TaxTMI 
TaxTMI 
2026 (6) TMI 83
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....appellant had earned salary income in Sweden during the relevant previous year, which was not disclosed in the return of income. Based on this information, proceedings were initiated under the provisions of the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 (BMA). A summons under section 131(1A) of the Income-tax Act was issued on 25.01.2022 calling for details of the foreign salary. The appellant, however, did not admit or disclose the foreign salary amounting to Rs. 2,88,618/- (SEK 36,372) earned in Sweden. Thereafter, a notice under section 10(1) of the BMA dated 30.03.2023 was issued, to which the appellant failed to furnish any reply. Consequently, the Assessing Officer (AO) passed an order under section 10(3) of the BMA treating the said amount as "undisclosed foreign income" under section 4(1)(a) of the Act. 3. On appeal before the CIT(A), the appellant submitted that the salary earned in Sweden had been credited to a bank account maintained with Nordea Bank, Sweden. It was contended that such bank account constitutes a foreign "asset" and, therefore, in terms of the proviso to section 3 of the BMA, the same should be taxed only in the year in which it came....
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....n Sweden constituted "undisclosed foreign income" within the meaning of section 4(1)(a) of the BMA.The AO further held that since the income was not disclosed in the return of income, the provisions of the BMA were attracted. Consequently, the AO brought the amount of Rs. 2,88,618/- to tax under section 10(3) of the BMA and completed the assessment accordingly. 6. The ld.CIT(A) examined the assessment order, grounds of appeal, and written submissions filed by the appellant and recorded the following findings: A. Validity of Notice and Order: The contention of the appellant that the notice under section 10(1) and the order under section 10(3) were unsigned was rejected. On verification, it was found that the documents bore valid manual signatures of the AO. B. Taxability of Undisclosed Foreign Income: The ld. CIT(A) held that the appellant had admittedly earned salary in Sweden during the relevant previous year and had failed to disclose the same in the return of income. Therefore, the AO was justified in invoking the provisions of the BMA and bringing the said income to tax. C. Whether Foreign Bank Account Constitutes an Asset: ....
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....nal. 7. The ld.AR for the assessee has filed the following written submissions: The admitted facts are that the appellant, a salaried employee in TCS, for the Asst. Years-2016-17 & 2018-19, filed the return of income in ITR-1, that the income earned by way of salary in Sweden was not admittedly included. Consequent to issue of notice u/s. 10(1) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015- hereinafter referred as BMA, the assessment was completed by independent orders u/s. 10(3) dt.29-01- 2025 for the above two years, determining the undisclosed foreign income at Rs. 2,88,618/- and Rs 6,58,738/- respectively. During the course of First Appellate Proceedings, the appellant filed submissions on two occasions-copies attached- and they are as under. First Submission- filed on 14-10-2025. In the said submission, the appellant challenged that the taxability of the salary income earned in Sweden on the ground that the bank account in Sweden shall be called an asset and hence the income credited therein should have been taxed in the year in which it had come to the knowledge of the Assessing Officer....
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....iew of the above, the initial question to be adjudicated is whether the above account of the appellant, in Sweden, shall be called an ASSET? The ITAT, Mumbai, after a detailed analysis, held that the such bank account is an asset, in the decision in Appeal Nos. BMA Nos.3 & 5/MUM/2021 dt.02.11.2021. The ITAT, Kolkata in BMA Nos.4 to 12/KOL/2024 dt. 23.12.2024 held as under: Section 2(12) of the Black Money Act, 2015 defines "undisclosed foreign income and asset", as per which it will be the total amount of undisclosed income of assessee from a source located outside India and the value of undisclosed asset located outside India as referred to in section 4. It is to be noted that "undisclosed foreign income" has not been singularly defined in the Black Money Act, 2015. Either as per the definition u/s. 2(12) of the Act or as per the provisions of section 4 of the Black Money Act, 2015, the "undisclosed foreign income and asset" have to be taken together for the purpose of assessment for the purpose of assessment u/s. 10 of the Black Money Act, 2015. The collective reading of the aforesaid provisions along with section 3 of the Black Money Act, 2015 would re....
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....iscal year concerned: and (b) the remuneration is paid by. or on behalf of. an employer who is not a resident of the other State: and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Where a resident of Sweden derives remuneration in respect of an employment exercised aboard an aircraft operated in international traffic by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), such remuneration shall be taxable only in Sweden. ' Now, the point to be considered is whether the appellant is saved by the DTAA mentioned above? Before going into this, the following are to be considered first. a. The appellant is a resident of a Contracting State, which is India. b. The employment has been exercised in the Other Contracting State, which is Sweden. Hence, remunerat....
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....t, 1961 (IT Act) on 05.07.2016, declaring total income of Rs. 3,08,130/- from sources in India. ii. Information received from the Additional Director of Income Tax (Investigation). Coimbatore, revealed that the Appellant had earned salary income of SEK 36,372 (equivalent to Rs. 2,88,618/-) from M/s. Tata Consultancy Services Sverige AB (TCS Sweden) during March 2016, while on deputation/exercise of employment in Sweden. iii. This foreign salary income was credited to the Appellant's bank account with Nordea Bank in Sweden (A/c No. 1108000002042714) and was not disclosed in the Appellant's Indian income-tax return. iv. Summons under Section 131(1A) of the IT Act were issued on 25.01.2022, seeking details of the foreign salary, bank statements, and tax payments. The Appellant did not fully comply or disclose the income. v. The Appellant's residential status for FY 2015-16 was determined as "Resident" under Section 6 of the IT Act, with 318 days in India, making her liable to tax in India on global income under Section 5(1) of the IT Act. vi. A notice under Section 10(1) of the BMA was issued on 30.03.2023, treating the salary a....
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....city and merit. Ground No. 2: The Ld. First Appellate Authority grossly erred in violating the principle of natural justice, by not providing copies of the notices and assessment order, challenged by the appellant on account of NO SIGNATURE. i. The Revenue denies any violation of natural justice. The CIT(A) issued hearing notices and provided opportunities for submissions. The Appellant filed written submissions on multiple occasions, which were duly considered and reproduced in the order (paras 4.1, 4.2, and 5.1 of the CIT(A) order). ii. Regarding signatures: The Appellant contends that the notice under Section 10(1) dated 30.03.2023 and the assessment order dated 29.01.2025 were unsigned. However, the CIT(A) examined copies furnished by the AO and confirmed they bore manual signatures (para 5.4 of CIT(A) order). The Appellant provided no contrary evidence, and the objection appears to be based on conjecture. iii. If copies were not provided during appellate proceedings, the Appellant could have requested them, but no such request is recorded. The Appellant participated fully without demonstrating any prejudice. Principles of natural justice req....
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....overned by the India-Sweden DTAA, which is pari materia but applied to different facts. b. No evidence was provided by the Appellant that the salary was taxed in Sweden or that foreign tax credit was claimed The Appellant did not respond to notices or disclose the income, making it "undisclosed" under Section 4(1)(a) of the BMA. c. Article 15 of the India-Sweden DTAA provides concurrent rights: Remuneration "may be taxed" in Sweden if employment exercised there (para I), subject to conditions in para 2. Since the employer is a Swedish resident, para 2(b) fails, reverting to para I's permissive taxing right for Sweden, but India retains primary right as the residence state. Relief is via credit under Article 24, which requires disclosure (not done here). d. The BMA is a special law for undisclosed foreign income, overriding the IT Act where applicable (Section 71 of BMA). Non-disclosure triggers BMA taxation, irrespective of DTAA benefits under the IT Act. iii. The CIT(A) correctly distinguished the case (para 5.6.4), noting different treaty provisions and factual matrix (no proof of Swedish taxation or double taxation here). While the decisio....
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....x such income rests with Sweden. The expression "may be taxed" has been judicially interpreted to mean that where the source State is granted the right to tax, and the conditions of the treaty indicate attribution to that State, the residence State must grant relief so as to avoid double taxation. Further, section 90(2) of the Income-tax Act provides that the provisions of the DTAA shall prevail where they are more beneficial to the assessee. In the present case, applying the DTAA, the income is not chargeable to tax in India. If the income itself is not chargeable under the Act read with the DTAA, the same cannot be brought to tax under the BMA. Effect of Non-disclosure: The Revenue has emphasized non-disclosure by the assessee. While non-disclosure may trigger proceedings, it cannot create a charge of tax where none exists in law. The BMA is a machinery and charging statute for taxing undisclosed foreign income. However, it cannot override the provisions of section 90(2) of the Income-tax Act and the binding effect of DTAA. Where income is not chargeable to tax in India by virtue of DTAA, it cannot be treated as "undisclosed foreign income" merely because it was not reporte....