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2021 (11) TMI 420 - AT - Income TaxScope of Black Money (Undisclosed Foreign Income Assets) And Imposition of Tax Act 2015 - whether as per provisions of the BMA it covers undisclosed foreign assets that existed at the point of time when provisions of the Act came into force? - applicability of the definition of beneficial owner under the Income Tax Act - HELD THAT - Provisions of the Black Money (Undisclosed Foreign Income Assets) and Imposition of Tax Act 2015 can indeed be pressed into service in respect of an undisclosed foreign asset or income even if it was already in the knowledge of any Governmental authorities, other than the jurisdictional Assessing Officer, as at the point when the said legislation came into force. This question is thus decided against the assessee. If we are to hold that definition of beneficial owner as assigned by Explanation 4 to Section 139(1) is to equally apply, we will end up in a situation in which the BMA itself will become unworkable. Therefore, for both of these reasons- i.e. (a) the contextual requirements being otherwise, and (b) the adoption of this meaning rendering the provisions of BMA becoming unworkable, the definition under Explanation 4 to Section 139(1) cannot be adopted in the context of the BMA. We reject this plea of the learned counsel as well. Levy of interest under sections 40(1) and (2) of the BMA, which, in turn, refers to interest under sections 234A, 234B and 234C - As submitted that the question of levy of interest under sections 40(1) and 40(2) is only with respect to tax on an undisclosed foreign income and not in respect of tax on an undisclosed foreign asset. Since, according to the learned senior counsel, it is a case of tax on the unaccounted foreign asset by way of bank account, the provisions of Section 40(1) and 40(2) will not come into play. While we agree with the learned senior counsel on legal principle, and to that extent, his plea is indeed well taken, we reject this plea on the short ground that, as held by us for the detailed reasons set out earlier in this order, what has been assessed in the impugned assessments is undisclosed foreign income. On account of this factual aspect, even though learned senior counsel is correct in his legal plea, the assessee gets no relief in respect of levy of interest under sections 40(1) and 40(2), referable to Section 234A, 234B and 234 C We uphold the action of the Assessing Officer in bringing to tax, in the hands of the assessee, the income reflected, to the extent information was available to him, in respect of undisclosed accounts with UBS AG, Singapore, under the Black Money (Undisclosed Income and Assets) Imposition of Tax Act, 2015. The order of the Assessing Officer is thus restored and the relief granted by the learned CIT(A) is vacated. - Decided against assessee.
Issues Involved:
1. Applicability of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (BMA). 2. Taxability of undisclosed foreign bank accounts. 3. Definition and scope of "beneficial owner" under BMA. 4. Procedural aspects and jurisdiction of the Assessing Officer. 5. Interpretation of BMA provisions in light of existing legal precedents and CBDT circulars. 6. Levy of interest under BMA. Detailed Analysis: 1. Applicability of BMA: The primary issue was whether BMA can be applied to assets or bank accounts that did not exist when the Act came into force on 1st July 2015. The Tribunal held that BMA applies to undisclosed assets or income that come to the notice of the Assessing Officer after the Act's commencement, irrespective of whether the assets existed before the Act came into force. The Tribunal rejected the argument that the term "is" in the context of BMA should be interpreted to mean only currently existing assets. 2. Taxability of Undisclosed Foreign Bank Accounts: The Tribunal addressed whether a foreign bank account could be treated as an asset under Section 2(11) of BMA. It was concluded that a foreign bank account represents an asset because it gives ownership of the credit balance in the bank. The Tribunal also noted that Rule 3(e) of the Black Money Rules provides a mechanism for valuing such bank accounts, reinforcing the intent to include bank accounts within the scope of undisclosed foreign assets. 3. Definition and Scope of "Beneficial Owner": The Tribunal examined whether the definition of "beneficial owner" under Explanation 4 to Section 139(1) of the Income Tax Act, 1961, applies to BMA. It was concluded that the context of BMA, which deals with undisclosed foreign assets and incomes, is different from the Income Tax Act. Therefore, the definition under the Income Tax Act does not automatically apply to BMA. The Tribunal held that requiring the Assessing Officer to prove that the assessee provided consideration for the asset would render BMA unworkable. 4. Procedural Aspects and Jurisdiction of the Assessing Officer: The Tribunal upheld the Assessing Officer's jurisdiction and procedural correctness in invoking BMA provisions. The argument that the proceedings under BMA were invalid because the assets were already known to the Government was rejected. The Tribunal clarified that the critical factor is when the asset comes to the notice of the Assessing Officer, not merely any governmental authority. 5. Interpretation of BMA Provisions: The Tribunal rejected the argument that CBDT Circular No. 13 of 2015, which states that declarations under BMA are ineligible if the Government has information about the asset, should apply to assessments. The Tribunal clarified that the circular was issued in the context of the compliance window under Chapter VI of BMA and does not affect the assessment provisions. 6. Levy of Interest: The Tribunal addressed the issue of interest under Sections 40(1) and 40(2) of BMA, which refer to interest under Sections 234A, 234B, and 234C of the Income Tax Act. It was held that since the assessment was of undisclosed foreign income, the interest provisions were applicable. Conclusion: The Tribunal upheld the assessment of undisclosed foreign income and assets under BMA, confirming the Assessing Officer's actions and rejecting the assessee's arguments on various grounds. The appeal of the assessee was dismissed, and the appeal of the Assessing Officer was allowed.
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