TaxTMI 
TaxTMI 
2025 (3) TMI 984
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld by the assessee came to the notice, only after search and seizure action conducted on 09.07.2018, u/s 132(1) of the Act, at his residence B-302, Aurum Trimurti, Tilak Marg, C-Scheme, Jaipur. The search and seizure action is stated to have led to discovery of evidence in the form of excel files, from the e-mail account and personal Macbook of the assessee. 2. Feeling aggrieved by the penalty order the assessee filed an appeal u/s 16 of the Act, 2015. 3. Learned CIT(A) partly allowed the appeal, while dealing with the issue in para 4.2 in the manner as under:- "Further, in his own case as discussed above, Hon'ble ITAT in case reported at [2023] 50 taxmann.com 290 (Jaipur Trib.) [13-04-2023] Krishna Das Agarwal v. DIT/ADIT(Inv.) regarding the disclosure in the ITR has held as under:- "34.8 After having gone through the documents as pointed to us which are mentioned in detail above, we find that assessee had made due disclosure of all his financial interest in a fiduciary capacity and as a signatory authority of a foreign bank account for and on behalf of the company while filing of returns of income for the assessment years 2018-19 and 2019-20 wherein in schedule FA, du....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... her mother and she failed to disclose same while filing her income-tax return, however disclosure was made while filing return under section 153A, therefore it was held that since such non-disclosure of a foreign asset was a bona fide mistake, penalty could not be imposed under section 43 of Black Money Act." Hon'ble ITAT in the case of the appellant has held that the the ITR for the year under appeal i.e. A.Y. 2017-18 "has stood amended/revised by the assessee and revenue has not controverted these facts supported by evidences. Thus in our view it is not a case of non-disclosure and even otherwise, as per the decision of Coordinate Bench of the Tribunal, Mumbai in the case of Leena Gandhi Tiwari (supra), it has been categorically held that Where assessee was a signatory in a foreign bank account owned by her mother and she failed to disclose same while filing her income-tax return, however disclosure was made while filing return under section 153A, therefore it was held that since such non-disclosure of a foreign asset was a bona fide mistake, penalty could not be imposed under section 43 of Black Money Act. Respectfully following the judgement of Hon'ble ITAT in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nalty order the assessee filed an appeal u/s 16 of the Act, 2015. Learned CIT(A) allowed the appeal, having regard to the observations made by a Co-ordinate Bench of ITAT, Jaipur Bench, in the appeal filed to challenge quantum assessment of the year under consideration, and set aside the penalty. Hence, this appeal too by the department. Arguments heard. File perused. Contentions 6. Ld. DR for the appellant has submitted that the appellant is a high profile tax payer, utilizing services of professionals, and as such, he must have been within knowledge of the requirement of taxation law, so as to disclose the requisite information i.e. financial interests in M/s Agrasen Polymer FZE, in Schedule- FA of the ITR, but, in his original return, he did not claim that no asset was held by him outside India as a beneficiary or otherwise, and also that he had no signing authority in any account located beyond India. The contention is that in the given facts and circumstance, Learned CIT(A) fell in error in dealing with the penalty keeping in view only the observations made by Income Tax Appellate Tribunal while dealing with additions made in quantum assessment proceedings. Ld. DR has s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee has relied on decision in Hon'ble Supreme Court in the case of M/s Hindustan Steel Ltd vs. State of Orissa, (1972) 83 ITR 26. Discussion 9. Taking up the common contentions pertaining to both the appeals, for ready reference, it may be mentioned here that penalty orders were passed by the Assessing Officer-Additional Commissioner of Income Tax, Central Range, Jaipur due to violation of provisions of Section 43 of the Act, 2015, as the assessee, resident in India and required to file his return of income u/s 139(1) of the Act, and disclosed located outside India in schedule FA of the return, fail to disclose his foreign assets in the said schedule, while filing return of income for the assessment year 2016-17. As mentioned above, Learned CIT(A) set aside the penalty order, for the reasons recorded in the impugned order. Therefore, the Department is in appeal before this Appellate Tribunal. 10. Admittedly, search and seizure action under section 132(1) of Act, 1961 was conducted on 9.7.2018 and the department initiated proceedings when the factum of existence of foreign assets and its non disclosure in the income tax return filed relating to the Assessment Year 2016-17 tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and not arbitrarily. In Ambay Cements' case (supra), while dealing with question of penalty, Hon'ble Supreme Court observed as follows :- "(a) Provision of exemption should be strictly construed. It is not open to Court to ignore the conditions prescribed in the exemption notification; (b) Mandatory rule must be strictly followed, while substantial compliance might suffice in a directory rule; (c) Whenever the statute prescribed that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement is mandatory; (d) It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way; and (e) Where a statute is penal in character, it must be strictly construed and followed." In CIT v. Mangalore Chemicals's case (supra), Hon'ble Karnataka High Court observed as under:- "8. Regarding question No. 1 much discussion is not necessary because once the original return is withdrawn or is substituted by filing a valid revised return, the natural consequence is t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anty be imposed unless the party obliged either acted deliberately in deflance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances: Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bone fide belief that the offender is not liable to act in the manner prescribed by the statute. 0.2 In the instant case, the Assessee admittedly duly recorded and disclosed the investment in foreign entity in its audited balance-sheet and also furnished such information under "Hon Current Investments in Schedule para-A-BS in its return of income, hence we are in concurrence with the claim of the Assessee that the Assessee has directly or indirectly complied with the statutory provisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riginal ITR and that same was accepted by the Assessing Officer. From the above reason, it is obvious that Learned CIT(A) did not go into merits, as to whether the appellant was required to disclose asset in Schedule FA or not, and rather, he set aside the penalty having regard to the disclosure made in the revised return. Learned CIT(A) should have discussed the above said point first and then proceeded further to decide the validity of the impugned penalty order. We are in agreement with Learned CIT(A) that furnishing of revised return certainly replaces the original ITR, and accordingly, for the year under consideration i.e. AY 2017-18, Learned CIT(A) was justified in setting aside the penalty order, once the assessee, even though after search action, came forward to disclose the foreign assets by furnishing revised return. Result 15. Therefore, appeal BMA 1/JP/2024, filed by the department and which pertains to the Assessment Year 2017-18 deserves to be dismissed. We order accordingly. BMA No.2/JPR/2024 16. As noticed above, we have discussed the common contentions raised by Learned DR for the department and by learned counsel for the respondent in respect of both the a....