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TMI Blog2025 (3) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... ears under consideration. The AO noticed from the submissions made by Shri Sanjay BhupatraiShah that the assessee herein had transferred funds to Shri Chintan Sanjay Shah in India. Thereafter, Shri Chintan Sanjay Shah has invested in 129.502355 units of ASK Global Strategies Fund (MAURITIUS) through Apex Fund Services on 14th September, 2018 and the assessee herein was shown as a joint-holder. Since the assessee did not declare the above said investment in "Schedule-FA" of Income tax returns, the AO initiated penalty proceedings u/s. 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in all the three years under consideration. 3. Before the AO, the assessee submitted that the above said foreign investment was made by his son Shri Chintan Sanjay Shah only and he is the economic and beneficial son of the entire value of investment. Accordingly, the assessee contended that he was not the owner of the foreign asset and hence, there was no requirement of disclosing the same in Schedule-FA of the income tax returns. The AO did not accept the above said explanation furnished by the assessee. Since the assessee has given funds to his for making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Shri Chintan Shah only in his Balance sheet and also in Schedule FA of Income tax return for AY 2019-20. Accordingly, it was submitted that Shri Chinthan Sha is the actual and beneficial owner of the above said foreign asset. The Ld A.R also submitted that Shri Chinthan Shah did not inadvertently declare the foreign investments in AY 2020-21 and 2021-22 in Schedule FA, even though the same was declared in that Schedule in AY 2019-20. Hence, the AO had levied penalty of Rs. 10.00 lakhs each in AY 2020-21 and 2021-22. The Tribunal has adjudicated the said issue in his case in BMA Nos. 31 and 32/Mum/2024 dated 27.11.2024 and deleted the penalty on noticing that Shri Chintan Shah has declared the above said investment in the Balance sheet, which was also incorporated in some other schedule and further, non-declaration in Schedule FA in these two years was without any malafide intention or ulterior Motive. 5. We notice that above said contentions have not been appreciated by the tax authorities. They were of the view that, since the above said investment has been made by Shri Chintan Shah out of funds given by the assessee and further the assessee has been made joint owner, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the relevant circumstances and in case the Assessee is able to discharge its burden for reasonable cause, then the discretion against the Assessee has to be used cautiously and consciously. The Hon'ble Apex Court in M/s Hindustan Steel Ltd. vs State of Orissa (1972) 83 ITR 26(SC) also reminded 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 offende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said investment in the books of R Venkat Raman (page 24 of paper book of AY 2016-17) and the bank statement of R Venkatraman with the outflow of funds towards the investment in Global Dynamic Opportunities Fund Ltd (page 26 of paper book of AY 2016-17). Similar details are available in the paper book submitted for other assessment years under consideration also. Therefore the Ld AR contended that the asset is actually owned by the husband of the assessee and the assessee's name is included only for administrative convenience. Accordingly the non-disclosure is an inadvertent error on the part of the assessee with no intention to evade any tax. From the perusal of the records, it is noticed that the impugned assets are disclosed in the return of income of assessee's husband and that the source for acquisition of the said assets has flown from the husband's sources. This substantiates the submission that the assessee is not a joint owner of the impugned asset but only a secondary owner. So there is merit in the contention that the owner of the asset (i.e.assessee's husband) has disclosed the assets and the assessee being the secondary owner did not disclose under the bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets, as it belongs to his son. We notice that the tax authorities have placed reliance on the fact that the assessee has lent money to his son Shri Chintan S Shah, who has, in turn, used those funds to make investments. Under the General law, merely for the reason that a person has purchased certain assets out of borrowed funds, the lender would not automatically become owner of those assets. The buyer would continue to remain owner of those assets, until it is recovered from him by the lender in accordance with law. in the event of failure of the borrower to adhere to the terms and conditions of loan. Further, the said loan transaction has taken place in India and it has been duly recorded in the books of both the lender and borrower. Hence the provisions of BMA will not extend to the loan transaction entered between the parties in India. 9. In view of the foregoing discussions, we are of the view that the tax authorities are not justified in levying penalty of Rs. 10.00 lakhs in each of the three years under consideration. Accordingly, we set aside the orders passed by Ld CIT(A) and direct the AO to delete the impugned penalties. 10. In the result, all the three appeals of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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