Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015)

S.43: 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-Foreign insurance policy was not declared in the return- Bonafide mistake- Levy of the penalty of Rs 10 lakhs was deleted. [S.10(3), Income-tax Act, 1961, 139]
Assessee an Indian Resident held a foreign insurance policy outside India Under the income tax act, the assessee was obliged to disclose the same in Schedule FA of the IT return. Since the assessee failed to disclose in its return, the AO levied penalty u/s43 of Black Money Act. CIT(A) deleted the penalty relying on the decision of the Tribunal in Add.CIT v. Leena Gandhi Tiwari (MBA No 1/Mum/ 2022 dt.29 -3 -2022) (2022) 216 TTJ 905 /96 ITR 384 / 212 DTR 105 (Mum.) (Trib.) Revenue filed an appeal before the Tribunal. Dismissing the appeal of the Revenue the Tribunal held that, during the year the policy was matured thus at the end of the year the policy did not exist. Assessee in its return declared the maturity proceeds as exempt income, thus disclosing the maturity value of the policy. In the declaration filed under Black Money Act it declared the same and paid taxes and penalty on it. The surrender value of the policy was declared in the IT return and only in schedule FA which is for disclosing foreign assets held during the year, it was not shown, amounting to a bonafide mistake. Furnishing inaccurate particulars about assets located outside India cannot be imputed on the assessee as it has already made a declaration under the Black Money Act, which was accepted by the Revenue. Thus it cannot be accepted that the foreign insurance policy was not declared in the return. Held penalty u/s 43 not justified. (BMA No. 5/Mum/2022 dt. 3-4-2023)(AY. 2016-17)
Addl. CIT v. Tejal Ashis Mehta (Mum.)(Trib.) www.itatonline.org
[Coram : Hon’ble Shri Vikas Awasthy, JM & Hon’ble Shri Gagan Goyal, AM]