9911796707
TMI Blog2025 (5) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be applicable mutatis mutandis to all these appeals under consideration. 3. BMA No.1/M/2025: In this case, Ld. DDIT/ADIT(Inv.)-1(1) FAIU, Mumbai [Assessing Officer] (in short "the AO") had received a credible information to the effect that the Assessee had foreign assets in the form of investments in the financial entities registered in United Arab Emirates and Isle of MAN, namely Zurich International Life Ltd (UAE) and RL 360 Life Insurance Company (Isle of Man) respectively and therefore during the course of investigation, a summon u/s 131(1a) of the BMA was issued to the Assessee on 27.06.2023. The Assessee in response filed the requisite details on 31.07.2023. 3.1 Thereafter, on inquiring on e-filing/ITBA portal, it was observed by the that the Assessee has filed income tax returns/ITRs for the AYs 2011-12, 2023-24 and has declared status as "resident" for all the assessment years. However, on the basis of information received in the office of the AO, it was observed that the Assessee has made following investments but not disclosed in FA Schedule in ITR: Information Source INFID Account No Interest Received Dividend Received Gross Proceeds/Redemption Zurich I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Returns of Income for AYs 2011-12 to 2023-24 declaring residential status as Resident in India for tax purposes for all the AYs. 4. After verification of details submitted during the course of investigation, it is seen that you have not declared the above said investments made in a Zurich International Life Limited-Branch (UAE) & RL360 Life Insurance Company (ISLE OF MAN) in Schedule FA of the Income Tax Return filed by you for the AY 2016-17. 5. As you have failed to disclose your total investments in a Zurich international Life Limited - Branch (UAE) & RL360 Life Insurance Company (ISLE OF MAN) in your retum of Income filed for the AY 2016-17, you are hereby required to show cause in writing as to why a penalty of Rupees Ten Lakhs for each assessment year should not be levied for the AV 2016-17 for non-disclosure of information about an asset located outside India in accordance with the provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 6. The compliance to this show cause notice shall be made by 05.10.2023." 5. The Assessee, in response to the aforesaid show cause notice, made submissions vide letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have failed to disclose the investments made in RL 360 Life Insurance Company (ISLE OF MAN) or Zurich International Life Limited in return of income does not hold good. It is further submitted that the same does not amount to non-disclosure of information about an asset located outside India in accordance with the provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Therefore, in consideration of the above mentioned facts and documents, it is humbly submitted that the penalty of Rupees Ten Lakhs for assessment year 2016-17 should not be levied." 6. The AO though considered the reply/submission of the Assessee but could not find the same, as acceptable, on the following reasons: "8.1. The residential status of the assessee is verified from return of income and it is found that the assessee is Indian resident from A.Y. 2011-12 to AY 2023-24. Further, from the perusal of FA Schedule in the return of income filed, it is observed that the assessee had not disclosed his foreign investments in various accounts of Zurich International Life Limited Branch (UNITED ARAB EMIRATES) & RL360 Life Insurance Company (ISLE OF MAN) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the name of the assessee. This fact has not been denied by the assessee also. As the foreign investment in the form of various accounts is in the name of the assessee, he is in duty to disclose the same in the FA schedule of return of Income. Further, the assessee had committed default in the subsequent year as well. Thus, it cannot be said that the default was bona fide. The submission cannot be considered as plausible explanation for not disclosing the investment in the FA schedule and thereby committing default within the meaning of the provisions of S 43 of the Black Money Act 2015 8.5 Further, Chapter IV of Black Money Act, 2015 provides for penalties leviable in respect of various defaults mentioned within the meaning of provisions of Black Money Act, 2015. As per this Chapter IV, there are separate penalties provided for default u/s 41 & u/s. 43 of the Black Money Act. 2015. Section 41 of the Black Money Act, 2015 provides for the penalty in respect of tax computed us 10 of the Black Money Act, 2015. Whereas, section 43 of the Black Money Act. 2015 provides for a penalty in respect of non-disclosure of Foreign Income & Assets under FA Schedule of Return of Income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Individual having PAN-AACPR1058F. 2. Proceedings under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as "BMA") were initiated in appellant's case by issuance of summons u/s. 131(1A) of the Income Tax Act, 1961 (hereinafter referred to as the Act) dated 15.07.2022 by the DDIT/ADIT(Inv)- 3(4), FAIU, Mumbai which were duly complied by the appellant. Subsequently, similar summon u/s. 131(1A) of the Act dated 27.06.2023 were issued to the appellant by the DDIT/ADIT(Inv)- 1(1), FAIU, Mumbai which was once again complied by the appellant within the due time. 3. Thereafter notice u/s. 43 of the Black Money Act, 2015 bearing DIN and Notice No. ITBA/COM/F/17/2023-24/1056539761 (1) dated 26/09/2023 was issued to the appellant in response to which all the detail called for were duly submitted to the officer. During the course of said proceedings, the appellant had clarified the stand as regarding alleged nondisclosure of offshore investment in Zurich International Life Limited and RL 360 Life Insurance Company (ISLE OF MAN) in FA schedule of the ITR for AY 2016-17 to 2022-23 as under: With regards to a life insurance p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Zurich International Life Limited, it is submitted that the appellant had bought one life insurance policy in year 2010 from the foreign currency used to carry during his foreign visit since his job involved travelling to various countries and also had considerable risks. For the said policy, the last premium was paid by the appellant in 2014. All the documents substantiating the above facts were also provided to the AO. Copy of the submission filed on 09.11.2023 is enclosed herewith as Annexure 1. However, the AO ignored the above facts and proceeded to levy a penalty of Rs. 10 Lacs for AY 2016-17 to 2022-23 for non-disclosure of assets in Schedule FA of the ITR. 2. Thereafter, with regards to allegation made in the impugned order that the alleged investment in RL 360 Life Insurance Company (ISLE OF MAN) and Zurich International Life Limited was not disclosed in Schedule FA of the income tax return for the AY's 2016-17 to 2022-23, it is submitted that the appellant was not required to report the same under Schedule FA. The appellant had neither invested any money nor was having any beneficial interest in the entity RL 360 Life Insurance Company (ISLE OF MAN) and was there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and hence we humbly request your goodself to quash the impugned order passed u/s 43 of the Black Money Act, 2015 and delete the penalty amounting to Rs 10,00,000/- passed for each assessment year i.e AY 2016-17 to AY 2022-23. 2. Without prejudice to above, it is submitted that even if any penalty is to be levied, the same should be restricted to Rupees Ten Lakhs for one assessment year only as the learned assessing officer is alleging the same offence in multiple years. It is humbly submitted that levying a penalty on multiple occasions for the alleged offence would cause great prejudice to the appellant, especially when the appellant does not have any beneficial interest in the said asset." 9. The Ld. Commissioner though considered the submissions of the Assessee, however, found the same as un-acceptable and therefore ultimately affirmed the levy of penalty, by observing and holding as under: "7.6 Coming to the facts of the instant case, there is no dispute that the appellant is a resident within the meaning of Income Tax Act for the instant year and hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further clearly established in Circular No 13 of 2015 dated 06.07.2015 issued by CBDT wherein it has been clarified that even of the foreign investment is out of disclosed sources. reporting in Schedule FA is still to be done. It is also worthwhile to mention here that the said Circular was available to the appellant at the time of filing of his return of income. Thus, there has been a default on the part of the appellant in not reporting the investments in RL360 Life Insurance Company (Isle of Man) since the appellant is the primary and the legal owner and the said asset is in existence for the calendar year relevant to the instant assessment year. 7.9 As regards the investment in various accounts of Zurich International Ltd (Branch UAE) the appellant has stated that he had purchased the policy in 2010 out of foreign currency carried during his foreign visit and that the last premium was paid in 2014 and that the policy has lapsed. The appellant has not submitted any evidence/document to show that the asset is not in existence in the instant year. As regards the argument that the same has been purchased out of disclosed funds, it has already been held above in para 7.8 that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars in such return relating to any asset located outside India, held by him as a beneficial owner or otherwise or in respect of which he was a beneficiary, or in relation to any income from a source located outside India. The term "fails to furnish any information" is sufficient to include in its ambit non-disclosure of a foreign asset. Also, even if the disclosure is made, furnishing of inaccurate particulars about a foreign asset also would make the assessee liable for penalty u/s 43 of BMA. In the present case, it was mandatory for the appellant to disclose the foreign assets accurately in the return. The mandate to file such information was introduced in the Income Tax Act from AY 2012-13 onwards and it is noted that the appellant has failed to file the particulars of the foreign asset in the return filed by him for the relevant assessment year. 7.12 The appellant has contended that since he had neither invested any money nor was having any beneficial interest in the said foreign entity, there was no requirement on part of the appellant to disclose either of the insurance policies in his ITR and therefore penalty was not leviable. 7.13 In this regard, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on period allowed as per law. The action of the AO in levying penalty is thus upheld. This ground of appeal raised by the appellant are decided against him and stand dismissed." 10. The Assessee, being aggrieved with the decision of the Ld. Commissioner in affirming the levy of penalty to the tune of Rs. 10,00,000/-, challenged the same by filling instant appeal and more or less, has claimed as under: "That the Assessee before both the authorities below had offered clarification with regard to the life insurance policy from RL 360 Life Insurance Company (Isle of Man) that he is neither holding any investment in such alleged company nor he is a beneficiary or invested any amount in such company. The Assessee duly clarified before the authorities below that though the policy, as alleged by the Department, stood in the Assessee's name, however, the same was purchased by brother-in-law of the Assessee in the Assessee's name in order to protect his sister as the Assessee due job obligations, used to travel to foreign country frequently. Admittedly, the Assessee was neither a beneficiary of such policy nor paid any premium or installment of such policy. In fact, the premium was paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income for the assessment year under consideration. 14. The Assessee, further submitted two documents, one which relates to the policy summary of Zurich International Life Limited, UAE, wherefrom it clearly appears that said life insurance was taken on 01.09.2010 and the last premium was paid on 24.03.2014. From the policy summary, as on 04.07.2024, it appears that the same has already been lapsed for non-payment of premium. 15. With regard to the life insurance policy from RL 360 Life Insurance Company (Isle of Man), the Assessee has submitted an undertaking certificate/declaration dated 31.10.2022 issued by Mr. Zahid Kothari, who has stated that he is a brother of Mrs. Saaina Rasai, wife of Mr. Akil Rasai (Assessee herein) and had decided to buy a life insurance policy in the name of Mr. Akil Abbas Rasai, who was travelling frequently to various places across the world for work purposes and therefore, considering the uncertainty involved in the work of Mr. Rasai, he decided to buy a life insurance policy in the name of Mr. Akil Rasai but making his sister as beneficiary. Mr. Zahid Kothari further reiterated that the insurance policy was bought by him only and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 43 of the BMA, the penalty proceedings u/s 43 of the Act were initiated and consequently the Assessee was show caused. The Assessee in response to show cause by filing his reply has claimed that life insurance policy from RL 360 Life Insurance Company (Isle of Man) though stood in the Assessee's name, however, the said policy was procured/purchased by the brother in law of the Assessee (Mr. Zahid Kothari) in order to secure the life of his sister, as the Assessee used to carry foreign visits frequently and consequently all the insurance premiums have been paid by Mr. Zahid Kothari. The Assessee never paid any premium of such policy. Mr. Zahid Kothari has also submitted an affidavit in this regard before the AO. Further, the Assessee Mr. Zahid Kothari has also issued a certificate dated 31.10.2022 in this regard, which reads as under: "ZAHID KOTHARI 2705 North Center St, Unit 38, Hickory, NC 28601. Tel 828 781 7811 31st October 2022 To whomsoever it may concern I, Zahid Kothari, aged 49 years, an inhabitant of the United States of America residing at 2705 North Center St. Unit 38, Hickory, NC 28601, hereby confirm that I am a brother of Mrs. Sakina R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any (Isle of Man), however, subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy. 21. Coming to second life insurance policy of Zurich International Life Ltd. - Branch (United Arab Emirates), the Assessee has claimed that since Assessee's job had involved travelling to various countries and had also considerable risks and therefore, the said policy was bought by the Assessee in the year 2010. Somehow the said policy lapsed after 2014 and therefore the same ceased to be an asset and thus there was no requirement to disclose such asset in a FA Schedule of ITR. The Assessee, in support of such claim, has also filed a copy of summary of policy, according to which the same was started on 01.09.2010 and last premium was paid on 24.03.2014, thereafter, nothing appears from the policy document, "as to whether any subsequent premium has been paid or not". In the policy, "status" of the policy is mentioned as "lapse" meaning thereby the policy lapsed due to non-payment of premium, which was lastly paid on 24.03.2014. Admittedly, the provisions for imposing the penalty u/s 43 of the BMA 2015, came into effect from A.Y. 2016-17 onwards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 remained to be fulfilled, ld. AO was not justified in invoking the provisions of Black Money (UFIA) And Imposition of Tax Act, 2015 to make an addition in the hands of the assessee at Rs. 1,08,01,726/-. We, thus, reverse the finding of ld. CIT(A) and delete the addition made in the hands of the assessee and allow ground nos. 1 to 5 raised by the assessee in the instant appeal." 23. Coming to the judgment passed by the Tribunal in BMA no.1 to 3/M/2023 decided on 09.08.2023 as relied on by the Ld. DR, we observe that in this particular case, the Assessee along with her husband has made a joint investment in Global Dynamic Opportunity Fund Ltd. in the ratio of 40:60 respectively. The Assessee made the investments, out of funds transferred from India to HSBC Bank at Jersey. The AO had noticed that Assessee, though, declared interest income from foreign investments in A.Y. 2016-17, however, the said asset was sold and offered to capital gain to tax in A.Y. 2019-20 but the Assessee did not disclose such foreign asset, while filing return of income from A.Y. 2016-17 to A.Y. 2018-19 under Schedule FA and therefore the penalty was levied by the AO. Which was subsequently affirmed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
