TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1055
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....n 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ('BM Act' for short). This is on account of the fact that the appellant-assessee's have failed to disclose in their Return of Income (RoI) for the relevant assessment year 2020-21, the foreign investments with Avestar Global Opportunities SPC (Cayman Islands) in foreign assets schedule (Schedule FA). It is necessary to note that the requirement of such disclosure of foreign assets/investment in Schedule FA was introduced since assessment year 2012-13 by Finance Act, 2012 in order to track the foreign assets and income generated thereon in foreign jurisdictions of the Indian residents. Section 43 of the BM Act prescribes for a penalty of Rs. 10 lacs in the event of failure by the assessee to disclose the foreign investment in Schedule FA. 3. The Assessing Officer ('AO' for short) in these cases issued a show cause notice dated 21.03.2023 in compliance of Section 46 of BM Act. The assessee's filed their reply. It was not disputed that the assessee's had invested in Avestar Global Opportunities SPC (Cayman Islands). However, it was contended that the investment was made out of tax paid i....
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....ioned ground or grounds of appeal, which are without prejudice to each other, as and when an occasion may arise at the time of hearing" 6. When the matter came up before the Division Bench on 22.01.2024, the Bench noticed that there are conflicting decisions of co-ordinate Benches on the interpretation to be placed on the provisions of Section 43 of the BM Act, particularly with regard to the nature of the word "may" as used in Section 43 of the BM Act. The Division Bench has noticed two sets of orders in para 5.2(d) (in favour of the assessee holding that it is discretionary to impose penalty) and para 5.3(d) (in favour of Revenue holding that it is mandatory/automatic). In that view of the matter, the Division Bench vide order dated 17.04.2025 had required the matter to be referred to a Special Bench broadly setting out the contours of the dispute as to interpretation of the provisions contained in Section 43 of the BM Act in para 5.9 (A) to (D) of the order dated 17.04.2025. 7. The President, in his discretion, has placed the above referred issue before the Special Bench vide order dated 01.08.2025. 8. In this case, Mr. Pascal Postel (Appellant in BMA Nos. 7 to 12/CHNY/....
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....eading of the section itself would indicate that the decision to impose penalty is discretionary in nature and not mandatory or automatic. 13. The learned counsel has placed reliance on the following decisions :- i) Hindustan Steel Ltd. vs State of Orissa, 83 ITR 26 (SC) ii) ACST vs Ankit International, (2011) 46 VST 1 (Bom) iii) CIT vs Ask Enterprises, 230 ITR 48 (Bom) iv) Vidarbha Industries Power Ltd. vs Axis Bank, (2022) 8 Supreme Court Cases 352 14. It is submitted that this Tribunal in the following decisions granted relief to the assessee's :- i) CIT(OSD) Central vs Shrem Alloys Pvt. Ltd., BMA No. 8/Mum/2023 to 11/Mum/2023, common order dated 29.08.2023 ii) Addl. Commissioner of Income Tax vs Mr. Manoj Mahendrakumar Pandya, BMA No. 6/Mum/2024, common order dated 26.06.2024 iii) Assistant Commissioner of Income Tax vs Rohit Krishna, BMA Nos. 36/MUM/2024 to 40/Mum/2024, common order dated 27.11.2024 iv) Prasad Nimmagadda vs Director of Income Tax, BMA No. 2/Hyd/2024, common order dated 16.01.2025. 15. The learned CIT-DR has submitted that the BM Act was enacted with the specific legislative intent....
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....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 of ten lakh rupees: Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees. Explanation- The value equivalent in rupees shall be determined in the manner provided in the Explanation to section 42." (Emphasis supplied) 18. The question is whether such non-disclosure would automatically lead to imposition of penalty or whether there is discretion in the AO to waive imposition of penalty in the appropriate circumstances. It is trite that charging/penal provisions of a taxing statute have to be construed strictly. Eve....
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....nts audited and failure to furnish a copy of such report within the time prescribed. In the context thereof, the Bombay High Court held as under :- "9. The imposition of a penalty in sub-section (2) of section 61 is not mandatory. The Commissioner has been conferred with the discretion to determine as to whether a penalty should or should not be imposed, if a dealer who is liable to get his accounts audited under sub-section (1), fails to furnish a copy of the report within the time prescribed. The Legislature has provided that the Commissioner "may" impose a penalty after giving the dealer a reasonable opportunity of being heard. The use of the word "may" is clearly suggestive of the fact that imposition of a penalty is not mandatory. The legislative intent has been emphasized in the requirement of furnishing to the dealer a reasonable opportunity of being heard before a penalty is imposed. The fact that the Legislature contemplated an opportunity of being heard is indicative of the intent of the Legislature that the explanation which the dealer may have, has to be considered before the Commissioner determines as to whether penalty should be imposed. That the imposition o....
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....de mistake. A perusal of para 6 of the order would indicate that this Tribunal found that the claim about there being bona fide mistake went unsubstantiated. In that view of the matter, the appeal filed by the assessee challenging the imposition of penalty came to be dismissed. In the first instance, we find that the case is distinguishable inasmuch as on facts it was found that the claim of assessee that non-reporting was out of a bona fide mistake was unsubstantiated. In other words, the assessee had failed to establish that there was a bona fide mistake in the non-reporting of the investment in Schedule FA. This finding has been recorded by the Bench after reproducing the break-up of the total investment and the amount which was actually reported. This Tribunal found that even insofar as the investment in his own name of Rs. 5,50,44,320/- is concerned, assessee only reported an amount of Rs. 3,91,04,805/-. It was in these circumstances found that the assessee had furnished inaccurate particulars of investment in his own name and there was altogether non-reporting of the investment made in the name of the children. That apart, we find that the Division Bench had no occasion to co....
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....stantiate that the Assessing Officer has exercised his discretion extravagantly. The Assessing Officer after examining the facts of the case, formed his opinion to levy penalty. The Assessing Officer exercised his discretion judiciously. No material is brought before us to show that Assessing Officer levied penalty under section 43 of BMA in an arbitrary and unjustified manner. The contention that the assets are not undisclosed assets may be factually true, but penalty under section 43 is levied for non-reporting of overseas investments and not for making investments from unaccounted money. The provisions of section 43 does not provide any room not to levy penalty even if the foreign asset is disclosed in books since the penalty is levied only towards non-disclosure of foreign assets in schedule FA. In the light of these discussions we see no infirmity in the order of CIT(A) confirming levy of penalty under section 43 of the BMA for non disclosure of foreign assets in the return of income filed by the assessee. Accordingly, appeals of the assessee for all assessment years i.e. 2016-17 to 2018-19 are dismissed." (Emphasis supplied) 26. It can thus clearly be seen that even the....