ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE 4, MUMBAI V. SHRI YASHOVARDHAN BIRLA, MUMBAI

BMA 35/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the learned CIT(A) which quashed the assessment order under section 10(3) of the Black Money Act, 2015. The assessee, Yashovardhan Birla, was found to have undisclosed foreign assets and income, which were not declared in his income tax return. The Revenue challenged the CIT(A)'s decision, arguing that the CIT(A) had relied on an earlier ITAT order without examining fresh facts. However, the Tribunal dismissed the Revenue's appeal, citing the precedent set in the assessee's own earlier case, where the notice under section 10(1) was held invalid.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827879 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2016-2017
• Appeal Filed On: 30-09-2025
• Other Referred Cases: Yashovardhan Birla Vs. CIT(A)
• Laws Referred To: Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRA
• Assessee Lawyers: MRUNAL PAREKH
• Keywords: Principle of natural justice; Search and seizure; Double taxation relief; Residential status
• Section: 15

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER BMA No. 35/MUM/2025 (Assessment Year: 2016-17) Additional Commissioner of Income Tax, Central Range-4, Mumbai ............... Appellant v/s Yashovardhan Birla, Birla House 21, Mount Pleasant Road, Mumbai – 400006 PAN : AAJPB2505N ……………… Respondent Assessee by : Shri Mrunal Parekh Shri Priyank Ghia Revenue by : Shri Ritesh Misra, CIT-DR Date of Hearing – 26/11/2025 Date of Order - 09/01/2026 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The Revenue has filed the present appeal against the impugned order dated 14.07.2025, passed under section 15 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“the Black Money Act”), by the learned Commissioner of Income Tax (Appeals)-51, Mumbai, [“learned CIT(A)”], for the assessment year 2016-17. 2. In this appeal, the Revenue has raised the following grounds: - “i. Whether the Ld. CIT(A) erred in law in quashing assessment u/s.10(3) of the Black Money Act by mechanically relying on ITAT’s earlier order dated 03.09.2021, without independently examining fresh facts and material available in the instant case? Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 2 ii. Whether the Ld. CITA) was justified in passing the impugned order when the validity of the ITAT's decision dated 03.09.2021 is already sub judice before the Hon’ble Bombay High Court? iii. Whether, on facts and in law, the Ld. CIT(A) erred in holding that notice u/s 10(1) is not sustainable, ignoring that it constitutes an independent cause of action based on undisclosed foreign assets not declared in Schedule FA of the ITR till the date of notice? iv. Whether the Ld. CIT(A) erred in law in ignoring that foreign assets/income referred to in notice u/s 10(1) were never assessed under the Income-tax Act, and in holding that such assets could not again be taxed under the BMIT Act, thereby misapplying the principle against double taxation? v. Whether the Ld. CIT(A) was justified in quashing the assessment order without considering incriminating material such as foreign bank accounts, FT & TR reports, and beneficial ownership records establishing assessee's undisclosed interest in offshore entities? vi. Whether reliance by the Ld. CIT(A) on Wealth Tax Tribunal's findings regarding discretionary trust structure is sustainable in law, given that the BMIT Act operates under a distinct statutory framework and wider chargeability provisions?” 3. We have considered the submissions of both sides and perused the material on record. The brief facts of the case are that the assessee is an Indian national and a tax resident of India. On 07.01.2014, a search and seizure action was conducted in the case of the assessee and the group companies. During the search and seizure action, certain incriminating documents and evidence were found and seized, which revealed that the assessee owns foreign assets, beneficial ownership in foreign entities and offshore bank accounts in the name of these foreign entities. On the basis of the information/inputs gathered during the search and seizure action, several FT & TR references to Foreign Tax Authorities were made by the DIT(Inv.), Mumbai, through the Investigation Division, CBDT under MLAT and through the FT & TR Division, CBDT under DTAA. From the replies received in response to such references from Foreign Tax Authorities, the findings of search action Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 3 with respect to beneficial interest of the assessee in foreign entities, foreign bank accounts in the name of such foreign entities and foreign assets were gathered. It also came to the knowledge of the Revenue that the foreign bank accounts were maintained in the name of these offshore entities, having the assessee as the ultimate beneficial owner. It was also found that the assessee has acquired property in Singapore and London. It was also noticed that these assets, financial interest, and beneficial ownership were not declared by the assessee in its income tax return, more particularly in Schedule-FA of the ITR, which was mandatory from assessment year 2012-13. 4. Accordingly, notice under section 10(1) of the Black Money Act was issued to the assessee on 22.11.2017. The assessee raised various jurisdictional/other objections against this notice issued under section 10(1) of the Black Money Act, which were disposed of by the Assessing Officer (“AO”) vide its letter dated 17.01.2019. Being aggrieved by the rejection of the objection by the learned AO, the assessee filed an appeal before the learned CIT(A) challenging the validity of the notice issued under section 10(1) of the Black Money Act as well as the order disposing of the objection raised by the assessee against the notice issued under section 10(1) of the Black Money Act. Subsequently, noticing the delay in disposal of the appeal at the first appellate level and due to assessment proceedings under section 10(3) of the Act getting time-barred, the assessee filed Writ Petition (L) No.7887 of 2021, seeking certain directions from the Hon’ble Bombay High Court, including a stay on the assessment proceedings. The Hon’ble High Court, vide its order dated 30.03.2021, refused to grant the stay on the Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 4 assessment proceedings pending before the AO under section 10(3) of the Black Money Act and directed expeditious disposal of the appeal filed by the assessee before the learned CIT(A). Pursuant to the direction issued by the Hon’ble High Court, the learned CIT(A) vide its order dated 26.03.2021, dismissed the appeal filed by the assessee and upheld the validity of the notice issued by the AO under section 10(1) of the Black Money Act. Being aggrieved by the order passed by the learned CIT(A), the assessee filed an appeal before the Tribunal. 5. Vide order dated 03.09.2021, the coordinate bench of the Tribunal in Yashovardhan Birla Vs. CIT(A), in BMA No.1/Mum/2021, for the assessment year 2016-17, allowed the appeal filed by the assessee against the order passed by the learned CIT(A) upholding the validity of the notice issued under section 10(1) of the Black Money Act. 6. During the pendency of the appeal before the Tribunal, the AO completed the assessment proceedings under the Black Money Act and vide order dated 31.03.2021, passed under section 10(3) of the Black Money Act, assessed the total undisclosed foreign income and assets of the assessee at Rs. 8071,86,73,000/-. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee against the order passed by the AO under section 10(3) of the Black Money Act by taking into consideration the decision of the Tribunal dated 03.09.2021 in the assessee’s own case. Being aggrieved, the Revenue in appeal is before us. Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 5 7. During the hearing, the learned Departmental Representative vehemently relied upon the order passed by the AO and submitted that the decision of the Tribunal dated 03.09.2021 has been challenged by the Revenue before the Hon’ble High Court, and the Revenue’s appeal is pending consideration. 8. On the other hand, the learned Authorised Representative (“learned AR”) by placing reliance upon the decision of the Tribunal in assessee’s own case submitted that there is no basis in the impugned addition made vide order passed under section 10(3) of the Black Money Act, once the notice issued under section 10(1) of the Black Money Act was held to be not sustainable. 9. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal vide its decision dated 03.09.2021 passed in assessee’s own case for the assessment year 2016-17, in BMA No.1/Mum/2021, while deciding the appeal against the order passed by the learned CIT(A) upholding the validity of notice issued under section 10(1) of the Black Money Act, observed as follows: - “36. We have carefully considered the submissions and perused the record. We note that we are sitting in appeal against the dismissal by the Id. CIT(A) to the assessee's challenge to judicial defect in issuing notice by the A.O. under BM Act to the assessee. We note that the assessee's challenge in this regard before the Id. CIT(A) was pending for quite some time. The assessee had to approach the Hon'ble Jurisdictional High Court in this regard. The Hon'ble Jurisdictional High Court has given certain direction. 37. The Hon'ble High Court had noted that the assessment proceedings in the meanwhile, were in progress against which the jurisdictional issue was raised. The Hon'ble High Court directed to the Id. CIT(A) that he shall dispose of the pending appeal before it within a period of four weeks from today that was 30.03.2021. That the assessment proceedings to go on. That the results of the assessment proceedings will be subject to the decision of the Id. CIT(A). Now Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 6 we note that the A.O. has already concluded his assessment proceedings by the time the Id. CIT(A) disposed off the jurisdictional issue. In the said order of dismissal, the ld. CIT(A) noted that he had called for the documents which were relied upon by the Assessing Officer in issuing the notice. The Ld. CIT(A) further notes that the A.O. informed him that these documents were duly referred in his final assessment order. Hence, the Id. CIT(A) without actually examining the original documents on the basis of which the A.O. has issued the notice, disposed the assessee's challenge to jurisdictional issue based upon the final assessment order. Thus, it is amply clear and duly accepted by the Id. CIT(A) that he has not examined the original documents based upon which the notice was issued, rather he has relied upon the final assessment order. In fact, the entire order of the id. CIT(A) dismissing the jurisdictional issue is elaborately relied upon the final order of the A.O. We note that when the issue before the Id. CIT(A) was jurisdictional defect in issue of notice and the Hon'ble Bombay High Court had directed the Id. CIT(A) to dispose it off and that the assessment proceedings to go on, the reliance by the Ld. CITA) in dismissing the jurisdictional challenge by taking the huge recourse of the final assessment order and even admitting that original documents were not examined by the Id. CIT(A) is not sustainable in law. While deciding the above jurisdictional issue, the Ld. CIT(A) cannot rely upon the final assessment order. In other words, the findings in the final assessment order cannot be relied upon to overcome the jurisdictional defect/challenge. The jurisdictional issue has to be decided by reference to the materials relied upon the A.O. in disposing of the jurisdictional challenge. Hence, the Ld. CIT(A)'s extensively reliance upon the final assessment order by the A.O. in dismissing the challenge to jurisdictional defect, is both unsustainable on account of law in this regard as well as the same is in contradiction to the Hon'ble Jurisdictional High Court's direction in this regard. 38. We further note that the same assessee had been the subject matter of wealth tax proceedings before this ITAT. The assets and the bank accounts in question were already the subject matter to the Wealth Tax Assessment. The ITAT in Wealth Tax assessment has decided the issue in favour of the assessee. Some of the findings of the ITAT in the aforesaid Wealth Tax order has already been extensively dealt with in the aforesaid orders of the Id. CIT(A) but the same may be reiterated in the summary of the same here as well. 39. We note that the ITAT in wealth tax proceedings have already given a finding that the assessee was nominated as one of several beneficiaries of an offshore irrevocable discretionary trust, settled-in the year 1989 by the assessee's non-resident late maternal uncle Shri Pratap Malpani. That the assessee was not a contributor to the trust structure. That the assessee is not liable to be construed as sole beneficiary of the trust. That the Revenue cannot collapse the offshore trust structure. That the assessee was not a 'substantial owner' of the assets settled upon trust held through Knitec Holdings Ltd. That the bank account in foreign jurisdictions pertaining to offshore entities could not be treated as bank accounts of the assessee even though for anti-money laundering purposes the assessee had been declared as 'beneficial owner'. That the case of the Revenue is not that the investments were moved from India by the settler or any beneficiaries. It is a fact on record that there are no investments which were made by the assessee or the investments were made from India. Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 7 40. We note that the above order of the ITAT has not been reversed by the Hon'ble Jurisdictional High Court. Now we note that the above submissions have been rejected by the Id. CIT(A) on the ground that the said order of the wealth tax assessment was not before the A.O. when he issued the notice to the assessee. We find that the Wealth tax assessment order was very much before the Id. CIT(A), he could not have brushed aside the findings by the ITAT in the wealth tax proceedings by claiming that the said order was not in existence when the notice was issued. This is more so when on the other hand the ld. CIT(A) is himself placing reliance upon the final order of the A.O. which obviously was not in existence at the time when the notice was issued. 41. We note that the Hon'ble Supreme Court in the case of Suzuki Parasrampuria Suitings Ltd. (supra) has held that the assessee cannot take shifting stand under different proceedings and such stand was liable to be rejected on the touch stone of the legal maxim of approbate and reprobate. In the present case, we note that the Revenue as well as ITAT cannot take shifting stands under different proceedings, when after evaluation of the same facts the ITAT had taken a decision in favour of the assessee that these assets do not belong to the assessee. Now we at the ITAT cannot take a contrary view by shifting the stand that ITAT's own findings and decision has no precedential value. This being so, the denial of liability by the assessee under Black Money Act under the jurisdictional challenge duly succeeds in view of the above said ITAT order in Wealth Tax proceedings. 42. Now we note that the legal maxim of approbate and reprobate applies to the Revenue as well. When it has already been accepted by the Revenue authorities in the proceeding before Income Tax Settlement Commission, that they are not doubting the trust deed executed by the uncle of the assessee Shri Prat Malpani which is in fact a genesis of all the accounts in additions here. Now, the Id. CIT(A) is rejecting the same by holding that the same is not to be relied upon. In our considered opinion, on the touch stone of the Hon'ble Supreme Court decision referred above and the legal maxim of approbate and reprobate, the Revenue cannot be permitted to take a contrary stand in the proceedings before the ITAT that now they are doubting the veracity of the trust deed settled by Shri Pratap Malpani. Once it is held that the Revenue is not doubting the said trust deed, the entire edifice of Revenue's case in this case fails as it is clear that the said trust was settled by the assessee's maternal non residential uncle Shri Pratap Malpani. As held by the Hon'ble Bombay High Court in the case of Malaysian International Trading Corporation vs. Mega Safe Deposit Vaults (P.) Ltd. (supra) that where no evidence adduce regarding the foreign law, the presumption is that it is the same as Indian law on the point in consideration. The assessee's contention in this regard was that in such circumstances, the trust settled abroad has to be taken as under the Indian trust. In such circumstances, the rights and duties of the settler is governed with reference to appointment of trustees and control over assets. In such circumstances, the migration of the trust assets does not alter the irrevocable nature of the trust settlement. The reliance upon the said case laws and the submissions has been rejected by the Id. CIT(A) on the ground that it was not a case were unaccounted documents were unearthed. And the same was claimed to have pertained to a tax heaven case. We note that the above observations itself is fallacious as the veracity of the trust deed had already been not disputed by the Revenue in the proceedings before the Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 8 Income Tax Settlement Commission. Moreover, these reasons mentioned by the Id. CIT(A) does not warrant that the afore-said case laws from the Hon'ble Jurisdictional High Court is to be ignored, once it is accepted that all the assets in the present case originate from the said trust deed. This is further supported by the decision of Hon'ble Supreme Court in the case of CIT vs. Estate of HMM Vikramsinhji of Gondal (supra). In Commissioner of Wealth Tax vs. Estate of HMM Vikramsinhji of Gondal [2015] 5 SCC 666): \"A discretionary trust is one which gives a beneficiary no right to any part of the income of the trust property, but vests in the trustees a discretionary power to pay him, or apply for his benefit, such part of the income as they think fit. The trustees must exercise their discretion as and when the income becomes available, but if they fail to distribute in due time, the power is not extinguished so that they can distribute later. They have no power to bind themselves for the future. The beneficiary thus has no more than a hope that the discretion will be exercised in his favour.\"(Judgment Compilation - Master Tab 1), delivered in wealth tax proceedings, precluding taxability in the hands of the Appellant under IT. Act until distribution of Trust income, but no liability whatsoever under BMA. 43. On examination from the touchstone of the aforesaid case law, the ownership of these assets cannot be thrust upon the assessee. Hence, the denial of liability by the assessee at the jurisdictional stage also succeeds on this count too. 44. Another point in support in the present case is that the BM Act provides u/s. 4(2) an exclusion for the assets which have been created out of the income assessed in India. The assessee had duly submitted that it has already been assessed to income tax by the Income Tax Officer upto preceding assessment year. This submission was rejected on the ground that as the assessments were subject matter of settlement commission. We note that the settlement commission had rejected the assessee's plea and these matters & proceedings are already separately going on. Hence by no stretch of imagination can lead to a conclusion that incomes are not been assessed as the Revenue has not dropped its plea/withdrawn its plea, that these incomes are not exigible to income tax. Once it is so held, these assets cannot again be the subject matter of black money proceedings at this stage, as it will amount to double prejudice to the assessee which is not sustainable in law. 45. We further note that another grievance of the assessee is that various materials which have been referred by learned CIT(A) in his order rejecting the jurisdictional challenge have not been confronted to the assessee at the time of learned CIT(A)'s order dismissing the jurisdictional challenge. We note that this is a very germane point as the principle of natural justice in this regard have been ignored by learned CIT(A). It is evident that the catena of documents which learned CIT(A) has referred are in fact lifted by him from the final order of the Assessing Officer to support his order. These were never confronted to the assessee. In this view of the matter order of learned CIT(A) suffers from jurisdictional infirmity in as much as it is contrary to the rules of natural justice. Moreover, we note that assessee has duly raised a ground before Id CITA that there is violation of natural justice inasmuch as assessee's request for a personal hearing in this regard has been rejected by the AO. Ld. Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 9 CIT(A) rejected this by holding that there is no such scope in section 15(1)b We do not see the basis of such reasoning by Ld. CIT(A), when assessee has duly submitted that the documents relied upon have not been confronted to the assessee. Ld. CIT(A) in this regard has noted that these documents were not in appeal folder before him and he has simply accepted the AOs report that these documents are referred in AOs final order and the documents have been confronted to the assessee. This is palpable violation of natural justice and id CIT(A) has fatally erred in rejecting the claim without himself examining the records. This proposition is duly supported by Hon’ble Supreme court decision in the case of Andaman Timber Industries Vs CCE vide order dated sept 2, 2015. 46. We further note that in notice to the assessee, the Assessing Officer has referred to the names of certain bank accounts and Form-A obtained from banks for establishment of beneficial owners identity. Now in this regard it is the contention of learned Counsel of the assessee that declaration of beneficial owner in Form A is made for distinct purposes under the Swiss anti money laundering Act. In the submission above it has already been noted that in the aid of Swiss AML Act, the Swiss bankers Association has issued a Code of Conduct for Swiss Banks with regard to the exercise of due diligence (CDB Guidelines), wherein model Form A is prescribed for the declaration of identity of the beneficial owners. However, as clarified by the Swiss Federal Tax Administration, vide its letter dated 30.6.2015 it does not have application for matters of taxation. Hence, mention of assessee's name in this Form-A cannot be taken as any proof of assessee's ownership of this asset for tax purpose. 47. Another plea of the assessee is that these assets were already part of income tax proceedings up to preceding assessment year and that for present Assessment Year the assessee has still time to file income tax return. Hence, it is the claim of the assessee issue of notice is premature. This plea of the assessee has been rejected by the authorities below by holding that there is no such bar in the black money act. However, we note that definition of undisclosed asset in the back money act clearly provides that assets created out of income assessed in income tax already shall be excluded. Hence, when the revenue has already assessed these assets under income tax proceedings upto previous Assessment Year and for current assessment year time for filing the return has not expired, assessee's plea that the issue of notice is premature is tenable and accordingly we accept the same. The bar in the ACT is inbuilt inasmuch as it has been provided that assets out of income assessed to income tax shall be excluded from the purview of undisclosed asset in Black Money Act. Hence, it is abundantly clear that as per the scheme of the act, there cannot be a simultaneously proceedings on the same asset/income under Income Tax Act, 1961 as well as Black Money Act. The doctrine of double prejudice does come into play here. Above discussion amply prove that the assessee's challenge before the Id CITA to denial of liability in the jurisdiction of the Assessing Officer to issue notice under black money act deserves to succeed. 48. Various other facets of learned CIT(A)'s order as well as submissions noted hereinabove are in connection with the merits of the appeal proceedings of assessment under black money Act. We are conscious that we are only adjudicating jurisdictional issue challenged by the assessee before the Ld. CIT(A). As noted above the said appeal before him also had the mandate of Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 10 Hon’ble Jurisdictional High Court. We shall not travel to the merits of the case which in fact will not be legally permissible when the only issue is jurisdictional challenge. In fact as noted by us learned CIT(A)'s order hereinabove is not sustainable on this count also, as he has dealt with the merits of the assessee's appeal wherein the mandate of learned CIT(A) was to examine the jurisdictional challenge only which as noted above the id. CIT(A) has disposed of inter alia without examining the original documents on the basis of which the A.O. had issued notice. 49. In the background of the aforesaid discussion and precedent, this appeal filed by the assessee succeeds.” 10. Thus, from the careful perusal of the decision of the coordinate bench of the Tribunal rendered in assessee’s own case, cited supra, in the year under consideration, it is evident that the very first notice issued by the AO for making the assessment under the Black Money Act, i.e., notice under section 10(1), was held to be invalid. Further, there is no dispute regarding the settled legal proposition that mere pendency of the appeal before the higher forum does not affect the finality of the Tribunal’s decision unless the same is overruled. 11. Accordingly, respectfully following the decision of the coordinate bench rendered in the assessee’s own case (supra), we do not find any infirmity in the impugned order passed by the learned CIT(A) in allowing the appeal of the assessee. As a result, the grounds raised by the Revenue are dismissed. 12. In the result, the appeal by the Revenue is dismissed. Order pronounced in the open Court on 09/01/2026 Sd/- OM PRAKASH KANT ACCOUNTANT MEMBER S Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 09/01/2026 Printed from counselvise.com BMA No. 35/Mum/2025 (A.Y. 2016-17) 11 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "