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TMI Blog2024 (11) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... s common, we take up all the 5 appeals together for adjudication by passing this consolidated order. 3. Brief facts of the case are that assessee was resident of India during the years under consideration. It is alleged that assessee had foreign assets being investments with Equatex UK Ltd. (United Kingdom of Great Britain and Northern Ireland) having account No. 1660701 but was not reported in schedule FA (Foreign Assets) of the income tax return filed for the years under consideration, as revealed in the enquiries conducted by the investigation Wing. 3.1. According to the Ld. Assessing Officer, schedule FA was introduced in the return of income from Assessment Year 2012 - 13 by the Finance Act, 2012, making it mandatory for the Indian residents to report about their foreign assets and income generated thereupon in foreign jurisdiction in order to track the same. According to the Ld. Assessing Officer, failure on the part of the assessee to make the said reporting attracted penalty of Rs. 10 lakhs under section 43 of the Act. Ld. Assessing Officer had issued a show cause notice seeking explanation from the assessee to this effect which was replied upon. 3.2. Assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means an asset (including financial interest ell any exp located outside India, held by the assessee in his name or in respect of which he is a beneficial owner and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory" 3.3. It was thus contended that the Act applies solely to undisclosed foreign income and assets and that assessee does not fall within the above referred provisions. 3.4. Further, assessee submitted that he had adequately disclosed his assets and liabilities in schedule AL of the income-tax return form which included value of these ESOPs under the head "shares and securities". It was thus claimed that since assessee had disclosed the entire amount of income by way of perquisite received as ESOPs and has paid the full amount of tax on such income, there is no occasion for imposing penalty under section 43 of the Act. Summary of disclosures made by the assessee is tabulated as under for which relevant documents are placed in the paper book on record: Particulars A.Y. 2017-18 (Page no. of Paperbook) A.Y. 2018-19 (Page no. of Paperbook) A.Y. 2019-20 (Page no. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year." 3.6. Assessee placed reliance on the decision of the Hon'ble Apex Court in the case of Hindustan Steel Ltd. vs State of Orissa (1972) 83 ITR 26(SC) which held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee has also deducted the TDS on the value of the foreign asset/ESOP and shown the details/value of the same in Form No.16 Part-B as well as in Form No.12BA. Hence, it cannot be said that the Assessee has not disclosed the foreign assets in any manner. The Hon'ble Co-ordinate Bench of the Tribunal in the case of M/s. Ocean Diving Centre Ltd. vs. CIT BMA No.22/M/2023 & ors. decided on 30.08.2023 has also considered almost the similar circumstances, wherein though the Assessee has not disclosed the foreign assets in Schedule FA but in fact disclosed the same in its balance sheet and schedule part-A-BS under "non-current investments" attached with the return of income and therefore the Co-ordinate Bench considering the fact that the Assessee has disclosed the foreign assets may not be in form FA but otherwise in its return of income ultimately held that the penalty is not warranted. For brevity and ready reference, the conclusion drawn by the Hon'ble Co-ordinate Bench of the Tribunal is reproduced herein below"....... ......8.1 Hence, considering the aforesaid facts and circumstances of the case, as it is not the case of the Revenue Department that the foreign asset/E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts on account of surrender were declared in the return of income in Schedule EI. Assessee was under bonafide belief that since policy was surrendered and was no more in existence, there was no requirement to disclose it in Schedule FA. On these set of facts, it was observed that for an asset ceased to exist on account of surrender and its maturity amount was duly reflected in income tax return thus bonafide mistake of not disclosing in Schedule FA is a reasonable cause for deleting the penalty. Reference was made to the decision of coordinate bench of ITAT of Mumbai in the case of ACIT vs. Leena Gandhi Tiwari in 136 taxmann.com 409 (Mum), dated 29.03.2022. Thus, penalty was deleted and appeal by Revenue was dismissed. ii) Aditi Avinash Athavankar vs. CIT in BMA Nos.16 to 19/Mum/2023, dated 10.07.2023 b. In this case, husband of the assessee made investment in foreign asset with second name of the assessee as a second holder for administrative convenience. Assessee had not contributed any amount towards the said investment. She was under bonafide belief that being a secondary owner, there is no requirement to furnish the details in Schedule FA. At the same time, husband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the decision of Leena Gandhi Tiwari (Supra). By referring to the intent of the Act, it was observed that it is mandatory on the part of the assessee to report investments/assets held outside India. It was also observed that there is furnishing of inaccurate particulars of investments and that claim of bonafide mistake is unsubstantiated. c.1. It was held that though the contentions of the assessee may be true, but penalty u/s.43 of the Act is levied for nonreporting which appears to be relentless but leaves no scope of gateway to delete the same even if overseas investment are made from known sources but not reported in Schedule FA of return of income. It was also stated that facts in the case of Leena Gandhi Tiwari (supra) are distinguishable. Penalty levied was upheld and appeal of the assessee was dismissed. iv) Shobha Harish Thawani vs. JCIT in BMA Nos. 01 to 03/Mum/2023, dated 09.08.2023 d. In this case, assessee invested in foreign asset from her Indian bank account through liberalised remittance scheme under the Foreign Exchange Management Act along with her husband in Global Dynamic Opportunity Fund with 40% share of the assessee. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 'may'. Reliance was placed on the decision of Hindustan Steel Ltd., (supra). It was held that it is not a case of total defiance or malafide or dishonest, breach/non-disclosure of information of foreign investment in Schedule FA. Penalty was deleted and appeal of the assessee was allowed. vii) Harshita Nirmal Jain vs. CIT in BMA No. 28/Mum/2023, dated 18.01.2024 g. It is a case where father, i.e., Shri Nirmal Jain (case dealt at Sr. No. iii) of the assessee made investment in the Global Dynamic Opportunities Fund in the name of his daughter out of his own income and capital. Part disclosure was made by the father in his return in Schedule FA. It was claimed that the entire investment was made from disclosed tax paid funds of the father. Assessee was under bonafide belief that since investment was made by her father, she was not required to make the disclosure in Schedule FA in her return of income for which no malafide can be attributed to the assessee for levy of penalty. Reliance was placed on the decision of Adithi Avinash Athavankar [supra- Sr. No.ii) above]. It was thus, held in favour of the assessee considering the bonafide belief and the penalty was deleted.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t without any purpose. It enables the Department to ensure proper investigation. Hence, its nondisclosure is to be viewed with disfavour. 8. We have heard both the parties and perused the material placed on record. We have also given our thoughtful consideration to provisions of the Act and long line of judicial precedents discussed above. Admittedly, assessee did not disclose his foreign asset in particular Schedule, i.e., Schedule FA though the same was duly disclosed in the Schedule AL in the item 'shares and securities' in the Income tax return. Further, assessee had offered perquisite value of the foreign asset, i.e., ESOPs in his return of income which was subjected to tax by way of TDS. Further, in the course of impugned proceedings, assessee had offered all the details and explanations corroborated with documentary evidences in respect of foreign asset. Also, for Assessment Years 202021 and 2021-22, assessee had filed updated return u/s.139(8A) of the IT Act duly disclosing the details of foreign asset in Schedule FA. 8.1. We also take note of the provisions of section 43 of the Act as well as the preamble to the said Act to understand the discretionary power ..... X X X X Extracts X X X X X X X X Extracts X X X X
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