TaxTMI 
TaxTMI 
2025 (5) TMI 1078
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..../M/2025 as a lead case and result of the same would be applicable mutatis mutandis to all these appeals under consideration. 3. BMA No.1/M/2025: In this case, Ld. DDIT/ADIT(Inv.)-1(1) FAIU, Mumbai [Assessing Officer] (in short "the AO") had received a credible information to the effect that the Assessee had foreign assets in the form of investments in the financial entities registered in United Arab Emirates and Isle of MAN, namely Zurich International Life Ltd (UAE) and RL 360 Life Insurance Company (Isle of Man) respectively and therefore during the course of investigation, a summon u/s 131(1a) of the BMA was issued to the Assessee on 27.06.2023. The Assessee in response filed the requisite details on 31.07.2023. 3.1 Thereafter, on inquiring on e-filing/ITBA portal, it was observed by the that the Assessee has filed income tax returns/ITRs for the AYs 2011-12, 2023-24 and has declared status as "resident" for all the assessment years. However, on the basis of information received in the office of the AO, it was observed that the Assessee has made following investments but not disclosed in FA Schedule in ITR: Information Source INFID Account No Interest Receiv....
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....LE OF MAN) C21AIMRLIC091J0002581 4031091J 3 On verification of ITRs filed by you, it is found that you have filed Returns of Income for AYs 2011-12 to 2023-24 declaring residential status as Resident in India for tax purposes for all the AYs. 4. After verification of details submitted during the course of investigation, it is seen that you have not declared the above said investments made in a Zurich International Life Limited-Branch (UAE) & RL360 Life Insurance Company (ISLE OF MAN) in Schedule FA of the Income Tax Return filed by you for the AY 2016-17. 5. As you have failed to disclose your total investments in a Zurich international Life Limited - Branch (UAE) & RL360 Life Insurance Company (ISLE OF MAN) in your retum of Income filed for the AY 2016-17, you are hereby required to show cause in writing as to why a penalty of Rupees Ten Lakhs for each assessment year should not be levied for the AV 2016-17 for non-disclosure of information about an asset located outside India in accordance with the provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 6. The compliance to this....
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....onal Life Limited was paid by me sometime in 2014, the same was not disclosed in the Income tax Return filed for assessment year 2016-17. Thus the fact mentioned by your goodself that I have failed to disclose the investments made in RL 360 Life Insurance Company (ISLE OF MAN) or Zurich International Life Limited in return of income does not hold good. It is further submitted that the same does not amount to non-disclosure of information about an asset located outside India in accordance with the provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Therefore, in consideration of the above mentioned facts and documents, it is humbly submitted that the penalty of Rupees Ten Lakhs for assessment year 2016-17 should not be levied." 6. The AO though considered the reply/submission of the Assessee but could not find the same, as acceptable, on the following reasons: "8.1. The residential status of the assessee is verified from return of income and it is found that the assessee is Indian resident from A.Y. 2011-12 to AY 2023-24. Further, from the perusal of FA Schedule in the return of income fil....
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.... the plain reading of the submission and the policy documents, it is seen that the investment in the form of various accounts in Zurich International Life Limited (UNITED ARAB EMIRATES) & RL 360 Life Insurance Company (ISLE OF MAN) is in the name of the assessee. This fact has not been denied by the assessee also. As the foreign investment in the form of various accounts is in the name of the assessee, he is in duty to disclose the same in the FA schedule of return of Income. Further, the assessee had committed default in the subsequent year as well. Thus, it cannot be said that the default was bona fide. The submission cannot be considered as plausible explanation for not disclosing the investment in the FA schedule and thereby committing default within the meaning of the provisions of S 43 of the Black Money Act 2015 8.5 Further, Chapter IV of Black Money Act, 2015 provides for penalties leviable in respect of various defaults mentioned within the meaning of provisions of Black Money Act, 2015. As per this Chapter IV, there are separate penalties provided for default u/s 41 & u/s. 43 of the Black Money Act. 2015. Section 41 of the Black Money Act, 2015 provides for the p....
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....e Ld. Commissioner and made following submissions: "6.1 During the course of appellate proceedings, the appellant filed written submissions which are reproduced as under:- Background of the case: 1. Shri Akil Abbas Rassai (hereinafter referred as an Appellant) is an Individual having PAN-AACPR1058F. 2. Proceedings under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as "BMA") were initiated in appellant's case by issuance of summons u/s. 131(1A) of the Income Tax Act, 1961 (hereinafter referred to as the Act) dated 15.07.2022 by the DDIT/ADIT(Inv)- 3(4), FAIU, Mumbai which were duly complied by the appellant. Subsequently, similar summon u/s. 131(1A) of the Act dated 27.06.2023 were issued to the appellant by the DDIT/ADIT(Inv)- 1(1), FAIU, Mumbai which was once again complied by the appellant within the due time. 3. Thereafter notice u/s. 43 of the Black Money Act, 2015 bearing DIN and Notice No. ITBA/COM/F/17/2023-24/1056539761 (1) dated 26/09/2023 was issued to the appellant in response to which all the detail called for were duly submitted to the officer. During the co....
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....ted. With regards to the life insurance policy from RL. 360 Life Insurance Company (ISLE OF MAN), it is submitted that the appellant was neither a beneficiary nor an investor of the same. The said life insurance policy was purchased by appellant's relative and premium of the policy was also paid by them. With regards to the life insurance policy from Zurich International Life Limited, it is submitted that the appellant had bought one life insurance policy in year 2010 from the foreign currency used to carry during his foreign visit since his job involved travelling to various countries and also had considerable risks. For the said policy, the last premium was paid by the appellant in 2014. All the documents substantiating the above facts were also provided to the AO. Copy of the submission filed on 09.11.2023 is enclosed herewith as Annexure 1. However, the AO ignored the above facts and proceeded to levy a penalty of Rs. 10 Lacs for AY 2016-17 to 2022-23 for non-disclosure of assets in Schedule FA of the ITR. 2. Thereafter, with regards to allegation made in the impugned order that the alleged investment in RL 360 Life Insurance Company (ISLE OF MAN) and Zurich Intern....
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....policies. 1. Thus, the allegation levied against the appellant, that the appellant has failed to disclose the investments made in RL 360 Life Insurance Company (ISLE OF MAN) or Zurich International Life Limited in return of income does not hold good. It is submitted that the same does not amount to non-disclosure of information about an asset located outside India in accordance with the provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and hence we humbly request your goodself to quash the impugned order passed u/s 43 of the Black Money Act, 2015 and delete the penalty amounting to Rs 10,00,000/- passed for each assessment year i.e AY 2016-17 to AY 2022-23. 2. Without prejudice to above, it is submitted that even if any penalty is to be levied, the same should be restricted to Rupees Ten Lakhs for one assessment year only as the learned assessing officer is alleging the same offence in multiple years. It is humbly submitted that levying a penalty on multiple occasions for the alleged offence would cause great prejudice to the appellant, especially when the appellant does not have any beneficial inte....
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....requirement is the ownership/beneficial ownership of a foreign asset. In this case, the said investment in RL360 Life Insurance Company is undisputedly in the name of the appellant and the appellant is the primary or the legal owner of the same. Regardless of the sources of investment, the appellant being the primary/legal owner has the responsibility to disclose the same in Schedule FA of the return of income. This onus is further clearly established in Circular No 13 of 2015 dated 06.07.2015 issued by CBDT wherein it has been clarified that even of the foreign investment is out of disclosed sources. reporting in Schedule FA is still to be done. It is also worthwhile to mention here that the said Circular was available to the appellant at the time of filing of his return of income. Thus, there has been a default on the part of the appellant in not reporting the investments in RL360 Life Insurance Company (Isle of Man) since the appellant is the primary and the legal owner and the said asset is in existence for the calendar year relevant to the instant assessment year. 7.9 As regards the investment in various accounts of Zurich International Ltd (Branch UAE) the appellant ....
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....separately for each of the assessment years. 7.11 In my view, for the purpose of section 43 of the BMA, there is no onus on the AO to demonstrate that the funds or assets in these accounts were owned by the assessee or beneficially owned by him. Section 43 of the Act has two limbs with respect to non-disclosure - the first being failure to furnish any information sought in the return filed under section 139(1) and second being furnishing of inaccurate particulars in such return relating to any asset located outside India, held by him as a beneficial owner or otherwise or in respect of which he was a beneficiary, or in relation to any income from a source located outside India. The term "fails to furnish any information" is sufficient to include in its ambit non-disclosure of a foreign asset. Also, even if the disclosure is made, furnishing of inaccurate particulars about a foreign asset also would make the assessee liable for penalty u/s 43 of BMA. In the present case, it was mandatory for the appellant to disclose the foreign assets accurately in the return. The mandate to file such information was introduced in the Income Tax Act from AY 2012-13 onwards and it is noted t....
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....legal obligation to furnish true and correct particulars of investment in foreign assets in his name in schedule FA of the ITR, which has not been done by the assessee. 7.16 In light of the above discussion, I am convinced that the AO has exercised his discretion in a judicious manner and is correct in proceeding to levy the penalty under section 43 of the BMA. The proper procedure has also been followed by the AO and the penalty order has been passed well within the limitation period allowed as per law. The action of the AO in levying penalty is thus upheld. This ground of appeal raised by the appellant are decided against him and stand dismissed." 10. The Assessee, being aggrieved with the decision of the Ld. Commissioner in affirming the levy of penalty to the tune of Rs. 10,00,000/-, challenged the same by filling instant appeal and more or less, has claimed as under: "That the Assessee before both the authorities below had offered clarification with regard to the life insurance policy from RL 360 Life Insurance Company (Isle of Man) that he is neither holding any investment in such alleged company nor he is a beneficiary or invested any amount in such comp....
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....sessee has not provided directly or indirectly consideration for the asset in the immediate future benefit direct or indirect of himself of any other person, hence explanation 4 cannot be applied. Similarly, as the Assessee has not derived any benefit during the year under consideration from the said policy, therefore, the explanation 5 would also not be applicable. As both the explanations are not applicable and therefore the Assessee was not required to disclose such assets in the form of insurance policies in the return of income for the assessment year under consideration. 14. The Assessee, further submitted two documents, one which relates to the policy summary of Zurich International Life Limited, UAE, wherefrom it clearly appears that said life insurance was taken on 01.09.2010 and the last premium was paid on 24.03.2014. From the policy summary, as on 04.07.2024, it appears that the same has already been lapsed for non-payment of premium. 15. With regard to the life insurance policy from RL 360 Life Insurance Company (Isle of Man), the Assessee has submitted an undertaking certificate/declaration dated 31.10.2022 issued by Mr. Zahid Kothari, who has stated that he is ....
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....parties and perused the material available on record. From the aforesaid facts and circumstances, it is clear that the AO had received the information to the effect that the Assessee had two investments, on account of insurance policies of two companies namely: (1) Zurich International Life Limited, UAE (2) RL 360 Life Insurance Company (Isle of Man), but has not disclosed such foreign assets in the Schedule FA, which was introduced in the return of income from A.Y. 2012-13 vide Finance Bill, 2012 and therefore in view of the provisions of section 43 of the BMA, the penalty proceedings u/s 43 of the Act were initiated and consequently the Assessee was show caused. The Assessee in response to show cause by filing his reply has claimed that life insurance policy from RL 360 Life Insurance Company (Isle of Man) though stood in the Assessee's name, however, the said policy was procured/purchased by the brother in law of the Assessee (Mr. Zahid Kothari) in order to secure the life of his sister, as the Assessee used to carry foreign visits frequently and consequently all the insurance premiums have been paid by Mr. Zahid Kothari. The Assessee never paid any premium of such policy. Mr. Z....
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....y mis-happening /causality and the Assessee neither purchased this policy nor paid any premium for the same. If that is the case so, then in our considered opinion, the Assessee cannot be held as beneficial owner or beneficiary of the policy, as the Assessee's wife was inducted as a beneficiary and therefore the liability on the Assessee for imposing the penalty, cannot be fastened. And therefore, considering the peculiar facts and circumstances in totality, we are inclined to delete the penalty imposed qua insurance policy obtained from RL 360 Life Insurance Company (Isle of Man), however, subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy. 21. Coming to second life insurance policy of Zurich International Life Ltd. - Branch (United Arab Emirates), the Assessee has claimed that since Assessee's job had involved travelling to various countries and had also considerable risks and therefore, the said policy was bought by the Assessee in the year 2010. Somehow the said policy lapsed after 2014 and therefore the same ceased to be an asset and thus there was no requirement to disclose such asset in a FA Schedule of ITR. The ....
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....ee, the alleged proceedings were carried out under Black Money Act, 2015. So, this fact also remains uncontroverted that the value of the alleged investments received by the assessee in India has already been subjected to Income tax and taxing the same amount under the Black Money Act, 2015 will tantamount to double taxation. 16. Under these given facts and circumstances of the case, we are of the considered view that since the necessary condition to hold a particular foreign asset as undisclosed foreign asset located outside India as provided u/s 2(11) of Black Money Act, 2015 remained to be fulfilled, ld. AO was not justified in invoking the provisions of Black Money (UFIA) And Imposition of Tax Act, 2015 to make an addition in the hands of the assessee at Rs. 1,08,01,726/-. We, thus, reverse the finding of ld. CIT(A) and delete the addition made in the hands of the assessee and allow ground nos. 1 to 5 raised by the assessee in the instant appeal." 23. Coming to the judgment passed by the Tribunal in BMA no.1 to 3/M/2023 decided on 09.08.2023 as relied on by the Ld. DR, we observe that in this particular case, the Assessee along with her husband has made a joint inve....