ADDL. COMMISSIONER OF INCOMETAX, CENTRAL RANGE, MANGALURU V. ULLAL KOJABBA MONU, MANGALURU

BMA 5/BANG/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted the addition of undisclosed foreign assets amounting to Rs.1,07,73,416 imposed by the AO under the Black Money Act. The assessee, Shri Ullal Kojabba Monu, had investments in foreign companies and argued that these were made prior to the enactment of the Black Money Act and were sourced from loans which were recorded in his books. The CIT(A) accepted the assessee's explanations and deleted the additions, leading to the Revenue's appeal. The Tribunal found that the CIT(A) had not adequately verified the sources of the funds and thus reversed the decision, restoring the matter to the AO for further investigation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824698 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 30-12-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2022-2023
• Appeal Filed On: 25-06-2025
• Laws Referred To: Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VEERANNA M MURGOD
• Keywords: Additional evidence; Fair market value; Source of fund
• Section: 10

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER BMA No. 5/Bang/2025 Assessment year: 2022-23 The Additional Commissioner of Income Tax, Central Range, Mangaluru. Vs. Shri Ullal Kojabba Monu, Kallapu, Permannur, Mangaluru – 575 017. PAN: ACGPM 4934R APPELLANT RESPONDENT Appellant by : Shri N. Balusamy, Jt.CIT (DR)(ITAT), Bengaluru. Respondent by : Shri Veeranna M Murgod, AR Date of hearing : 19.11.2025 Date of Pronouncement : 30.12.2025 O R D E R Per Prashant Maharishi, Vice President 1. This appeal is filed by the Revenue (the appellant) for the assessment year 2022-23 against the appellate order passed by the CIT(Appeals)-2, Panaji [ld. CIT(A)] dated 25.3.2025 who has passed an order u/s. 16(7) of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 [BMA] in the case of Shri Ullal Kojabba Printed from counselvise.com BMA No. 5/Bang/2025 Page 2 of 8 Monu wherein the addition of undisclosed foreign assets of Rs.1,07,73,416 imposed by the ld. AO u/s. 10(3) of the BMA as per order dated 3.7.2024 was allowed. 2. The ld. CIT(A) has deleted the addition in the hands of the assessee as undisclosed foreign assets and therefore the ld. AO is in appeal before us. 3. The brief facts of the case show that search was conducted in the case of Kanachur Islamic Education Trust, Mangalore on 17 February 2021. The assessee is the chairman of the trust and stated that in his individual capacity investment of 1 lakh Singapore US dollar was made in Koju Global PTE Ltd., Singapore. From the email seized during search, the department had initiated proceedings under section 10 of the BMA and notices were sent. The assessee furnished the reply. The appellant replied the show cause notice stating that the shares in the foreign companies were purchased much prior to coming into the force of this Act and that investment have been compounded by Reserve Bank of India by levying appropriate penalty on the same in the year 2009. When the firm Koju Trading Co. LLC Dubai was discontinued by the order of the Reserve Bank of India, the firm Koju Global PTE Ltd. was incorporated by borrowing Singapore dollar 1 lakh. Both the events had taken place before the commencement of the Black Money Act. It was further stated that the amount invested in Koju Global PTE Ltd. was by borrowing an interest free loan from Mr. Abdul Rahimand Madeena. The said interest free loan was invested in Koju Trading Co. Printed from counselvise.com BMA No. 5/Bang/2025 Page 3 of 8 LLC Dubai through banking channel by accepting overseas cheque given by Mr. Abdul Rahimand Madeena. Neither any consideration has moved in or moved outside India towards this capital investment and therefore there is no violation. Assessee also submitted that it is in the business of timber trading since last 50 years. Koju Global PTE Ltd. was a private limited company incorporated on 25 February 2008, and assessee was one of the shareholders. There are only two shareholders and there was increase in stock holding of the assessee in 2008 by transfer of shares. Assessee also submitted that 153C proceedings were initiated for assessment year 2014 – 15 to 2022 – 23 and therefore there is no violation of the provisions of the Black Money Act. 4. The ld. AO was of the view that assessee has failed to consider the provisions of section 72C of the Act and has proceeded to pass the impugned order by calculating the undisclosed foreign fair market value of the assets at Rs.1,38,37,876 in Koju Global PTE Ltd., Singapore. Accordingly the assessment order was passed on 3 July 2024 wherein the above sum was charged to tax. Thus the ld. AO held that fair market value of the assets in undisclosed foreign assets with respect to Koju Global PTE Ltd., Singapore is Rs.1,38,37,876/– and investment in Koju Trading Co. LLC Dubai is ₹ 2,935,590/–. 5. The assessee preferred an appeal before the ld. CIT(A), who decided the issue by appellate order dated 25th of March 2025. The ld. CIT(A) deleted the addition stating that the assessee has explained the sources of the funds along with documentary evidences and thus the source of Printed from counselvise.com BMA No. 5/Bang/2025 Page 4 of 8 investment is explained. He further held that once the source of investment is explained the assets cannot be termed as undisclosed assets located outside India as per section 2 of the BMA. He further held that the ld. AO has merely on erroneous reporting of the foreign assets in income tax return has concluded that the shares as undisclosed assets located outside India which is not the intention of the Act and therefore the addition was deleted. 6. The ld. AO is aggrieved with the same and is in appeal before us. The main contention of the learned DR is that the ld. CIT–A has admitted the additional evidence in the absence of any specific provision in the Act with respect to the investment in Koju Trading Co. LLC Dubai and investment in Koju Global PTE Ltd., Singapore. He further stated that the ld. CIT–A has wrongly relied on the confirmation filed by the assessee without causing further verification on the issue of investment in a Singapore entity. It was further submitted that there is no evidence of transfer of shares in the name of assessee in Singapore entity. He further submits that what is the sources of funds is not explained by the assessee, but CIT (A) has deleted the addition without ascertaining the same. It was also not verified by the appellate authority about relationship as well as the sources of funds of relatives. 7. The ld. DR vehemently submitted that that while deleting the addition of Koju Trading Co. LLC Dubai, the ld. CIT–A has considered that the source of investment in the above company was made from the borrowing of 1,47,000 Dirhams from his NRI relative, Mr. Abdul Printed from counselvise.com BMA No. 5/Bang/2025 Page 5 of 8 Rahiman Madeena. The ld. CIT–A also considered that the loan amounts so borrowed was recorded in its books of accounts under investment for shares and under sundry creditors for the loan borrowed. Based on these evidences the ld. CIT–A has deleted the addition. Ld. DR submitted that how the assessee borrowed from Mr. A R Madeena and how that money was utilised by the assessee for making investment in Koju Trading Co. LLC Dubai was not confirmed. With respect to the investment in Koju Global PTE Ltd., Singapore assessee submitted that it was incorporated with 2 Singapore dollars. The subscription was held between Mr Tarun Mehta and the assessee. The shareholding of the assessee increased by 99.9998 Singapore dollars for which the investment came from Mr Tarun Mehta who is resident of Singapore. There is no evidence that how Mr Mehta has given this money to the assessee. The source of the above fund was also not explained and therefore the addition has rightly been made by the AO. Therefore he submitted that unless the confirmation from Mr Madeena and Mr Tarun Mehta is available, the sources of the fund could not be established and therefore the ld. CIT–A is incorrect in deleting the above addition. 8. The ld. Authorized representative vehemently supported the order of the ld. CIT (A) and submitted that when the amount is recorded in the books of accounts of the assessee there is no question of making the addition. Printed from counselvise.com BMA No. 5/Bang/2025 Page 6 of 8 9. In rejoinder ld. DR submitted that entries in books of accounts itself are challenged. These entries does not have the evidence backed by the sources of the funds. 10. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The claim of the assessee is that there is an investment of ₹ 147,000 Dirhams in Koju Trading Co. LLC Dubai and further an investment of one lakh Singapore dollars in Koju Global PTE Ltd., Singapore. The first investment was made in 2004 and second investment was made in 2008. The above details were found in view of the search proceedings and the post search investigation carried out by the income tax department. These investments were not at all disclosed in the schedule FA of the return of income filed by the assessee. Accordingly the notices were issued and the additions were made. 11. During the course of assessment proceedings the assessee explained that with respect to investment in Koju Trading Co. LLC Dubai has been compounded by Reserve Bank of India and appropriate penalty of the same was levied in the year 2009. The Koju Trading Co. LLC Dubai was discontinued by the order of the Reserve Bank of India and the firm Koju Global PTE Ltd.; Singapore was incorporated by borrowing one lakh Singapore dollars. Both the events occurred before the commencement of the Black Money Act. The ld. AO noted that Koju Trading Co. LLC Dubai, the source of investment, was stated to be the amount borrowed in UAE of 147,000 Dirhams equivalent to ₹ Printed from counselvise.com BMA No. 5/Bang/2025 Page 7 of 8 18,77,655 from Mr. Abdul Rahimand Madeena. There is no confirmation available of this lender. It was further stated that with respect to the investment in the Singapore entity, the amount was borrowed by assessee from Mr Tarun Mehta who is a resident of Singapore. No confirmation is also available from the same gentleman. In absence of the same, the ld. CIT–A was incorrect in holding that the assessee has disclosed the above amount and same is from accounted income of the assessee. The entries in the books of accounts are made undoubtedly but those entries are not substantiated by the confirmation and sources of funds of Mr. Madina or Mr. Mehta. Even there is no relationship shown between Mr. Mehta and assessee who invested in Singapore entity originally. Further compounding of offences under FEMA does not absolves assessee from the provision of Income tax and Black Money Act. Both are independent provisions and have different consequences. As the ld. CIT–A has not given any finding on this aspect but has merely accepted the explanation of the assessee, we reverse the order of the ld. CIT–A. 12. In view of this, we restore the whole issue back to the file of the ld. AO with a direction to the assessee to submit the confirmation from the above two entities for investment in Koju Trading Co. LLC Dubai and Koju Global PTE Ltd., Singapore. IN substances, the assessee has to prove the source and nature of explanation to the satisfaction of the ld. AO. The ld. AO may make enquiry as required and thereafter decide whether the assessee has made any undisclosed investment in the above entity or not. If the amount is found to be accounted for in the books of Printed from counselvise.com BMA No. 5/Bang/2025 Page 8 of 8 the assessee and confirmed by these parties showing sources of income , the addition deserves to be deleted, otherwise the ld. AO may pass order in accordance with law on merits of the case. 13. Accordingly appeal filed by the learned assessing officer is allowed for statistical purposes. Pronounced in the open court on this 30th day of December, 2025. Sd/- Sd/- (SOUNDARARAJAN K.) (PRASHANT MAHARISHI) JUDICIAL MEMBER VICE PRESIDENT Bangalore, Dated, the 30th December 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "