TaxTMI 
TaxTMI 
2025 (10) TMI 1446
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....Rs. 10,00,000/- levied by the Ld. DDIT (Inv.). 3. The appellant craves leave to add, alter, amend, substitute and/or modify, withdraw all or any of the foregoing grounds of appeal." BMA No. 5/ Mum/2023; AY.2017-18 "1. The learned CIT (A) erred in upholding the penalty order passed by Ld. DDIT (Inv.) u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA) levying penalty of Rs. 10,00,000/- 2. The learned CIT (A) ought to have held that the penalty order passed by the Ld. DDIT (Inv.) in contravention of the provisions of the BMA Act and CBDT Circular/Instructions is invalid and bad in law. 3. The learned CIT(A) has erred in not deleting penalty of Rs. 10,00,000/- levied by the Ld. DDIT (Inv.). 4 The appellant craves leave to add, alter, amend, substitute and/or modify, withdraw all or any of the foregoing grounds of appeal." BMA No. 6/ Mum/ 2023; AY.2018-19 "1. The learned CIT (A) erred in upholding the penalty order passed by Ld. DDIT (Inv.) u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ('BMA') levying pen....
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....ii. Jute Corporation of India Ltd. vs. CIT [187 ITR 688] (SC); iii. Ahmedabad Electricity Co. Ltd. vs. CIT [199 ITR 351 (Bom) (FB)] 4. In this regard, our reference was drawn to the penalty order passed by the DDIT(Inv.)-6(1), Mumbai, dt. 04-12-2021, pertaining to AY. 2016-17. It was submitted that consequent to the order passed by the Pr.DIT(Inv.)-(2), Mumbai, vide order dt. 16-09-2020, granting concurrent jurisdiction to DDIT(Inv.)-6(1), Mumbai under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as "Black Money Act"), the DDIT(Inv.)-6(1), Mumbai assumes jurisdiction and thereafter, issued notices u/s. 8(1) of the Black Money Act, which was responded to by the assessee vide letters dt. 30-09-2020 and 09-10-2020 and thereafter, a show cause was issued to the assessee as to why penalty of Rs. 10 lakhs should not be levied in his case in accordance with Section 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 for the AY. 2016-17 for not disclosing his beneficial ownership of the foreign asset i.e., shareholding in Manquist Holdings Pte. Ltd. (Singapore Entity) and M....
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....ence was drawn to the said guidelines and the relevant part thereof reads as under: "3. Concurrent jurisdiction only for the purposes of the BM Act: The aforesaid Notification in respect of concurrent jurisdiction of DDIT (Inv.)/ADIT(Inv.) to exercise the powers and functions of AO is only for the purposes of the BM Act ie. only to the extent of issues pertaining to undisclosed foreign asset/income of a person and it does not cover issues under the Income-tax Act, 1961. The issues under the Income-tax Act shall continue to be dealt-with as per the existing provisions and the guidelines. 4. Concurrent jurisdiction only to DDIT (Inv.)/ADIT(Inv.) investigating an undisclosed foreign asset/income case: In pursuance of the aforesaid Notification of the CBDT, concurrent jurisdiction of AO is to be assigned only to that particular DDIT(Inv.)/ADIT(Inv.) who is investigating issues pertaining to undisclosed foreign asset/income of a person. Therefore, the competent authority [DGIT(Inv.)/ Pr.DIT(Inv.)] is required to pass the order assigning concurrent jurisdiction of AO to specific DDIT(Inv.)/ADIT(Inv.) in the specific case. No general order is intended to be passed. The s....
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....er section 10(1) of the BM Act: Though no statutory time limit for issuance of notice under section 10(1) is specified under the BM Act, wherever the conditions of para 6(a) to 6(c) above in respect of issuance of notice under section 10(1) are satisfied, AO is required to issue the notice preferably within 30 days from the end of the previous year in which such information was received by him/ came to his notice. However, if the notice is not issued within the period of 30 days, reason thereof is to be recorded in writing by AO concerned, to be duly approved by Pr.DIT/Pr.CIT concerned. It is important to note that as per section 11(1) of the BM Act, the assessment under the BM Act is to be passed within 2 years from the end of the financial year in which notice under section 10(1) was issued by the AO. 9. Stage of sharing information with ED (Enforcement Directorate) for action under PMLA: Section 88 of the BM Act has included the offence of willful attempt to evade any tax, penalty or interest referred to in section 51 of the BM Act as a Scheduled Offence for the purposes of PMLA which may lead to separate action under PMLA in appropriate cases, besides action under the ....
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....tions filed, recovery, appeals and other actions under the BM Act would be expeditiously handled by the regular AO, and DDIT(Inv.)/ ADIT(Inv.) concerned would not exercise the powers and functions of AO in respect of such further proceedings. It is also clarified that where DDIT(Inv.)/ ADIT(Inv.) is investigating a case involving undisclosed foreign income/asset, the regular AO would not exercise the powers and functions of AO w.r.t. assessment and prosecution for the offences under the BM Act. The DDIT(Inv.)/ ADIT(Inv.) concerned would send the case to regular AO along with relevant case records within 30 days of completion of the last envisaged action. While sending, important issues to be followed up should be clearly indicated. Further actions in respect of that case under the BM Act would be taken by the regular AO. 16. Penalty under the BM Act: The ADIT(Inv)/ DDIT(Inv) in the capacity of AO may initiate and pass necessary penalty order wherever approval of JCIT is not required. After passing the penalty order the same should be sent to the regular AO for the purposes of demand notice etc, entering the particulars in relevant registers, recovery and other follow up ac....
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....diction of the DDIT (Inv), Unit 6(1), Mumbai as raised by way of the additional ground has been vague and unclear until the date of the final hearing dated 5 May 2025 before this Hon'ble Tribunal. The advocate for the Assessee has only then clarified that the DDIT (Inv) does not have the requisite jurisdiction as per Para 15 and 16 of the Guidelines dated 23 January 2018. 2. In the Assessee's letter dated 2 April 2024, it is stated that the penalty order passed by the DDIT (Inv) Unit 6(1), is not in accordance with the CBDT guidelines dated 23 January 2018. a. Firstly, this contention is not an issue relation to jurisdiction but an issue relation to the merits of the penalty order. b. Secondly, the contention raised by the Assessee in the said letter and the additional ground of appeal sought to be raised have no correlation. c. Thirdly, the relevant circular in relation to concurrent jurisdiction is the CBDT Notification No. 39 of 2017 dated 16 May 2017. The CBDT Circular of 23 January 2018, only provides for guidelines for handling cases under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (herei....
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....nd perform the functions of a tax authority under this Act in respect of any person within his jurisdiction. (3) Subject to the provisions of sub-section (4), the jurisdiction of a tax authority under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning the concurrent jurisdiction) or under any other provision of that Act. (4) The tax authority having jurisdiction in relation to an assessee who has no income assessable to income-tax under the Income-tax Act shall be the tax authority having jurisdiction in respect of the area in which the assessee resides or carries on its business or has its principal place of business" 7. Thus, the DDIT (Inv) Unit 6(1), Mumbai, derives lawful jurisdiction under the framework of these provisions. Compliance with notifications governing jurisdiction (a) CBDT Notification S.O. 1590(E) dated 16 May 2017 (Annexure A): 8. This notification defines the territorial jurisdiction under the Black Money Act and establishes that the Municipal Corporation of Greater Mumbai and Navi Mumba....
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....the Ld. DDIT (Inv.) Unit 6(1) arises from the Notification S.O. 1590(E) dated 16 May 2017 and not from the guidelines as set out in this Notification. 11. Paragraph 9 of the CBDT Notification F.No 414/134/2015-IT (Inv.I) (Pt) dated 23 January 2018 is reproduced for ease of reference as follows: "9. Stage of assigning concurrent jurisdiction of AO to DDIT (Inv.)/ADIT (Inv.) concerned by DGIT(Inv.)/Pr.DIT(Imv): Where the conditions of para 6 above are satisfied and either notice under section 10(1) is to be issued or inquiry under section 8 of the BM Act is to be initiated, DGIT(Inv.)/Pr.DIT(Inv.) concerned is required to assign concurrent jurisdiction of AO 10 DDIT (Inv.)) ADIT (Inv) concerned in accordance with these guidelines, before issuance of the notice or initiation of the inquiry, as the case may be. Further, pursuant to assignment of concurrent jurisdiction of AO to DDIT (Inv)/ADIT(Inv.) concerned, AO and DDIT(Inv.) /ADIT(Inv.) would be the same officer and therefore, for the purposes of section 10 of the BM Act, date of assigning concurrent jurisdiction of AO to DDIT (Inv.)/ADIT(Inv.) concerned by the respective DGIT(Inv.)/ Pr.DIT(Inv.) would be the date ....
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.... 15. Therefore, the penalty imposed under Section 43 is a direct consequence of the Assessee's failure to comply with the disclosure requirements under the Black Money Act, 2015. Jurisdictional objections raised by the Assessee cannot vitiate the findings of deliberate concealment and failure to disclose foreign income/ assets. Interpretation of Guidelines of CBDT dated 23 January 2018 16. It is submitted that with a view to create a more expeditious and efficient administrative framework for the implementation of the Black Money Act, and to achieve the intended objectives, the CBDT issued Guidelines for handling cases under the Black Money Act. These guidelines are issued to harmonise jurisdictional assignments and they do not override the substantive provisions of the Black Money Act or the 16 May 2017 Notification cited hereinabove. 17. Section 46(1) of the BM Act empowers the DDIT(Inv) to impose penalties, and Section 46(4) mandates approval of the Joint Commissioner of Income Tax (JCIT) before passing a penalty order. In the present case, the DDIT(Inv), having been assigned AO powers under the Notification dated 16 May 2017, clearly has ....
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....inforced by the Orders dated 16 September 2020 and 3 December 2021. 25. Where there is no challenge to the inherent jurisdiction of the authority, any procedural objection raised by the Assessee does not go to the root of jurisdiction. Furthermore, the Assessee was duly served with the penalty proceedings, participated in the same without raising any jurisdictional objection, and was provided opportunities to be heard. Such conduct amounts to acquiescence and constitutes a waiver against any purported challenge to the jurisdiction. Approval of JCIT/ JDIT under the Black Money Act 26. It is submitted that approval has indeed been granted by the Additional Director of Income Tax on 3 December 2021 who is senior in rank to the Joint Commissioner of Income Tax (Annexure C). 27. As per Section 116 of the Income Tax Act, which applies mutatis mutandis to the Black Money Act by virtue of Section 6 thereof, both the Joint Commissioner and the Additional Commissioner/Director fall under the category of supervisory authorities and the Additional Director is senior in rank to the JCIT. 28. Further, Under Section 2(15) of the Black Money Act, refere....
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....ssee has been issued a show cause notice and given an opportunity to be beard; c. The Assessee has participated in the proceedings without raising any such objection previously. 35. While Section 46(4) mandates approval from the Joint Commissioner of Income Tax, it does not prohibit approval from a higher authority. In the present case, approval has been duly obtained from the Director of Income Tax, a higher ranking officer. 36. The Guidelines issued by CBDT must be read in harmony with the Black Money Act itself and interpreted in a manner that furthers its object rather than defeating it on hyper-technical grounds. Approval by a superior authority satisfies the legislative intent and provides even greater administrative scrutiny. Therefore, the JCIT approval, as alleged, is not prohibited, and due compliance with statutory requirements stands established. Waiver of jurisdictional objection by participation 37. In any case, it is submitted that the Assessee has actively participated in the proceedings without raising any jurisdictional objection at the earliest opportunity and has thereby waived their right to challenge jurisdiction at....
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....he CBDT are binding on the departmental authorities have already been submitted. It was further submitted that inspite of assessee participating in the penalty proceedings, the jurisdictional objections can be raised at any stage and there is no estoppel against the law. It was submitted that there is no parallel provision like section 124(3) of the Income Tax Act in the Black Money Act and Section 84 of the Black Money Act doesn't incorporate section 124 of the Income Tax Act. It was further submitted that as per para 16 of the CBDT Circular, the DDIT is not authorized to pass a penalty order where approval of JCIT is required. It was submitted that in the written submissions so filed, it has been accepted that the CBDT Circular distributes responsibilities of the regular AO and DDIT to avoid overlap or conflict between the tax authorities for administrative convenience but at the same time, they are binding on the authorities. It was further submitted that the interpretation suggested by the assessee do not run contrary to section 46 of the Black Money Act. It was submitted that section 46 empowers the tax authority to levy penalty. As per Section 6 of the Black Money Act, bo....
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....he DDIT (Inv.), Unit 6(1), Mumbai to determine whether he has the jurisdiction to pass the penalty order under section 43 of the Act in the facts and circumstances of the present case where penalty exceeds Rs 5 lacs. And where ultimately, it is determined that the DDIT (Inv.), Unit 6(1), Mumbai doesn't have the jurisdiction to pass the penalty order under Section 43 of the Black Money Act, the same goes to the root of the matter and fundamentally effect the very action on part of the DDIT (Inv.), Unit 6(1), Mumbai and where the DDIT (Inv.), Unit 6(1), Mumbai was oblivious about the same, the assessee cannot be prevented from raising the same before the Tribunal for the first time even though the same has not been taken up before the DDIT (Inv.), Unit 6(1), Mumbai or before the Ld. CIT(A). It is a settled position that there cannot be any estoppel against the law. The Hon'ble Supreme Court in case of NTPC (supra) has held that "under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expres....
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....Income Tax (Inv.)-2 to further authorize Dy. Director of Income Tax to exercise concurrent powers and performs the function of AO and pursuant to such powers, the Principal Director of Income Tax (Inv.)-2, Mumbai has authorized the Dy. Director of Income Tax (Inv.), Unit-6(1) to exercise concurrent powers and functions of an AO in case of the assessee. Here, it is also relevant to note that the said authorization to exercise concurrent powers and perform functions of an AO is qua the assessee and not qua the assessee for a particular assessment year. Therefore, as far as all the impugned assessment years under consideration are concerned, the Dy. Director of Income Tax (Inv.), Unit-6(1), Mumbai has the necessary authorization to exercise the concurrent powers and perform functions of an AO in the case of the assessee. 13. At the same time, what is equally relevant to note is that there are guidelines issued by the Central Board of Direct Taxes dt.23-01-2018 which have evidently been issued well before the grant of the concurrent powers to Dy. Director of Income Tax (Inv.), Unit-6(1). The said guidelines talks about handling cases under the Black Money Act and it has been provide....
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....ber 2020 and the whole process of grant of concurrent jurisdiction thus aligns with the CBDT guidelines. 16. In para No.3 of the said guidelines, it has been provided that notification dt. 16-05-2017 empowering the Dy. Director of Income Tax (Inv.), /Principal Director of Income Tax (Inv.) to assign the concurrent jurisdiction of AO to DDIT(Inv.)/ADIT(Inv.) is to exercise the powers and functions of the AO only for the purposes of the Black Money Act i.e., only to the extent of issues pertaining to undisclosed foreign asset/income of a person and it does not cover issues under the Income Tax Act, 1961. 17. In Para No. 4 of the said guidelines, it has been further provided that the concurrent jurisdiction of the AO is to be assigned only to DDIT(Inv.)/ADIT(Inv.), who is investigating issues pertaining to undisclosed foreign asset/income of a person and, therefore, the competent authority is required to pass the order assigning the concurrent jurisdiction of AO to specific DDIT(Inv.)/ADIT(Inv.) in the specific case and no general order is intended to be passed. In the instant case, there is no dispute that the Pr. DIT(Inv.)-2, Mumbai has passed a specific order dated 16-09-2020....
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.... prompt references to relevant foreign jurisdictions and all these matter are not relevant for the present purposes. 21. Para No. 11 of the guidelines talks about the issuance of show cause notice and passing of the assessment order. It provides that before passing the assessment order, show cause notice would be issued by DDIT(Inv.)/ADIT(Inv.) and draft of the assessment order should be put up for administrative approval of the Addl. DIT(Inv.)/JDIT(Inv.) and pursuant to that, the assessment order should be passed. It provides that after passing the assessment order, the same should be sent to the regular AO for the purposes of demand notice etc., entering the particulars in relevant registers, recovery and other follow-up actions. The guidelines thus demarcates the powers and functions between the DDIT(Inv.)/ADIT(Inv.) and the regular AO where the former has to complete the required steps leading up to passing of the assessment order and thereafter, the matter has to be handed over to the regular AO for all subsequent action steps in terms of demand and recovery, etc. 22. Paras 12, 13 and 14 are in the context of prosecution proceedings under the Black Money Act which are no....
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.... the purposes of demand notice etc, entering the particulars in relevant registers, recovery and other follow up actions. It has been further provided that wherever required, the regular AO should initiate penalty proceedings under the Black Money Act (particularly u/s. 41 of the Black Money Act) immediately on receipt of the assessment order and relevant records and pass necessary orders, at the earliest possible, without waiting for disposal of appeals, etc. 26. On reading of the said guidelines, we find that as per para 16, it provides that ADIT(Inv.)/DDIT(Inv.) can initiate and pass penalty orders wherever approval of JCIT is not required. It thus carves out an exception to the earlier guidelines as per para 15 which lays down that it is the regular AO who can levy penalty and provides that only in a situation, approval of JCIT is not required before levy of penalty, the ADIT(Inv.)/DDIT(Inv.) can initiate and pass penalty orders. Further, except for the aforesaid exception, it emphasizes the earlier guidelines as laid down in para 15 that it is the regular AO who should initiate the penalty proceedings and pass the penalty orders. 27. In the instant case, penalty has been....
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.... approval of the Joint Commissioner or the Joint Director. In the instant case, it is not in dispute that the DDIT(Inv.), Unit-6(1), Mumbai has infact taken the necessary approval from the Add. DIT(Inv.) before levying the penalty. What has been disputed is the fact that it is only in a situation where the approval of Joint Commissioner of Income Tax or Add. DIT(Inv.) is not required, the DDIT(Inv.) in the capacity of the AO can initiate and pass necessary penalty order as per para No. 16 of the guidelines so laid down by the CBDT. In other words, the guidelines lays down the pecuniary jurisdiction of DDIT(Inv.) in terms of quantum of penalty which he can levy and that too, without seeking approval from JCIT/JDIT. Therefore, the exception so carved in para no. 16 of the guidelines doesn't apply in the instant case and DDIT(Inv.) couldn't have levied the penalty in the instant case amounting to Rs 10 lacs u/s 43 of the Black Money Act which is beyond his pecuniary jurisdiction and it is the regular AO who should have initiated and levied the penalty. 29. We therefore find that in para No. 15 and 16, the guidelines are clear to the effect that as far as matters relating to....
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....declared for the assessment year 1995-06. The case of respondent before the Tribunal was that the Department had decided not to have detailed scrutinies for the assessment year 1906-07 if the income dedared was at least 30% more than the income declared in 1995-96, therefore, the assessment itself was bad. The Tribunal accepted this contention. However, the learned Counsel for appellant submits that these instructions were not binding on the Tribunal or Court or were not available for execution to any Judicial authority. 4. There is no dispute about circular having been issued, which reads as under: "749A Scrutiny assessment guidelines for assessment year 1996-97. The Income-tax Department has decided not to select returns for the assessment year 1996-97 for detailed scrutiny if the total income declared is at least 30% more than the total income declared for the assessment year 1995-96. The following further conditions should be fulfilled: (a) the total income for both the assessment years should exceed the basis exemption limit: (b) the total income for the assessment year 1995-96 should not exceed Rs. 5 lakhs and (c)....
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....our of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act which are binding on the authonties in the administration of the Act. Ur Under section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities (p. 895) The Supreme Court in this judgment, which is clear from the paragraph quoted abo....