9911796707
TMI Blog2025 (3) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... s, simply have been continued in the year under consideration. All these aspects clearly show that there was bonafide mistake on the part of the assessee to mention and disclose the same in the return of income. In view of the above, the penalty imposed by the lower authority is required to be deleted.
Respectfully, following the decision of Ocean Diving [2023 (12) TMI 54 - ITAT MUMBAI] and the judgment of Mylan Laboratories [2022 (1) TMI 1353 - TELANGANA HIGH COURT], we hereby allow the appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... policies have been closed in the month of September, 2016). 2. Failed to disclose the investment in Lemon Stone Holding Pte Ltd, Mauritius in the AY 2017-18. He had made disclosure in this regard in his ITR for AY 212-13 to 2016-17 and again in AY 2018-19 to 2019-20. 3. Failed to disclose the investment amounting to Rs. 7,22,07,540/- in residential flats in Singapore made during FY 2016-17 in his ITR for AY 2017-18 also not shown the investment amounting to Rs. 12,72,798/- in property situated at Malaysia made during the FY 2016-17. 4. Failed to disclose the possession of shares received from Mylan Inc, USA received as ESOPs and RSUs in his return of income for AY 2012-13 to 2015-16." As the assessee failed to disclose the foreign assets in the return of income, the Ld AO has issued a notice to the assessee and as the assessee failed to comply with the notice, the Ld. AO accordingly imposed the penalty of Rs. 10,00,000/- u/s. 43 of the Black Money (UFIA) and Imposition of Tax Act, 2015 [in short "the BMA Act, 2015"]. 6. Feeling aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after dealing with the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiary, or relating to any income from a source located outside India, at any time during such previous year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum often lakh rupees: Provided that this section shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year. 3. Enactment of BMA for Technical, Venial or Bonafide breaches 3.1) The said harsh law named Black Money (Undisclosed Foreign Income & Assets) and imposition of Tax Act, 2015 has been enacted for checking the economic offenders, tax evaders and for the larger causes of public good and cannot be so interpreted as to cause undue hardship to bonafide/ innocent breachers and therefore the said law must not be invoked for punishing a technical/venial/bonafide breach by a bonafide breacher of any statutory obligation and therefore, the bonafide actions of the taxpayers must be excluded from the application of provisions of stringent legislations like, BMA, 2015." 10.1 By reading bare provisions of section 43 of the Act, it clearly refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the case of the Assessee does not fall under the rigorous provisions of section 43 of the B.M. Act. No doubt the Schedule "FA" and BMI Act, have been introduced and enacted for checking the economic offenders, tax evaders and for analyses of information qua foreign investment/income by using artificial intelligence and Schedule "FA" applicable specifically to the Assessee(s) whose accounts are not required to be audited or if audited but books of account not filed along with the return of income. However, in each and every case, the penalty as prescribed in section 43 of the Act, cannot be imposed. 10.3 With regard to the contention raised by Ld. DR to the effect that the Assessee is a habitual defaulter. In our view as the Black Money Act was introduced and enacted in 2015 and therefore, that could be a reason for technical / venial breach starting from AY 2016-17 onwards which is under consideration before us, however, in the instant case, it is not the case of total defiance or malafide or dishonest breach/non- disclosure of information of foreign investment in schedule FA, therefore, on the aforesaid analyzations and considerations, in our view the penalty is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 nondisclosure under section 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. 9. The BMA is enacted on 26th of May, 2015 by Act number 22 of 2015 and 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 furnish in return of income, information or furnish inaccurate particulars about an asset (including financial interest in any entity) located outside India. The section reads as under - 43. If any person, being a resident other than not ordinarily resident in India within the meaning of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 schedule FA. Even if it is assumed that in the light of expression "may" used in section 43 of BMA, the Assessing Officer has the discretion to levy penalty, the assessee failed to substantiate that the Assessing Officer has exercised his discretion extravagantly. The Assessing Officer after examining the facts of the case, formed his opinion to levy penalty. The Assessing Officer exercised his discretion judiciously. No material is brought before us to show that Assessing Officer levied penalty under section 43 of BMA in an arbitrary and unjustified manner. The contention that the assets are not undisclosed assets may be factually true, but penalty under section 43 is levied for non-reporting of overseas investments and not for making investments from unaccounted money. The provisions of section 43 does not provide any room not to levy penalty even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady furnished the information with regard to the source of the investment during the assessment proceedings for the AY 2019-20. It was submitted that the assessee will not gain by not disclosing the information more particularly, when the assessee has been disclosing the same information in the previous and subsequent assessment years. 14. Section 43 of BMA, Act, 2015 requires the Assessing Officer to impose a penalty of Rs. 10 lakhs in case there is a failure on the part of the assessee to furnish inaccurate particulars of investment outside India. In the present case, admittedly the assessee has failed to disclose the said assets outside India and when this fact came to the notice of the Assessing Officer in the assessment proceedigns for the AY 2019-20 then as per the procedure provided u/s. 46 of the BMA Act, 2015, the Assessing Officer had issued the show cause to the assessee for imposing the penalty. 15. The assessee, though had pleaded ignorance or omission or technical glitch to justify non-disclosure in the return of income, the same has been rejected by the Assessing Officer /CIT(A). We are of the opinion that though Section 43 has been couched in the mandatory manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. In view of the above, the penalty imposed by the lower authority is required to be deleted. Furthermore, we may follow the reasoning given by the co-ordinate Bench of the Tribunal in the case of Ocean Diving Centre (supra) wherein on identical facts, the Tribunal had deleted the penalty imposed upon the assessee. 16. The reliance of the Revenue on the decision of the coordinate Bench in the case of Ms. Shobha Harish Thawani (supra), is not applicable to the present facts of the case as the assessee in the present case, has all along disclosed the investment in the prior and subsequent assessment years and furthermore, the assessee was able to disclosed and explained the source of investment in foreign countries for the assessment year 2017-18 and therefore, the said decision is not applicable to the facts of the present case. Furthermore, we may fruitfully rely upon the decision of the jurisdictional High Court in the case of Mylan Laboratory reported in [2022] 137 taxmann.com 178 (TELANGANA) wherein it was held as under:- "35. In Union of India v. Kamlakshi Finance Corporation Ltd. 1992 taxmann.com 16, Supreme Court held and reiterated that the principles of judicial dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
