 when the BMA, 2015 was neither in existence nor any A.O. under the Act was authorized to implement the provisions of the Act. Under the circumstances, I agree with appellant's submission that notice u/s. 10(1) of the BMA, 2015 was defective and jurisdiction assumed under BMA, 2015 for the A.Y. 2014- 15 is illegal. Hence, without going into merits of the issue involved, order u/s. 10(3) of the BMA, 2015 dated 31-03-2021 is quashed." 6.3. Being aggrieved by the above action of the Ld. CIT(A), the revenue has come in appeal. 7. The Ld. Counsel for the assessee has made the following submissions: "Submis....
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....on 4 defines the scope of total undisclosed foreign income & assets computing undisclosed foreign income and assets and in that context envisages a situation to tackle a foreign income which is not reported in return submitted u/s 139(1),(4),(5) of Income Tax Act. The assessee was under bona fide believe that dividend income earned on which tax has already been withheld by US Tax Authorities and which was reinvested in NRF will be taxable in India in the year of maturity/termination of fund. In any case, the assessee case falls for taxation U/s 5(1)(c) of Income Tax Act, not under BMA 2015. The assessee admittedly has started reporting his foreign account in FA schedule of return from F.Y. 2016-17 (asst. year 2017-18). (5) Submission on Chargeability Under the Black Money Act The assessee would like to submit that the year of chargeability under the Black Money Act (BMA) is not the year in which income has been earned. The BMA recognises the specific year in which the Assessing Officer (AO) receives information regarding undisclosed foreign income and assets and the year of obtaining information is the previous year rather than the year to which the income or assets pertain. ....
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....14- 15, 2015-16, and 2016-17 lack valid assumption of jurisdiction and are therefore illegal and unenforceable, as the BMA was not in operation during those years and notice u/s 10(1) could only be issued for the assessment year relevant to previous year in which information has been received. 7. Submission on Wrong classification of NRI Fund Value as Undisclosed Foreign asset : The Assessing Officer (AO) erroneously classified the notional increase in the value of the NRI fund, amounting to $63,693, as an undisclosed foreign asset for the assessment year 2014-15. This classification contradicts Section 2(11) of the Black Money Act, especially considering that the source of the original corpus of the NRI fund was satisfactorily explained. The funds were derived from savings accumulated during the respondent's employment in the USA, for which tax returns were duly filed. Furthermore, FAQ No. 24 of Circular 13 dated July 6, 2015 (enclosed in the paper book at page 131), explicitly states that a person who is currently a resident and acquired foreign assets using income not subject to tax in India cannot be deemed to hold undisclosed foreign assets. In the light of this cl....
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....ney Act, 2015. The assessee was not supposed to comply the provisions of Black Money Act, 2015, before it has come into force and, therefore, the assessee cannot be held liable for non-compliance of any provisions of the Black Money Act, 2015 in relation to AY 2014-15 and 2015- 16 and penalty levied u/s. 41 & 43 of the Black Money Act, 2015 and would also be not sustainable for AY 2014-15 and AY 2015-16. Therefore, there is no force in the appeals of the revenue relating to action of the Ld. CIT(A) in deleting the tax imposed u/s. 10 of the Black Money Act, 2015 and penalty levied u/s. 41 & 43 of the Black Money Act, 2015 for AYs 2014-15 and 2015- 16. 9. Appeals of the revenue relating to AY 2014-15 and AY 2015-16 are hereby dismissed. BMA No. 12/Kol/2024, AY: 2016-17: 10. The Black Money Act, 2015 had come into operation for the AY 2016- 17 onwards. The AO noted that there was decrease in the funds value of the investment by the assessee. Therefore, he did not tax any income of the assessee in that respect. However, he noted that there was reinvested dividend of $2133. He calculated the equivalent currency in Indian value of the undisclosed foreign income at Rs. 1,95,537/- and ....
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.... is reproduced as under: "Charge of tax. 3. (1) There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent of such undisclosed income and asset: Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer. (2) For the purposes of this section "value of an undisclosed asset" means the fair market value of an asset (including financial interest in any entity) determined in such manner as may be prescribed." 16. Section 4 of the Black Money Act, 2015 deals with the scope of "total undisclosed foreign income and asset", the contents of which for the sake of ready reference are reproduced as under: "Scope of total undisclosed foreign income and asset. 4. (1) Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,- (a) the income from a source located outside India, w....
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....d reveal that the undisclosed foreign income and asset of an year are to be assessed together and further as per the proviso to section 3, undisclosed assets located outside India shall be charged to tax on its value in the previous year in which such assets come to the notice of the AO. The collective reading of all the provisions would give an inference that the undisclosed foreign income and asset are to be assessed by the AO under the Black Money Act, 2015 in the year in which it has come to the knowledge of the AO. Admittedly, there was no undisclosed asset of the assessee in the foreign country. Regarding the dividend income earned on the NRF fund, the plea of the Ld. AR of the assessee is that the same would not fall in the definition of income as the assessee had invested in a fund, wherein, the dividend, if any, earned on such fund would automatically form part of the fund and was not separately taxable. Further, the assessment year 2016-17 was the first year when the Black Money Act, 2015 came into force. The foreign income earned by the assessee was taxable, otherwise, in that country.. However, the tax on the said dividend income was withheld as per the USA Tax Law as s....
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....ndia, who has furnished the return of income for any previous year u/s. 139 of the Income Tax Act and has failed to furnish any information or furnishes inaccurate particulars in the 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 any time during such previous year. However, proviso to the said section states that this section shall not apply in respect of an asset or assets other than immovable property, where aggregate value of such asset or assets does not exceeds Rs. 5,00,000/-, which amount has been further substituted by Rs. 20,00,000/- w.e.f. 01.10.2024. 22. The AO levied the impugned penalty of Rs. 10,00,000/- observing that the assessee's foreign assets and foreign income during the year, which the assessee had not disclosed in the income tax return filed u/s. 139(1) of the Act, were of the value, which was more than Rs. 5,00,000/-. He, therefore, levied the impugned penalty of Rs. 10,00,000/-. 23. The Ld. CIT(A), however, deleted the penalty so levied by the AO observing th....