ARCHANA AJAY MITTAL,MUMBAI V. DDIT INV. 1(3)- FAIU, MUMBAI

BMA 48/MUM/2024

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The case involves Archana Ajay Mittal, who was penalized for not disclosing foreign assets in her income tax returns for several assessment years. The assets were actually disclosed by her husband, Ajay Shankarlal Mittal, in his returns. The penalty was imposed under section 43 of the Back Money (UFIA) and Imposition of Tax Act, 2015, which mandates disclosure of foreign assets. The assessee argued that the non-disclosure was unintentional and due to a clerical error, as her husband was the primary account holder and had already disclosed the assets. The Tribunal considered various precedents and the specific circumstances of the case, leading to the decision to set aside the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705779 (ITAT-MUMBAI)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: Aditi Avinash Athavankar vs CIT(A)- 51, Mumbai, Palanirajan Rajarajan vs Addl. CIT, Sanjay Bhupatrai Shah vs DDIT
• Laws Referred To: Back Money (UFIA) and Imposition of Tax Act, 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: PIYUSH CHHAJED; AW
• Keywords: Set aside; Reasonable cause; Bonafide belief; Source of fund
• Section: 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER B.M.A. 42/Mum/2024 - A.Y. 2018-19 B.M.A. 43/Mum/2024 - A.Y. 2017-18 B.M.A. 44/Mum/2024 - A.Y. 2022-23 B.M.A. 45/Mum/2024 - A.Y. 2016-17 B.M.A. 46/Mum/2024 - A.Y. 2019-20 B.M.A. 47/Mum/2024 - A.Y. 2020-21 B.M.A. 48/Mum/2024 - A.Y. 2021-22 Archana Ajay Mittal 62-A, Mittal Bhavan-2 Dr. Gopal Rao Deshmukh Marg, Mumbai, Cumballa Hill S.O., Mumbai-400 026 PAN : AAGPM6545C vs DDIT INV.1(3)-FAIU Room No.416, 4th Floor Scindia House, Ballard Estate Mumbai-400 001 APPELLANT RESPONDENT Assessee by : Shri Piyush Chhajed, CA a/w Shri Ayush Chajjed, CA Respondent by : Shri Hemanshu Joshi SR.DR. Date of hearing : 26/06/2025 Date of pronouncement : 30/06/2025 O R D E R Per Bench: This bunch of appeal of the assessee was filed against the order of the Ld. Commissioner of Income-tax (Appeals)-51, Mumbai passed under section 17 of Back Money (UFIA) and Imposition of Tax Act, 2015 (in short, ‘the Act’), date of 2 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal order 03/10/2024 for A.Ys. 2016-17 to 2022-23. The impugned orders emanated from the order of the Ld. DDIT/ADIT (Inv)-1(3), FAIU, Mumbai passed under section 43 of the Act, date of orders 14/02/2024. 2. All the appeals have same nature of facts and common issue. Therefore, all the appeals are taken together, heard together and are disposed of together by this common order. BMA No.42/Mum/2024 for A.Y.2018-19 is taken as lead case. 3. The brief facts of the case are that the assessee filed the return in individual capacity by declaring as ‘resident individual’. The Ld.AO had received information that the assessee was maintaining foreign assets in the form of investments in the financial entities registered in, Barclays Bank PLC, Branch Isle of Man. On verification of the returns filed by the assesse under section 139 of the Act it was found that from A.Ys 2009-10 to 2022-23, the assessee had not declared the foreign assets in the column provided in the return of income. The Ld.AO observed that in the Foreign Assets Schedule (FA Schedule) was introduced in the return of income since A.Y. 2012-13, in Finance Bill, 2012, in order to keep a track of foreign assets and income generated shown in foreign jurisdictions of Indian Residents. A new provision for penalty under section 43 of the Act was introduced for non-disclosure of such foreign assets. So considering this, on verification of ITR for A.Y. 2018-19, it was found that the assessee had not declared the foreign assets in FA Schedule an as a result, the assesse violated the provisions of section 43 of Act in respect of the investment in Barclays Bank PLC, Branch Isle of Man. The assesse during penalty proceedings submitted that all her bank accounts were maintained by her husband and the first name is mentioned her husband’s name, Mr. Ajay Shankarlal Mittal and in the return of income from A.Y. 2015-16, the said bank account is duly reflected in the FA Schedule of the ITR and the interest earned was duly considered 3 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal for taxation in the hands of Mr. Ajay Shankarlal Mittal. But without considering the same, the Ld.AO imposed penalty of Rs.10 lakhs under section 43 of Act. Aggrieved assesse filed an appeal before the Ld. CIT(A) and filed all the relevant documents in support of her claim. But the Ld.CIT(A) upheld he impugned penalty order. Being aggrieved, assessee filed an appeal before us. 4. The Ld. AR submitted that a paper book comprising pages 1 to 1082 was filed and is taken on record. It was further contended that the bank account with Barclays Bank PLC, Branch: Isle of Man, was duly opened in 2019 by the assessee’s husband, and the said foreign assets, along with the income generated therefrom, were duly disclosed in his return of income. During the penalty proceedings, the assessee furnished all relevant information to the Ld. AO, which has also been acknowledged in the penalty order. The relevant extract from paragraph 7 on page 5 of the penalty order is reproduced below: “7. Assessee's submission: 7.1. In response to the aforesaid show-cause notice issued to the assessee, the assesse submitted reply vide letter dated 25.09 2023. The reply submitted by him is reproduced as under : \"With the captioned reference I, furnish herewith the details, information and documentary evidence as under:- 1. I would like to state that I am resident Indian only and in none of the previous year(s) my status was non-resident 2. As per Notice your good self is mentioned about reporting to with/financial interest in certain financial entered Bentleys Bank PLC Branch (Isle of Man in response to the same, I would like to state that I am a joint holder in the Foreign Bank Account maintained by my husband Shri Ajay Shankarlal Mittal. The said Foreign Bank Accounts are maintained with Barclays Blank PLC - Branch (lsle of Man). The first holder of the said Bark Account Sher A and the details are as under, (Copy of Bank Statement attached herewith Annexure A) 4 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal Particular Account No. Currency type Status Date of opening Barclays wealth Reserve GBP 50534773 GBP Closed 02/08/2012 Barclays wealth Reserve GBP 85990533 USD Closed 02/08/2012 Barclays Saving GBP 6312269 GBP Active 04/06/2019 Barclays Saving USD 47305600 USD Active 04/06/2019 3. As I am not the first holder of the above Accounts, the first holder i.e. my husband Ajay Shankarlal Mittal has duly reported the Foreign Bank Account(s) in his Income Return ITR (ITR).(copy of ITR of Shri Ajay Shankartal for A.Y. 2015-2016 2021-2022 is attached herewith Annexure B). Also there is very less interest income from the above account which are duly considered for taxation in the hands of Ajay Mittal. 4. Further the assessee has filed the Updated Income Tax Ret for FY 2021-2022 and duly disclosed the both the account in Schedule FA of ITR form. (Copy of the vide Annexure C). 5. I made certain transfer of funds outside India under Liberalised Remittance Scheme (LRS) to Ajay Mittal Details of which are as follows: Date Bank from Bank to GBP INR Beneficiary Source of Funds 04.08.2017 Axis Bank Barclays GBP A/c 50534773 1,00,000 0302 Ajay Mittal Loan from Novel FTWZ Ltd 13.03.2018 ICICI Bank Barclays GBP A/c 50534773 98,576 90,56,085 Ajay Mittal Loan from Rudradev Properties Pvt Ltd 02.08.2018 ICICI Bak Barclays GBP A/c 50534773 1,30,000 1,18,43,221 Ajay Mittal Loan from Mega Management Services Pvt Ltd 30.12.2019 Barclays Bank Barclays GBP A/c 63132269 1,90,000 1,78,64,024 Ajay Mittal Loan from Mega Management 5 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal Services Pvt Ltd 10.08.2020 ICICI Bank Barclays GBP A/c 63132269 1,50,000 1,49,29,677 Ajay Mittal Loan from Mega Management Services Pvt Ltd 13.06.2022 ICICI Bank Barclays GBP A/c 63132269 1,00,000 1,02,49,646 Ajay Mittal Loan from Mega Management Services Pvt Ltd 15.06.2022 ICICI Bank Barclays GBP A/c 63132269 40,000 40,03,596 Ajay Mittal Loan from Ajay Mittal 11.07.2022 ICICI Bank Barclays GBP A/c 63132269 40,000 40,03,596 Ajay Mittal Loan from Ajay Mittal The foreign bank was not disclosed in the income Tax Return due to clerical error only and the same accounts was already disclosed in the income Tax Return of my husband ie. Ajay Mittal and there is no intention to hide any details and also there is no tax evasion also, further we have also filed the Updated Tax return for A.Y. 2022-23 and duly disclosed the Foreign Bank Account So we request you to kindly not to levy any penalty as there is not a intention to hide the above foreign Bank Accounts from disclosure Your good self is requested to kindly take the above details on record. I hope that your good self would find the above details in order. I shall be please to clarify any pertinent aspect.” 5. The Ld.AR in argument further stated that all the information was duly shared to the Ld.AO in response to his show cause notice dated 22/09/2022 and the reply was submitted on 01/05/2023. The details in relation to the declaration 6 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal of foreign asset was informed to the Ld.AO. The assessee’s husband declared the said bank accounts in the return of income and the income so generated was duly declared in his return. 6. The impugned penalty order was challenged before the Ld.CIT(A) and considering the submissions, the Ld.CIT(A) noted his observations in following paragraph:- 11.11. In my view, for the purpose of section 43 of the BMA, there is no onus on the AO to demonstrate that the funds or assets in these accounts were owned by the assessee or beneficially owned by him. Section 43 of the Act has two limbs with respect to non-disclosure the first being failure to furnish any information sought in the return filed under section 139(1) and second being furnishing of inaccurate particulars in such return relating to any asset located outside India, held by her as a beneficial owner or otherwise or in respect of which she 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 assessee 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 her for the relevant assessment year.” 7. The Ld.AR in argument respectfully relied on the order of the co-ordinate bench of ITAT, Mumbai Bench in the case of Aditi Avinash Athavankar vs CIT(A)- 51, Mumbai bearing BMA No.16 to 19/Mum/2023, date of pronouncement 10/07/2023, relevant paragraph 16 is reproduced below:- “16. In assessee's case, the assets are already disclosed by assessee's husband in his return of income which is being scrutinized and accepted by the revenue. Therefore, the assets in our view cannot be termed as black money. Further, there is no reason for the assessee to intentionally not 7 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal furnish the details of the same assets except a bonafide belief that the details are already furnished by her husband who is the primary owner and that the assessee being secondary owner is not required to furnish the details once again. Therefore, in our considered view a reasonable conclusion could be drawn that the lapse in reporting foreign investments in Schedule FA of the return of income by the assessee is bona fide and devoid of any ulterior motives. Accordingly the Assessing Officer is not justified in exercising the discretionary power just because it would be lawful to do so. The discretionary power would have to be exercised having regard to the facts of each case in a fair, objective and judicious manner and the intention of the relevant legislation. Further in the present case there are sufficient prima facie evidences well demonstrated by the assessee not to doubt bona fide intentions and therefore it is not just and fair for the assessee to face stringent penal consequences under BMA. Accordingly the penalty levied for AY 2016-17 under section 43 of BMA is hereby deleted.” He further relied on the decision of ITAT, Chennai Bench in the case of Palanirajan Rajarajan vs Addl. CIT (2025) 172 taxmann.com 817 (Chennai – Trib), date of order 03/02/2025. The relevant paragraph 5 is reproduced below:- “5. Our view is duly supported by the order of Mumbai Tribunal in the case of Addl. CIT v. Gandhi Tiwari [2022] 136 taxmann.com 409 (Mumbai - Trib.)) holding that mere non-closure of a foreign asset in the income tax return, by itself, is not a valid reason for a penalty under the BMA. While disclosure of all foreign assets is mandatorily required to be made in an income tax return, the penalty under Section 43 of BMA comes into play only when the aggregate value of these assets exceeds Rs. 5 Lacs. Therefore, even statutorily, it is not a simple cause and effect relationship between non-disclosure of an undisclosed foreign asset in the income tax return and penalty under BMA. The unambiguous intent of the legislature thus was to exclude trivial cases of lapses which could be attributed to a reasonable cause. It could also be noted that Sec.43 provide that the Assessing Officer \"may\" impose the penalty, and the use of the expression \"may\" signifies penalty is not to be imposed in all cases of lapses and that there is no cause and relationship simplicitor between the lapse and the penalty. As to what should be the considerations for the exercise of this inherent discretion by the Assessing Officer, some guidance 8 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal could be taken from Hon'ble Supreme Court's judgment in the case of Hindustan 1. v. State of Orissa [1972] 83 ITR 26 (SC), which, inter alia, observes that “…………..penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or conscious disregard of its obligation. The penalty will not also be imposed merely because it is lawful to do so. Whether a penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose a penalty, when there is a technical or venial breach of the provisions of the Act or breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute\". Essentially, therefore, the overall conduct of the and materiality of the lapse as also its being in the nature of a technical or venial breach of law, is the most critical factor so far as taking a call on the question of whether or not a penalty should be imposed for the assessee's failure to discharge a statutory obligation. The imposition of penalty under Section 43 is surely at the discretion of the Assessing Officer, but the manner in which this discretion is to be exercised has to meet the well-settled tests of judicious conduct by even quasi judicial authorities. The bench also considered the objective of BMA legislation and finally confirmed the order of first appellate authority in deleting the impugned addition as imposed by Ld. AO.” The Ld. AR respectfully relied on the decision of coordinate bench of the ITAT, Mumbai, E-Bench in the case of Sanjay Bhupatrai Shah vs DDIT (2025) 173 taxmann.com 316 (Mumbai – Trib), date of order 24/01/2025. The relevant paragraph 8 is reproduced below:- “8. In the instant cases, there is no dispute with regard to the fact that the investments have been made in the foreign asset by Shri Chinthan Sanjay Shah and he himself has declared as 100% of owner of the same in the Income tax return filed by him. The assessee has been included as a secondary owner, for administrative purposes and hence the assessee was under bonafide belief that he was not required to disclose the foreign assets, as it belongs to his son. We notice that the 9 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal tax authorities have placed reliance on the fact that the assessee has lent money to his son Shri Chintan S Shah, who has, in turn, used those funds to make investments. Under the General law, merely for the reason that a person has purchased certain assets out of borrowed funds, the lender would not automatically become owner of those assets. The buyer would continue to remain owner of those assets, until it is recovered from him by the lender in accordance with law, in the event of failure of the borrower to adhere to the terms and conditions of loan. Further, the said loan transactions taken place in India and it has been duly recorded in the books of both the lender and borrower. Hence the visions of BMA will not extend to the loan transaction entered between the parties in India.” 8. The Ld. DR vehemently argued the case and placed complete reliance on the orders passed by the revenue authorities. However, the Ld. DR was unable to rebut the contentions advanced by the Ld. AR by citing any contrary judicial precedents. 9. We have heard the rival submissions, perused the material available on record, and carefully considered the decisions relied upon by the Ld. AR. The brief facts of the case, as discussed, revolve around the imposition of penalty under section 43 of the Act for alleged non-disclosure of foreign bank accounts maintained with Barclays Bank PLC, Isle of Man Branch. It is noted from the record that the assessee has consistently maintained that she was a joint holder in the said bank accounts where her husband, Mr. Ajay Shankarlal Mittal, was the primary account holder. The foreign bank accounts were duly disclosed by her husband in his respective returns of income along with the interest income, which has been duly offered to tax. The assessee also filed her updated return for A.Y. 2022-23, wherein the said foreign assets were disclosed under the FA Schedule, thereby evidencing bona fide compliance with the disclosure requirements. The explanation tendered by the assessee during the penalty proceedings, including the full disclosure of the relevant bank statements, source of funds, ITRs 10 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal of the husband, and other supporting documents, clearly establishes the assessee's bona fide belief and absence of any willful concealment or intention to evade tax. The co-ordinate benches of the ITAT, in the cases of Aditi Avinash Athavankar (supra), Palanirajan Rajarajan (supra), and Sanjay Bhupatrai Shah (supra), have consistently held that mere technical or venial breaches arising out of bona fide belief, especially where the primary holder has already disclosed the foreign assets and income therefrom, do not warrant penal consequences under section 43 of the BMA Act. It has also been judicially affirmed that the imposition of penalty under section 43 is discretionary and must be exercised judiciously, taking into account the surrounding facts, conduct of the assessee, and legislative intent. In the present case, the assessee has sufficiently demonstrated that the lapse, if any, was inadvertent and non-malicious, and all the necessary disclosures were duly made by the primary account holder. Moreover, the revenue has not brought any material to rebut the explanation or to prove that the assessee was the actual beneficial owner of the said assets or the income therefrom. In view of the above facts, legal position, and judicial precedents cited, we are of the considered view that the penalty levied under section 43 of the Act in this case is unjustified and unsustainable. Accordingly, the penalty order passed by the Ld. AO and sustained by the Ld. CIT(A) under section 43 of the BMA is hereby set aside, and the penalty of Rs.10,00,000/- stands deleted. BMA Nos 43 to 48/Mum/2024 10. As regards to these appeals, the facts and circumstances are identical. Therefore, the decision arrived at above applies mutatis mutandis to these appeals also. 11 BMAs 42 to 48/Mum /2024 Archana Ajay Mittal 11. In the result, the appeals filed by the assessee in BMA Nos 42 to 48/Mum/2024 are allowed. Order pronounced in the open court on 20th day of June, 2025. Sd/- sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, िदनांक/Dated: 20/06/2025 Pavanan Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु\u0014 CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "