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TMI Blog2023 (8) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... under schedule FA and the Assessing Officer levied penalty towards the non-disclosure u/s 43 of BMA for each of the assessment years. Though there is merit in the submission of the ld AR that the asset cannot be classified as undisclosed since the source for the acquisition is established, we need to look at the requirement under section 43 of BMA. Therefore before proceeding further we will look at the relevant provisions of the BMA. As apparent from the language of section 43 that the disclosure requirement is not only for the undisclosed asset but any asset held by the assessee as a beneficial owner or otherwise. Given this the argument that the penalty under section can be levied only with respect to undisclosed asset is not tenable. Undisputedly, the assessee in the instant case has not disclosed the foreign asset in the return of income Schedule FA, therefore, we are inclined to agree with the findings of the CIT(A) in this regard. Alternate plea of the assessee is that the non-disclosure of the foreign asset in schedule FA of the return is an inadvertent bonafide error and therefore does not warrant levy of penalty - AO after examining the facts of the case, formed his opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Income-tax return. The assessee further submitted that the amount invested in the fund was sourced out of assessee s account i.e. HSBC Bank at Jersey to which funds were transferred from her Indian account under the liberalized scheme permitted by Reserve Bank of India. The assessee also submitted that in the return filed for A.Y. 2019-20, the foreign assets have been duly disclosed. The assessee accordingly, prayed that the penalty proceedings may be dropped as the error committed by the assessee is not intentional. The Assessing Officer did not accept the submissions of the assessee and proceeded to levy penalty of Rs. 10 lakhs for each of the assessment years under consideration under section 43 of the BMA. The Assessing Officer placed reliance on the decision of the Hon ble Supreme Court in the case of Union of India vs Dharmendra Textile Processors Ors (306 ITR 275) and also in the case of CIT, Ahmedabad vs Reliance Petroproducts Pvt Ltd 189Taxmann 322 (SC). Aggrieved, the assessee filed appeal before the CIT(A). 4. Before the CIT(A), the assessee reiterated its submissions made before the Assessing Officer. The assessee further submitted that the impugned assets are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of undisclosed foreign assets under BMA. It has already been clarified earlier that the penalty u/s 43 of the Act is not related to the quantum of assets determined as undisclosed under BMA. The default has to be determined with respect to the assessee's failure to disclose the assets / bank accounts outside India in the return filed under section 139(1) of the Income Tax Act 1961. 6.10 The penalty under section 43 of the Act is not with respect to ownership of such assets but with respect to non-disclosure of the account in which the assets were held. The lapse could have been treated as technical lapse if the assessee was not aware of the said asset/account or if some one else was operating the said account. However, no where, in section 139(1) of the ft Act or in the return of income, there is any confusion with:' respect to nature of disclosure required to be made. Admittedly, the assessee was' a joint holder in the Global Dynamics Opportunities Fund Ltd to the extent of 40% and was also a joint holder in the foreign bank account with Standard Chartered Bank, Singapore and also HSBC Bank, Jersey (till its closure on 27.06.2017) 6.11 The disclosure of a foreign acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, submitted that the levy of penalty under section 43 of BMA is with respect to non disclosure of foreign assets held by the residents. The Ld.DR further submitted that the source being explained and the income arising out of the foreign asset being offered to tax does not discharge the onus of the assessee to disclose the asset in Schedule FA as per the provisions of section 43 of the BMA. Accordingly, the ld.DR submitted that the penalty has been rightly levied. 8. We heard the parties and perused the material on record. The assessee along with her husband has made a joint investment in Global Dynamic Opportunity Fund Ltd and the assessee's share in the said investment is 40%. The assessee has made the investment out of funds transferred from India to HSBC Bank at Jersey. On perusal of records it is noticed that the assessee has declared interest income from the foreign investment in AY 2016-17 and the said asset has been sold and capital gain is offered to tax in AY 2019-20. The assessee however did not disclose the foreign asset while filing the return of income for AY 2016-17 to A.Y. 2018-19 under schedule FA and the Assessing Officer levied penalty towards the non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not only for the undisclosed asset but any asset held by the assessee as a beneficial owner or otherwise. Given this the argument that the penalty under section can be levied only with respect to undisclosed asset is not tenable. Undisputedly, the assessee in the instant case has not disclosed the foreign asset in the return of income Schedule FA, therefore, we are inclined to agree with the findings of the CIT(A) in this regard. 11. The alternate plea of the assessee is that the non-disclosure of the foreign asset in schedule FA of the return is an inadvertent bonafide error and therefore does not warrant levy of penalty. In this regard it is noticed that, though the assessee claims that the non-reporting is a bonafide mistake, there is nothing on record in support of the said claim. It is also contended that the levy of penalty under section 43 is not mandatory but is at the discretion of the Assessing Officer since the word used in the section is that the Assessing Officer may levy penalty. In the given case it is an undisputed fact that the impugned foreign asset has not been disclosed in the return of income filed for all the three assessment years 2016-17 to 2018-19 in sch ..... 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