TaxTMI 
TaxTMI 
2026 (9) TMI 222
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....als)-31, New Delhi. dated 26.02.2026 arising out of penalty order u/s 41 of Black Money (UFIA) and Imposition of the Act, 2015 dated 30.03.2022. The assessee, Nimit Rai Tiwari has also filed cross appeal in the impugned AY 2019-20. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up Revenue's appeal being ITA No.14/Del/2023 in the case of Nimit Rai Tiwari and assessee's Cross Objections being CO No.123/Del/2023 for Assessment Year 2019-20 as lead cases. 3. Brief facts of the case are, the assessee is resident individual in India and is filing Income Tax Returns regularly. The copy of ITR acknowledgement for year under consideration is placed on record at page 1 of the paper book. The assessee (Nimit Rai Tiwari) and her wife (Ankita Rai Tiwari) were nominee shareholder in a foreign company in the name of "Suncell Holdings SA" (in short "SHSA"), registered in British Virgin Islands, holding 25,000 shares each at 'No Par value', meaning shares which does not require any investment. The company SHSA operated a bank account with BNP Paribas. However, due to nonoperation and unable t....
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..... Ankita Rai Tiwari 1,27,97,370 (50%) - 8. Accordingly, the AO has made the following additions in the hands of assessee :- * 50% of credits received in Bank account of SHSA = USD $ 1,96,248/- or Rs. Rs. 127,97370/- * Credit received in Bank account of SSMPL = USD $ 150,000/- or Rs. 97,56,615/- * Total Addition = Rs. 2,25,53,976/- 9. Aggrieved with the above order, the assessee preferred an appeal before Ld. CIT(A). During appellate proceedings, the assessee filed additional evidences, the same was accepted and remand report was called for. After considering the detailed submissions of the assessee, remand report on additional evidences and rebuttal to the remand report, ld. CIT (A) deleted the addition of credits received in the bank account of the abovesaid foreign entities from V.L. Sharma and Sandip Brahmdev Sharma, however, he proceeded to sustain the credit received in the bank account of SHSA on account of commission income of $ 16,283 i.e. 50% of $ 32,565.19 equivalent to Indian Rs.10,59,086/-. The relevant findings of the ld. CIT (A) are reproduced below :- "9.1 Further, it is seen that the assessment order dated 23.03,....
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....ount of Sino-Star was on account of loan of USD 1,50,000 from Sh. V.L Sharma, which was also duly explained and accepted by the AO in the Remand Report. 9.4 I have carefully considered the assessment order, submissions of appellant, Remand Report and rejoinder. As noted by the AO at Para 6 of his order, the Foreign Taxation Authorities have identified only the assessee and his wife as shareholders of Suncell. They have also been identified by those authorities as Beneficial Owners as well as authorized signatories in the bank account of Suncell. It is also identified that the assessee and his wife were the actual decision - makers of Suncell and none of the Directors therein had power of decision- making in the company. The assessee and his wife were also identified as the Beneficial Owners of Suncell. It is further undisputed that the assessee had arranged entire funding of USD 3,61,000 from his close relatives, Sh V.L. Sharma and Sh. S.B. Sharma, Therefore, the assessee is not only identified as the Beneficial Owner by Foreign Tax Authorities but is also an indirect contributor to the funds credited in the bank account of Suncell. Hence, the assessee fulfills the definit....
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....dits in bank account of Sino-Star, there remains no amount relating to Sino-Star which would chargeable under the BMA." 10. Against the aforesaid order, the Revenue has filed an appeal and the assessee has also filed cross objection before us raising following grounds of appeal :- "REVENUE'S GROUNDS OF APPEAL : "1. Whether on the facts and circumstances of the case and in law the ld.CIT(A) has erred in deleting the addition made by AO at Rs.2,25,53,976/- by ignoring the fact that the assessee has held the foreign assets/assets outside India which she has not disclosed in her ITR, for the A Y 19-20? 2. Whether on the facts and circumstances of the case and in law the ld.CIT(A) has erred in deleting the addition made by AO at Rs.22553976/- by ignoring the fact that assessee has not submitted any supporting documents before the AO despite been given ample opportunities given during the assessment proceedings. 3. Whether on the facts and circumstances of the case and in law the ld.CIT(A) has erred in deleting the addition made by AO at Rs.2,23,53,976/- relied upon the single line written observation of the AO in the Remand Report, ignoring the fac....
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....guidelines stipulate that the concerned AO is required to issue a notice u/s 10(1) within thirty days from the end of the previous year, in which the information comes to his notice. The relevant extract is as follows: "8. Time limit for issuance of notice under section 10(1) of the BM Act: Though no statutory time limit for issuance of notice under section I 0(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 (I) 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 I 0( 1) was issued by the AO." In the present case, the ld. AO issued summon u/s 131(1A) dated 11.04.2016 (PB pg. 2-4) requiring the ....
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....d disclosure of beneficial ownership in the impugned bank accounts, without linking such information to any chargeable year and the same was issued long after FY 2016-17, when the Department had already becomes aware of all relevant facts through statements, voluntary letters, and revised returns filed by the Assessee. We find that the summons u/s. 131(1A) of the ITA dated 20.10.2016, statements were recorded, the assessee made voluntary disclosures and filed revised returns dated 04.12.2016. We also note that the notice u/s. 10(1) of the BMA was issued much later on 13.04.2018, i.e., after more than one year from the close of FY 2016-17 and this inordinate delay not only demonstrates absence of contemporaneous satisfaction but also breaks the statutory nexus between the discovery of the asset and initiation of proceedings envisaged u/s. 3 to 5 of the BMA. We find that there was omission to mention the relevant financial year along with the delay in initiation of proceedings which goes to the root of jurisdiction and such a defect is not curable under section 81 of the BMA, which, being pari materia with section 292B of the IT Act which protects only clerical or technical mistakes ....
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....see in am manner. The taxability thereof in the hands of the assessee is not in consonance with the Black Money (Undisclosed Foreign Income and Asset) & Imposition of Tax Act. 2015. More so when, there is no iota of evidence that any funds belonged to and/or pertained to the assessee in his individual capacity. Nor is there any evidence to show that any income of the assessee was taken abroad, or earned in his individual name and was omitted to be taxed in India. Therefore the taxability of any amount in the hands of the assessee will be unconstitutional as without bringing any evidence so as to prove that the assessee has directly, or indirectly, earned any income. In the search, revenue has not found any material in digital or in a seized material which suggest that there is an income accrued or arise to the assessee in his individual capacity. He also submitted that the comparison in the present case, is that of a non-resident foreign company and not an Indian company. The said vital fact has been accepted and never been disputed by the Ld. AO in the Assessment Order dated 31-3-2021 and/or in the Remand Report dated 13-7-2022. He has further submitted that the Place of Effective....
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....38.8 Therefore, considering the facts and circumstances discussed above and various evidences produced by the assessee and respectfully following the case laws cited by the assessee, we are of the view that the non-resident foreign company M/s. Agrasen Polymers FZE based at UAE is a separate legal entity and all the funds/investments etc. belong to the company and no tax liability can be fastened on the assessee. Thus we allow this ground No. 9 of the assessee." The aforesaid legal position has recently been reaffirmed by the Hon'ble Delhi Bench of the Tribunal in the case of Pradeep Wig v. ACIT [2025] 5 TMI 502 (ITAT Delhi). In that case also, the Revenue sought to assess rental income, capital gains and bank interest earned by a foreign company incorporated in British Virgin Islands in the hands of its shareholders by alleging that they were the beneficial owners of the assets of the company. Rejecting the stand of the Revenue, the Hon'ble Tribunal held as under: "48. We are thus inclined to hold that the assessee/appellants were not the beneficial owner of any property or asset of CCL and therefore neither any income arising from the property of the said compan....
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.... placed on the following judgments wherein it was held that assessee was not the beneficial owner of the foreign bank account in a foreign company: - * ITAT Delhi in the case of ADDL. COMMISSIONER OF INCOME TAX Range-7, New Delhi Versus DEEPAK JAIN, New Delhi And (Vice-Versa) And DEEPAK JAIN Versus ADIT (Inv.), Faridabad, 2025 (9) TMI 1584. Dated 24.09.2025 * ITAT Delhi in the case of Pradeep Wig Versus ACIT, Central Circle-5, New Delhi. And DCIT, Central Circle-5, New Delhi Versus Pradeep Wig and Neera Wig Versus ACIT, Central Circle-5, New Delhi. And DCIT, Central Circle-5, New Delhi. Versus Neera Wig and Pradeep Wig Versus DDIT (Invest.), Unit-3 (2), New Delhi and Addl. CIT, Central Range-2, New Delhi Versus Pradeep Wig and Neeraj Wig Versus DDIT (Invest.), Unit-3 (2), New Delhi. And Addl. CIT, Central Range-2, New Delhi Versus Neera Wig and Sonu Wig Versus DDIT (Invest.), Unit-3 (2), New Delhi. And Addl. CIT, Central Range-2, New Delhi. Versus Sonu Wig, 2025 (5) TMI 502, dated:- April 29, 2025 * ITAT Jaipur in the case of Shri Krishna Das Agarwal Versus DDIT/ADIT (Inv.), Alwar And Addl. Commissioner of Income Tax, Central Range, Jaipur Versus Shri Kri....
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....erest) at any time during the relevant accounting period ............ A3. Details of Foreign Equity and Debt Interest held (including any beneficial interest) in any entity at any time during the relevant accounting period ............" * From the extracts, it is clear that the requirement of disclosure in Schedule FA arises only if the assessee continues to have ownership or beneficial interest in the asset during the relevant period. * In the present case, it is respectfully submitted that the assessee has duly disclosed all existing foreign assets in the ITR for AY 2019-20. The assessee held investment in SSMPL, which was an existing company during the relevant accounting period, and the same has been consistently disclosed in Schedule FA of ITRs for AY 2016-17 onwards, including AY 2019-20. * On the other hand, SHSA was not in existence during the relevant accounting period. The concerned bank account had been closed suo motu by the bank on 30.04.2014 (PB pg. 77), and the company was subsequently struck off by the local authorities on 01.05.2015. Accordingly, there was no requirement or occasion to disclose SHSA in the ITR f....
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.... by sufficient cause from producing the evidences during assessment. The CIT(A) has also noted that the assessment order was passed during the peak of the COVID-19 pandemic, a period acknowledged by the Hon'ble Supreme Court for general exclusion in computation of limitation and procedural compliance. * It is further submitted that the CIT(A) has duly followed due process under Rule 46A(3) by forwarding the additional evidences to the Assessing Officer and calling for a remand report. Thus, there is no procedural infirmity in the action of the CIT(A) in admitting and relying upon the additional evidences. * Moreover, the reliance placed by the assessee on the following judicial precedents cited on PB pg. 161-162, clearly supports the proposition that when an assessee is prevented by reasonable cause, particularly in relation to thirdparty or foreign evidences, the same must be admitted at the appellate stage to ensure substantial justice: - M/s ONS Creations Pvt. Ltd. vs. ITO (ITAT Delhi, ITA No. 6250/Del/2013); - Avan Gidwani vs. ACIT (ITAT Mumbai, ITA No. 5138/Mum/2015); and - Rankin Infrastructure (P.) Ltd. [(2022) 142 taxmann.com 37 ....
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....ee were perused and it appears that Sh. VL Sharma and S B Sharma have the financial capacity to disburse the loan which is appearing from the tax returns and bank statements." * Once the AO, upon verification of additional evidences, accepted that the lenders had sufficient financial capacity, the very basis of the original addition ceased to exist. The addition made by the AO in the assessment order was solely on account of non-availability of these documents. After their production and verification, there remained no adverse material on record to justify retention of the addition. * It is further submitted that the CIT(A) has not relied only on one sentence of the remand report but has holistically evaluated the evidences-including the ITRs, bank statements, and confirmations of the lenders-along with the AO's own acknowledgment regarding their financial capacity. CIT(A) has on page 38-39 para 9.4 of its order also taken note of the fact that both SHSA and SSMPL have partly repaid the loans to the foreign lenders, which further supports the genuineness of the transactions and rules out any possibility of undisclosed income. * Once the loans were found t....
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.... PREVIOUS BALANCE 297.238,99 09.01 GC206753 TRANSFER OF FUND TR030027003 09.01.2013 2.732,75 294.506,24 31.01 GC207757 REF TR030207164 31.01.2013 8.211,30 286.294,94 05.02 GC207937 REF TR030242114 05.02.2013 8.874,54 277.420,40 13.02 TRB72234 FUNDS RECEIVED TR030296443 13.02.2013 32.565,19 309.985,59 20.02 GC208608 TRANSFER OF FUND TR030331613 20.02.2013 20.093,26 289.892,33 26.03 GC210171 TRF OF FUNDS TR030617386 26.03.2013 6.389,04 283.503,29 28.03 GC210462 CHARGES FREC2113291 28.03.2013 53,32 283.449,97 SUM OF PERIOD MOVEMENTS 46.354,21 32.565,19 18. Considered the rival submissions and material placed on record. First, we shall deal with the revenue appeal, we observe that the assessee along with his wife are shareholders in SHSA holding 25000 shares each at NoPar-Value basis, it clearly indicates that there is no requirement to make any investment in the above said company. They were the ....
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.... is established, the same cannot be considered as undisclosed income of the assessee since the liability was established. Hence, we do not see any reason to disturb the detailed findings of the Ld CIT(A). In the result, the grounds raised by the revenue are dismissed. 20. Coming to the CO filed by the assessee, we observed that the AO noticed that the company SHSA had received commission income of USD 32,565 and since the same was treated as income of the assessee by treating the assessee as deemed owner of the company. The same was also sustained by Ld CIT(A). It is fact on record that the above said commission was earned by the company, however, the company was established by the assessee on the basis of No Par Value basis, that means the assessee was managing the affairs of the company, the income and expenditure of the company was belongs to the assessee that being the case, the income earned by the company belongs to the assessee. At the same time, any relevant expenditure incurred by the company also belongs to the assessee only. Therefore, both income and expenditure belongs to the assessee. We noticed that the revenue authorities considered only the credit in the bank an....