2020 (6) TMI 376 - HC - Income Tax

Black Money - role of an appellate authority defined under the Black Money Act - Maintainability of appeal - penalty for failure to furnish the return of income and information - HELD THAT - Whether the impugned order reflects the adherence to the provisions of the circular of 2015 ibid or in terms of the provisions of the Black Money Act this Court under Article 226 of the Constitution of India cannot exercise the role of an appellate authority defined under the Black Money Act to deal with the controversy if brought into motion. Petitioner is well within the right to assail the aforementioned order as the impugned order is dated 17.3.2020 and the limitation in the instant case expired during the lock down but as per the Government directive and judgment of the Full Bench of this Court limitation prescribed already stood extended. Petitioner if so advised shall be at liberty to assail the aforementioned order. Any observation hereinabove would not prejudice the right of the petitioner in case the remedy is availed. In view of what has been noticed this writ petition sans merit and accordingly dismissed.

Summary

Issues:
Challenge to penalty imposed under the Black Money Act for non-disclosure of foreign assets in income tax return.

Analysis:
1. The petitioner, a Non Resident Indian, challenged a penalty of ?10 lakhs imposed by the Income Tax Officer for the assessment year 2016-17 under the Black Money Act for not disclosing foreign assets in the income tax return. The petitioner believed that disclosure under Schedule FA was required only from the assessment year 2017-18. The petitioner filed a revised return after the deadline, but the penalty was still imposed.

2. The petitioner argued that the penalty proceedings were unjust as there was no intentional error or willful intention to evade tax. The petitioner contended that the penalty could only be imposed if Schedule FA was not filed, but the assets in question were acquired from non-taxable income earned abroad. The petitioner also cited Circular 15 of 2016, which stated that reporting in Schedule FA would not bring such undeclared assets under tax.

3. The court analyzed the provisions of the Black Money Act, particularly Section 3 which charges tax on undisclosed foreign income and assets. The court noted that undisclosed assets located outside India without a satisfactory explanation could be subject to tax. The assessment proceedings, appeal process, and penalties under the Act were also discussed.

4. The court emphasized that the Circular, though not binding, could not be used to challenge the penalty. The court clarified that it could not act as an appellate authority under the Black Money Act. The petitioner was given the option to challenge the order within the extended limitation period due to the lockdown. The court ultimately found the writ petition without merit and dismissed it, preserving the petitioner's right to pursue further legal remedies.

This detailed analysis covers the issues raised in the judgment, the arguments presented by the petitioner, the court's interpretation of the relevant legal provisions, and the final decision rendered by the court.