JOINT COMMISSIONER OF INCOME TAX, RANGE-4, CENTRAL, KOLKATA, KOLKATA V. PRERNA CHOPRA, KOLKATA

BMA 18/KOL/2024

AI Insights

The case involves appeals by the revenue against the CIT(A)'s decision to delete penalties imposed on Gaurav Kumar Chopra and others for undisclosed foreign income and assets for the Assessment Year 2017-18. The penalties were initially imposed following a search and seizure operation and subsequent assessments, which the CIT(A) later found to be unjustified. The Tribunal's decision to dismiss the appeals was based on the findings that the investments in question were made from disclosed sources and were minor, thus not warranting the penalties under the BMA Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36487 (ITAT-KOLKATA)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: BMA Act, Imposition of Tax Act, 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Cost of acquisition; Source of fund
• Section: 143(3); 142(1); 143(2); 20

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “बी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय एवं Įी संजय अवèथी, लेखा सटèय क े सम¢ [Before Shri Pradip Kumar Choubey, Judicial Member &Shri Sanjay Awasthi,Accountant Member] B.M.A. No. 16 /Kol/2024 Assessment Year: 2017-18 JCIT, Range-4, (Central), Kolkata Vs. Gaurav Kumar Chopra (PAN: ADZPC 8840 J) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ B.M.A. No. 18 /Kol/2024 Assessment Year: 2017-18 JCIT, Range-4, (Central), Kolkata Vs. Prerna Chopra (PAN: AFXPJ 4093 C) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ B.M.A. No. 20 /Kol/2024 Assessment Year: 2017-18 JCIT, Range-4, (Central), Kolkata Vs. Sushila Chopra (PAN: ACDPC 1056 B) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ 2 B.M.A. Nos. 16, 18 & 20/Kol/2024 Assessment Year: 2017-18 Gaurav Kumar Chopra & Ors. Date of Hearing / सुनवाई कȧ Ǔतͬथ 29.01.2025 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 25.02.2025 For the assessee / Ǔनधा[ǐरती कȧ ओर से Shri S. Jhajharia, A.R For the revenue / राजèव कȧ ओर से Shri P. N. Barnwal, CIT DR ORDER / आदेश Per Bench: These are the appeals preferred by the revenue against separate orders of Commissioner of Income Tax (Appeal)- 20, Kolkata (hereinafter referred to as the Ld. CIT(A)] for AY 2017-18. We took up BMA No. 16,18 & 20/Kol/2024 for AY 2017- 18 for adjudication as these relates to the penalty proceedings. 2. The above three appeals have been filed by the revenue against the order dated 12.09.2024 with respect of AY 2017-18 by which the Ld. CIT(A) has deleted the penalty-imposed u/s 41 on the undisclosed foreign income. Since, the issues and facts are same in all the aforesaid three appeals hence taken up together for disposal taking the lead case as BMA No. 16/Kol/2024 for AY 2017-18. 3. Brief facts of the case of the assessee are that in the previous year relevant to the AY 2017-18 the assessee filed his return of income declaring total income at Rs. 30,71,990/-, Rs. 32,78,380- and Rs. 40,80,850/- respectively. Search & Seizure proceedings were conducted on the residential as well as business premises of Chopra Group, notices u/s 143(2) and 142(1) were issued that was duly complied with by the assessee. The AO passed an assessment order u/s 143(3) wherein the total income was assessed at Rs. 30,71,990/-. Assessee preferred appeal before the CIT(A) where 3 B.M.A. Nos. 16, 18 & 20/Kol/2024 Assessment Year: 2017-18 Gaurav Kumar Chopra & Ors. assessee got relief by directing the addition made to be deleted. The A.O initiated penalty proceedings u/s 41 of the BMA Act and Imposition of Tax Act, 2015. The assessee has been asked to submit his reason why not penalty u/s 41 of the BMA Act should be imposed, the assessee requested to keep the penalty proceedings in abeyance till the disposal of appeal preferred against the assessment order u/s 10(3) of the BMA Act, but his request has been refused by the AO and penalty was determined against the assessees. The said order has been challenged by the assessee before the CIT(A) where in appeal of the assesses has been allowed. 4. Being aggrieved and dissatisfied the revenue has preferred all the three appeals against the order passed by CIT(A). 5. The Ld. D.R challenges the impugned order thereby submitting that the Ld. CIT(A) has erred in deleting the penalty-imposed u/s 41 on the undisclosed foreign income and assets. 6. Contrary to that the ld. A.R supports the impugned order thereby submitting that the Ld. CIT(A) did not commit any wrong while allowing the appeal of the assessee as the order passed by the AO has been set aside by the CIT(A). The Ld. Counsel further submits that the Ld. CIT(A) has considered the facts of the case and documentary evidences and thereafter held that no tax is payable in the current year in respect of any undisclosed foreign income and asset of the assessee. The Ld. Counsel further submits that the assessee had made very small investment as initial capital into some companies which were merely involved in some kind of trading activities. The Ld. Counsel further submits that all the relevant assessment year 2008-09 while on a foreign trip the assessee’s husband M/s Zenith Metals Ltd. out of regular fund drawn for the purpose of foreign visit. It has been submitted by the counsel that the amount was so pretty small, it was not accounted separately in the balance sheet for the financial year ended as on 31st March, 2008 and was considered to be part of the expenditure for such foreign visit. 7. Upon hearing the counsel of the respective parties, we have perused the order of Ld. CIT(A) and find that the Ld. CIT(A) in its operative portion of the order has held 4 B.M.A. Nos. 16, 18 & 20/Kol/2024 Assessment Year: 2017-18 Gaurav Kumar Chopra & Ors. that the order u/s 10(3) has been quashed vide order dated 11.09.2024 so penalty as imposed is erroneous and accordingly allowed the appeal of the assessee filed against penalty order. It is an admitted fact that the assessee has preferred an appeal against the order passed u/s 10(3) of the BMA Act, and the appeal of the assessee has been allowed by the Ld. CIT(A) by observing thus: “4.8 Therefore, considering relevant facts of the case and laws on the issue of ‘undisclosed asset located outside India’, I do not find merit in the assessment of AO, where he has held the said investment of the assessee as undisclosed foreign asset only because of the fact that the said assets were not shown in the schedule FA of her ITR for the relevant assessment years. The law is very much clear in Section 2(11) of BMA, 2015, that an asset (including financial interest in any entity) located outside India, can only be held as an undisclosed asset located outside India, when the assessee has no explanation about the source of investment in such asset or explanation given by him/her is unsustainable in the opinion of the AO. In view of the above discussion, the addition of Rs. 28,182/- made by the AO is held as unsustainable in the eyes of law. Hence, it is deleted.” 8. On perusal of the submission made by the assessee we find that all the relevant A.Y. 2008-09 while on a foreign trip Mr. Gaurav Kumar Chopra had invested some amount in the shares of M/s Zenith Metal Ltd. Out of the regular funds drawn for the purpose of foreign visit. (Passport was enclosed). It is further pertinent to mention here that amount was preety small. The assessee has submitted that since the amount was small so it was not accounted separately in the balance sheet for the financial year ended on 31st March 2008. The Ld. Assessee has further submitted that investment made in foreign company namely M/s Zenit Metals Ltd. amount of Rs. 17,028/- is made out of the regular funds, however, the reflection of such investments was erroneously ignored while filing the return of income for AY 2012-13 to 2014-15 (the years in which there was schedule FA in IT return which was required to be framed). The assessee has already stated before the AO as well as in the appellate proceedings that he has made financial investment in M/s Jelenta Investments Ltd. (BVI) on 09.04.2010 for 33 nos. of shares of company [Cost of Acquisition Rs. 1,464/- 33 USD x 44.36] and M/s Zenith Metals Ltd. on 29.07.2007 for 3300 no. of shares [Cost of Acquisition Rs. 28,182/- HKD x 8.54], such acquisition of shares of foreign entity were made out regular funds / drawing of the assessee. It is further important to mention herein that investment of Rs. 28,182/- i.e. 3400 HKD in M/s Zenith Metals Ltd. on 29.07.2007 relevant for AY 5 B.M.A. Nos. 16, 18 & 20/Kol/2024 Assessment Year: 2017-18 Gaurav Kumar Chopra & Ors. 2008-09 was beyond the scope of Section 153A. The Ld. CIT(A) in allowing the appeal of the assessee vide order dated 11.09.2024 has observed thus: “4.5 The facts and submission made by the appellant is duly considered on merit from the details submitted by the appellant before the Ld. CIT(A) as well as before the AO in the assessment proceedings, it is found that the assessee Mr. Gaurav Kumar Chopta made a foreign visit to Hong Kong on 7th July, 2007 and for the purpose of meeting their regular expenses in the foreign visit, they had purchased a total of USD 2000 on 14.06.2007 for a sum of Rs. 81,370/- from M/s Clarity Financial Services Ltd.an RBI authorized dealer in foreign currencies and travelling cheques. This purchase was made from his explained source of income as he has filed an ITR for AY 2008-09, relevant to FY 2007-08, showing total income of Rs. 14,09,880/- and paid income tax on the said amount of Rs. 4,25,264/-. Not only that, the wife of the assessee had also filed her ITR for AY 2008-09 showing total income of Rs. 4,42,916/- and paid taxes of Rs. 85,000/-. So the assessee has substantial fund to cover the expenses made in purchase of USD 2000 and consequently making the meager investment of Rs. 17,028/- in purchase of shares of M/s Zenith Metal Ltd. on 29.07.2007. 4.6. Further, as per details given by the appellant, the wife of the assessee, Smt. Prerna Chopra purchased 10,000 shares of M/s Zenith Metals Ltd. @ 1HKD = 10,000/- HKD = 10,000 KHD = USD 1290. The details of those investment are as under: 1. Mr. Gaurav Kumar Chopra 3300 HKD 2. Prerna Chopra 3300 HKD 3. Shusila Devi Chopra 3400 HKD So from the details given by the appellant in his submission, it is clear that investment made in the purchase of shares of M/s Zenith Metals Ltd. of Rs. 28,182/- on 28.07.2007 is fully covered by him, disclosed sources of income in India.” 9. Going over the facts of the case as well as the order passed by the Ld. CIT(A) we do not find any merit in the appeal of the revenue. Accordingly, all the above three appeals of the revenue are hereby dismissed. In the result, all the appeals filed by the revenue are dismissed. Order is pronounced in the open court on 25th February, 2025 Sd/- Sd/- (Sanjay Awasthi/संजय अवèथी) (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 25th February, 2025 SM, Sr. PS 6 B.M.A. Nos. 16, 18 & 20/Kol/2024 Assessment Year: 2017-18 Gaurav Kumar Chopra & Ors. Copy of the order forwarded to: 1. Appellant- JCIT,Central, Range-4, Kolkata 2. Respondent – Gaurav Kumar Chopra , Prerna Chopra and Sushila Devi Chopra all are residing at 133, Biplabi Rash Behari Basu Road, chopra House, 3rd Floor, Canning Street More, Kolkata-700001 3. Ld. CIT(A)-Addl./JCIT(A)-5, Mumbai 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "