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TMI Blog2025 (3) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... al read as under: 1. The order of the CIT(Appeals) 18, Chennai dated 18.01.2024 in DIN & Order No. ITBA/COM/M/17/2023-24/1059899195(1) for the above assessment year is contrary to law, facts, and in the circumstances of the case. 2. The CIT(Appeals) - 18, Chennai erred in confirming the levy of penalty u/s. Section 43 of The Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015), herein after referred to as the Act to the tune of Rs. 10,00,000/- on the presumption of failure in furnishing information of the investments made by the appellant in the return of income filed for the* assessment year under consideration without assigning proper reasons and justification. 3. The CIT(Appeals)- 18, Chennai failed to appreciate that provisions in Section 2(11) of the Act had no application to the facts of the present case, thereby negating the levy of penalty under provisions of Black Money (Undisclosed Foreign Income and Assets) and imposition of tax Act, 2015. 4. The ClT(Appeals) - 18, Chennai failed to appreciate that there was no precise charge in the notice initiating the penalty proceedings under consideration, thereby vitiating the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chennai ought to have appreciated that the order imposing penalty under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 12. The CIT(Appeals) - 18, Chennai failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 1.2 The Ld. AR advanced arguments with the support of various case laws, the copies of which have been placed on record. The Ld. Sr. DR also advanced arguments and justified the invocation of provisions of Sec.43 of BMA against the assessee. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 1.3 At the outset, it is noted that the provisions of Sec. 43 of BMA provide that if any person, being a resident other than not ordinarily resident who has furnished the return of income for any previous year under sub-sections (1) or (4) or (5) of Sec.139 fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice u/s 43 of BMA 30-03-2021 10. Penalty order passed u/s 43 of BMA 19-03-2022 2.3 It transpired that the assessee had made investment in foreign entities. The assessee was also holding two immoveable properties. The assessee held one bank account also. The details thereof have been extracted on Page No.1 & 2 of penalty order dated 19-03-2022. Though all these investments were not reflected in the Schedule "Foreign Assets" (FA in short) in the return of income, nevertheless, sources for the investment abroad were clearly explained by the assessee with supporting documents. The same is also evident from the fact that the assessment was completed with 'Nil' addition. However, Ld. AO initiated penalty u/s 43 since the assessee failed to furnish information of such investments in the returns of income. Accordingly, the assessee was show-caused. 2.4 The assessee opposed levy of penalty on the ground that it maintained non-residential status up-to AY 2011-12 and for AYs 2012-13 and 2013-14, the status was not ordinarily resident. For subsequent years, the assessee was a resident. The issue is only for AY 2016-17 when the act was first introduced. The assessee reflected income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 was for procedural default. For exercise of this discretion, the assessee could not make out any case. Finally, the impugned penalty was confirmed. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 3. From the facts, it emerges that the assessee was a non-resident up-to AY 2011-12 and for AYs 2012-13 and 2013-14, the status was not ordinarily resident. Thereafter, the assessee has become resident. From AY 2016-17, BMA was introduced wherein there was a new requirement on a resident to disclose the details of prescribed foreign assets. This requirement was a newly introduced requirement and introduced for the first time w.e.f. AY 2016-17. Undisputedly, this information was not furnished by the assessee is regular return of income filed on 30-11- 2016. 4. Subsequently, the assessee was searched on 09-11-2017 and notices were issued u/s 153C for various assessment years on 13-09- 2019. In response, the assessee filed return of income on 21-11-2019 which was scrutinized under Income Tax Act and an assessment was framed u/s 143(3) r.w.s. 153C on 31-12-2019 wherein Ld. AO made certain addition of rental income as well as certain other addition u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 43 of BMA comes into play only when the aggregate value of these assets exceeds Rs. 5 Lacs. Therefore, even statutorily, it is not a simple cause and effect relationship between non-disclosure of an undisclosed foreign asset in the income tax return and penalty under BMA. The unambiguous intent of the legislature thus was to exclude trivial cases of lapses which could be attributed to a reasonable cause. It could also be noted that Sec.43 provide that the Assessing Officer "may" impose the penalty, and the use of the expression "may" signifies that the penalty is not to be imposed in all cases of lapses and that there is no cause and effect relationship simplicitor between the lapse and the penalty. As to what should be the considerations for the exercise of this inherent discretion by the Assessing Officer, some guidance could be taken from Hon'ble Supreme Court's judgment in the case of Hindustan Steel (supra), which, inter alia, observes that "........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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled in response to notice u/s 153C 21-11-2019 6. Order passed u/s 153C 31-12-2019 7. Notice us 10(1) of BMA 27-11-2017 8. Order Passed u/s 10(3) 30-03-2021 9. Show Cause notice u/s 42 of BMA 30-03-2021 10. Penalty order passed u/s 42 of BMA 19-03-2022 9. It could be seen that in his year, the regular return of income was filed by the assessee on 20-11-2018 admitting income of Rs. 81.30 Lacs which was held to be invalid return. In this return, the assessee had disclosed foreign assets / investments in Schedule FA. Subsequent to search on the assessee, notices u/s 153C was issued and the assessee filed return of income on 21-11-2019 admitting income of Rs. 79.53 Lacs. The Ld. AO made addition of Rs. 4 Lacs but Ld. AO adopted original returned income of Rs. 81.30 Lacs while framing the assessment. However, penalty u/s 42 was initiated on the ground that the assessee failed to file the return of income within prescribed time limit. Accordingly, the assessee was show-caused. The provisions of Sec. 42 provide that if a person, being a resident other than not ordinarily resident in India, who is required to furnish a return of his income for any previous year, as require ..... X X X X Extracts X X X X X X X X Extracts X X X X
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