TaxTMI 
TaxTMI 
2025 (4) TMI 385
X X X X Extracts X X X X
X X X X Extracts X X X X
....king with Deutche Bank AG. During the year under consideration, assessee filed his return of income reporting total income at Rs. 4,80,89,272/-. Assessee received a sum of Rs. 24,20,929.87 towards ESOPs of Deutsche Bank A.G. who. had considered the said ESOPs as perquisites and deducted tax at source. Assessee, too had offered salary income (including ESOPs) in his return of income. Assessee showed the investment in ESOPs in the last year under Schedule "FA" in his return of income for A.Y. 2016-17. As the said investment was sold during the year, the same remained to be disclosed in Schedule FA for the year under consideration. 3.1. According to the Ld. Assessing Officer, schedule FA was introduced in the return of income from Assessment Year 2012 - 13 by the Finance Act, 2012, making it mandatory for the Indian residents to report about their foreign assets and income generated thereupon in foreign jurisdiction in order to track the same. According to the Ld. Assessing Officer, failure on the part of the assessee to make the said reporting attracted penalty of Rs. 10 lakhs under section 43 of the Act. Ld. Assessing Officer had issued a show cause notice seeking explanation fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act applies solely to undisclosed foreign income and assets and that assessee does not fall within the above referred provisions. 3.7. Attention was invited to the provisions of section 43 of the Act according to which assessee contended that section does not specify that details of foreign assets must be disclosed in particular schedule, that is Schedule FA as alleged, of the income-tax return form. Assessee was under a bonafide belief that he is not supposed to disclose his foreign assets in any separate schedule such as schedule FA when the same had already been adequately disclosed in schedule AL as part of his assets and liabilities. According to the assessee, levy of penalty under section 43 is not mandatory but is at the discretion of the Assessing Officer since the word used in the said section is that Assessing Officer "may" levy penalty. It was submitted that legislature has given discretionary power to the Ld. Assessing Officer to decide the levy of penalty after considering all relevant factors including the purpose and object, the Act seeks to achieve. The discretion to impose a penalty puts the ld. Assessing Officer under a corresponding obligation to exercise the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Rohit Krishna vs. CIT for the Assessment Year 2016-17 in BMA No. 11/M/2024 dated 26.08.2024 which had dealt with the identical issue on identical fact pattern as in the present case before us. This decision in turn placed reliance in the case of Ocean Diving Centre Ltd. v. CIT in BMA No. 22/M/2023 dated 30.08.2023 as well as in the case of Hindustan Steel Ltd. vs. State of Orissa (supra) by the Hon'ble Supreme Court. The observations and finding arrived by the Coordinate Bench in the case of Rohit Krishna (supra) for Assessment Year 2016-17 are extracted below for ease of reference: "8. We have heard the parties and perused the material available on record and given thoughtful considerations to the rival claims of the parties. Admittedly, the Assessee has not disclosed the foreign assets in particular schedule i.e. FA Schedule, however, it is a fact that the Assessee has duly disclosed the foreign assets i.e. ESOP and its value in "Schedule AL" of the income tax return and the employer of the Assessee has also deducted the TDS on the value of the foreign asset/ESOP and shown the details/value of the same in Form No.16 Part-B as well as in Form No.12BA. Hence, it....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 31.07.2023 iv) Shobha Harish Thawani vs. JCIT 01 to 03/Mum/2023 09.08.2023 v) CIT vs. Shrem Alloys Pvt. Ltd 08 to 11/Mum/2023 29.08.2023 vi) Ocean Diving Centre Ltd. vs. CIT 24 to 27/Mum/2023 30.08.2023 vii) Harshita Nirmal Jain vs. CIT 28/Mum/2023, 18.01.2024 viii) Addtl.CIT VS. Manoj Mahendrakumar Pandya 6/Mum/2024 26.06.2024 ix) Rohit Krishna vs. CIT 11/Mum/2024 26.08.2024 5. For each of the above decisions, ld. Counsel for the assessee pointed out their key aspects including facts, judicial precedents relied upon, observations and findings arrived therein. The same are narrated seriatim to gain a meaningful and purposive perspective on the issue involved. i) ACIT vs. Tejal Ashish Mehta in BMA No. 5/Mum/2022, dated 03.04.2023 a. In this case, assessee had a life insurance policy of a foreign company, whose surrender value was declared u/s. 59 of the Act on which tax and penalty were paid. Declaration was made under one time compliance scheme which was accepted by the Revenue. According to the assessee, receipts on account of surrender were declared in the return of income in Schedule EI. Assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....do so. According to the decision, the discretionary power would have to be exercised having regard to facts of each case in a fair, objective and judicious manner and the intention of the legislation. It was noted that intention behind the introduction of the Act is mainly to track and bring into the tax net the undisclosed black money stashed abroad. Thus, on bonafide intentions of the assessee, penalty was deleted and appeal of the assessee was allowed. iii) Nirmal Bhanwalal Jain Vs. CIT in BMA Nos. 13 to 15/Mum/2023, dated 31.07.2023 c. In this case, assessee had made investments in offshore funds in his own name and in the name of his children including Harshita Jain (daughter) and other two minors. Assessee had disclosed investments made in his own name in Schedule FA in the return of income filed for Assessment Year 2016-17. However, investments made in the name of children inadvertently remained to be disclosed. Also, assessee due to oversight failed to mention increase in investment value in the Schedule FA against his own name. Assessee claimed it to be a bonafide mistake and placed reliance on the decision of Leena Gandhi Tiwari (Supra). By referring to the intent o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rn of income and income therefrom offered to tax. Reliance was placed on decision in the case of Hindustan Steel Ltd. (supra). It was observed that at the initial stage i.e., in Assessment Year 2012-13, investment made was disclosed in Schedule FA but not disclosed in Schedule 'Holding Status'. It was also observed that disclosure was made in the return filed in response to the notice u/s. 153A of the IT Act which was treated at par with the return u/s. 139 of the IT Act. It was held that case of the assessee is not of deliberate or malafide or dishonest action or non-action or breach or defiance or disregard of statutory provisions of law. Penalty was deleted and appeal of Revenue was dismissed. vi) Ocean Diving Centre Ltd. vs. CIT in BMA Nos. 24 to 27/Mum/2023, dated 30.08.2023 f. In this case, assessee had invested in foreign entities, inadvertently not reflected in Schedule FA but duly disclosed in the balance sheet in Schedule 'Part A-BS' under 'non-current investments'. Observations were made in respect of discretionary powers in section 43 of the Act by the use of the word 'may'. Reliance was placed on the decision of Hindustan Steel Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne in mind. Legislature has given discretionary power to the Assessing Officer to decide levy of penalty after considering all relevant factors including purpose and object, the statute seeks to achieve. This discretion puts the Assessing Officer under a corresponding obligation to exercise the said discretion with proper regards to the facts and circumstances of the case, holistically. Bonafide intentions of the assessee based on prima facie evidences should not be doubted for invoking the stringent provisions of section 43 for levying penalty. He further submitted that when there are contradictory views on the same issue, the view in favour of the assessee is to be adopted considering the decision of Hon'ble Supreme Court in the case of Vegetable Products, (1973) 88 ITR 192 (SC). 7. Case of the Revenue is that provisions of the Act are strictly applicable and assessee is mandatorily required to disclose foreign assets in Schedule FA, failure of which would lead to imposition of penalty. According to ld. Sr. DR, disclosure of foreign asset in the return is not merely technical requirement without any purpose. It enables the Department to ensure proper investigation. Hence, ....