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TMI Blog2023 (7) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... e which is being scrutinized and accepted by the revenue. Therefore, the assets in our view cannot be termed as black money.
There is no reason for the assessee to intentionally not furnish the details of the same assets except a bonafide belief that the details are already furnished by her husband who is the primary owner and that the assessee being secondary owner is not required to furnish the details once again.
Therefore in our considered view a reasonable conclusion could be drawn that the lapse in reporting foreign investments in Schedule FA of the return of income by the assessee is bona fide and devoid of any ulterior motives. Accordingly AO is not justified in exercising the discretionary power just because it would be lawful to do so.
Further in the present case there are sufficient prima facie evidences well demonstrated by the assessee not to doubt bona fide intentions and therefore it is not just and fair for the assessee to face stringent penal consequences under BMA. Accordingly the penalty levied u/s 43 of BMA is hereby deleted. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in respect of which the assessee has filed return of income under section 139(1) of the Income-tax Act, 1961. Enquiries were carried out by the office of the DDIT(Inv), Unit II(2), Mumbai from which it was noticed that the assessee has financial interest in foreign based entity, M/s Global Dynamic Opportunities Fund Ltd during the financial year 2015-16. The assessee being a resident Indian had to disclose information about her financial interest / investments in an off-shore entity in the return of income. The Assessing Officer noticed that the assessee had not disclosed the same in Schedule FA of her return of income for the assessment years under consideration. The above information was forwarded to the Assessing Officer for initiation of penalty proceedings under section 43 of the BMA. On receipt of the information, a show cause notice was issued to the assessee to furnish reasons as to why penalty under section 43 of BMA should not be levied. 6. In response, the assessee filed a reply stating that the husband of the assessee R Ventakaraman has made investments in M/s Global Dynamic Opportunities Fund Ltd of Mauritius in his name with second name of his wife, i.e. assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, such assets shall be excluded from the purview 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 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. While the assessee has claimed that the investment in the foreign asset had been made by her husband out of his explained sources, that the foreign assets were duly disclosed by her husband in Schedule FA of his ITR and that she was merely a second holder, no documentary evidence has been submitted in support of the above claims. In the absence of any documentary evidence, the above claims have no basis. Moreover, no where in section 139(1) of the IT Act or in the return of income, there is any confusion with respect to nature of disclosure required to be made. Admittedly, the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Ld.AR that there is no black money involved in the whole transaction and, therefore, no penalty is warranted under section 43 of the BMA. The Ld.AR relied on the decision of the co-ordinate bench of the Tribunal in the case of Leena Gandhi Tewari vs DCIT 136 taxman.com 409. 10. The Ld.DR, on the other hand, submitted that the provisions of section 43 of BMA are very clear as to non disclosure of foreign investments in Schedule FA would attract penalty. The Ld.DR also submitted that in assessee's husband's case, the order of assessment is not elaborate to support the contention of the assessee that the source of investments are clearly explained and that there is no black money involved. The Ld.DR also relied on the findings as extracted in the earlier part of this order to submit that the penalty is rightly levied in assessee's case. Accordingly, the Ld.DR supported the order of lower authority. 11. We heard the parties and perused the material on record. The BMA is enacted on 26th of May, 2015 by Act number 22 of 2015 and which came into force with effect from First day of April, 2016. Section 43 of the BMA contains provisions for levy of penalty for failure to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any intention to evade tax or with any malafide intent. Imposition of penalty under section 43 is a quasi criminal liability since section 51 of BMA provides that if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this act, he shall be punishable with rigorous imprisonment for term not less than 3 years and may extend till 10 years & with fine. Accordingly it is important to examine the existence of mens rea in assessee's case in order to justify the levy of penalty. In this regard it is relevant to refer to the decision of the Hon'ble Supreme Court in the case of . Hindustan Steel Ltd. v. State of Orissa [(1972) 83 ITR 26 (SC) where it is observed that - "Penalty is not to be imposed if there is no conscious breach of law. 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 guilty of conduct, contumacious or dishonest, or acted in conscious disregard to its obligation. Penalty will not also be imposed merely because it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is necessary to find out from the scheme of the Act the intention of the Legislature. In other words in construing a penal statue, the object of the law must be clearly borne in mind as held in the case of Pratap Singh v. State of Jharkhand [(2005) 3 SCC 551. The Finance Minister in his speech while introducing the BMA stated that "tracking down and bringing back the wealth which legitimately belongs to the country is our abiding commitment to the country. Recognising the limitations under the existing legislation, we have taken a considered decision to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad". This would mean that the intention behind introduction of BMA is mainly to track and bring into the tax net the undisclosed black money stashed abroad. Therefore the plain interpretation of the words used in section 43 means that the legislature has given a discretionary power to the Assessing Officer to decide the levy of penalty after considering all relevant factors including the purpose and object the statute seeks to achieve. The discretion to impose a penalty puts the Assessing Officer under a corresponding obligation to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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