Re: Undisclosed Assets located outside India

An assessee has filed a declaration u/s 4 of the scheme to settle the dispute that was being contested in an appeal before the Commissioner(Appeals) for A.Y. 2017-18 in respect of the addition made to the total income, under the Income tax Act, on the ground that the assessee owned an undisclosed asset located in a foreign country, outside India. An identical addition is also made under the provisions of the Black Money Act which is separately contested in an appeal under the BMA. The assessee seeks to settle the dispute under ITA by opting under VSVt and as a consequence thereof desires to persuade the appellate authority under the BMA that income once taxed can not be doubly taxed. The authorities have rejected the declaration by invoking the provisions of clause(iii) of sub-section(a) of s.9 .

There is a doubt that the assessee qualifies to file a declaration u/s 4 under the scheme for settlement of the disputed tax which has arisen on account of an assessment under the Income tax Act in relation to an undisclosed asset located outside India. Ordinarily, such an  addition should have been made under the BMA and not under the ITA and surely not under both the Acts. The doubt has arisen on account of the language of the provision which provides for blanket prohibition  for assessments involving undisclosed foreign assets irrespective of  the parallel assessment made under the BMA. What however is not possible but is desirable to avoid double taxation is the consequential withdrawal of the assessment made under BMA and the deletion of the addition made therein in cases where an assessee succeeds in settling his dispute under ITA under the scheme .

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