KETAN RAMESH DHAMANASKAR,MUMBAI V. ADDL. CIT CENTRAL RANGE-7, MUMBAI

BMA 10/MUM/2024

AI Insights

The case revolves around the appellant, Ketan Ramesh Dhamanaskar, who contested the inclusion of shares of Baxter International Inc. as undisclosed assets under the BMA Act for the Assessment Year 2019-20. The shares were acquired through dividends from stocks under an Employee Stock Purchase Plan, which were reinvested without being credited to a bank account. The appellant argued that these assets were disclosed in his income tax returns and the income was subjected to withholding tax in the USA, thus not constituting undisclosed income or assets. The Assessing Officer (AO) had initially treated these as undisclosed assets, leading to the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830665 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 06-05-2024
• Other Referred Cases: ACIT vs Srinjoy Bose, JCIT vs Shri Akhilesh Singh, JCIT vs Vikash Marda
• Laws Referred To: Black Money (UFIA) and Imposition of Tax Act, 2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: AKSHAY JAIN
• Keywords: Set aside; Fair market value; Principle of natural justice; TDS; Source of fund; Double taxation relief; Residential status
• Section: 90; 133(6); 139; 10

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER B.M.A. No.10/Mum/2024 (Assessment Year: 2019-20) Ketan Ramesh Dhamanaskar B-25 Gopal CHS, Tejpal Scheme Road No.2 Vile Parle (East) Mumbai-400057 PAN : AAMPD9459J vs Addl. CIT Central Range-7 Room No.654, 6th Floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai-400020 APPELLANT RESPONDENT Assessee by : Shri Akshay Jain Respondent by : Shri Hemanshu Joshi (SR DR) Date of hearing : 07/01/2026 Date of pronouncement : 20/01/2026 O R D E R Per Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income-tax (Appeals)-51, Mumbai [for brevity, ‘Ld.CIT(A)’] order passed under section 17 of Black Money (UFIA) and Imposition of Tax Act, 2015 (for brevity, ‘the BMA Act”) for the Assessment Year 2019-20, date of order 30/04/2024. The impugned order emanated from the order of the Ld. Additional Printed from counselvise.com 2 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar Commissioner of Income tax, Central Range-7, Mumbai (for brevity the “Ld. AO”), order passed U/s 10(3) of the BMA Act, date of order 27/03/2022. 2. The assessee has taken the following grounds: “1. On the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the impugned Assessment order is invalid, bad in law and liable to be quashed as the same does not contain DIN and also does not mention the reasons for not containing DIN in violation of CBDT Circular No.19/2019 dated 14.08.2019. 2. On the facts and circumstances of the case and law, the Ld. CIT (A) was not justified in holding the asset held by the appellant, being shares of Baxter Inc., as undisclosed asset under the Black Money, (UFIA) and Imposition of Tax Act, 2015. 3. On the facts and circumstances of the case and law, the Ld. CIT (A) erred in upholding the order of Assessing officer without appreciating that the deeming fiction contained in section 10(3) of the Black Money (UFIA) and Imposition of Tax Act, 2015 cannot be applied to assets and is only applicable on undisclosed income. 4. On the facts and circumstances of the case and in law, the CIT(A) erred in invoking the provisions of section 72(c) of the Act for upholding the addition, which was not relied upon by the learned AO. 5. On the facts and circumstances of the case and in law, the CIT(A) has invoked the provisions of section 72(c) of the Act without providing any notice for the same. Hence, the order is passed in violation of principle of natural justice. 6. On the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that shares held by the assessee do not fall under the definition of \"Undisclosed Asset located outside India\" under section 2(11) of Black Money (UFLA) and Imposition of Tax Act, 2015 as the same were acquired from known and explained sources of income and was explained by Ld. AO himself in the Assessment Order. 7. Without Prejudice, the Ld. CIT (A) failed to appreciate the fact that shares of Bexter Inc. are disclosed under the schedule FA in ITR for AY 2017-18, AY 2018-19 and AY 2019-20, hence the same cannot be held as undisclosed asset of the appellant and in view of the same, addition made by Ld AO on undisclosed asset is liable to be deleted. Printed from counselvise.com 3 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar 8. Without Prejudice, the Ld. CIT (A) failed to appreciate that the tax ought not to have been levied on the assets held by the assessee, being shares held of Baxter Inc. as the same was inadvertently missed to be reported due to a bona fide error and was disclosed in the ITR's from AY 17-18 onwards.” 3. The brief facts of the case are that the assessee is a salaried individual regularly assessed under the Income tax Act. He worked at “Baxter India Private Limited” from October 2007 to June 2010, before being transferred to Baxter Zurich in Switzerland until September 2012. He returned to India in October 2012 and joined Zoetis India Limited, where he worked until March 2020. He filed his income tax returns as a non-resident Indian (NRI) during his time abroad. Through Baxter's Employee Stock Purchase Plan (ESPP), the assessee was allotted “Baxter International Inc.” stock under the Dividend re-investment plan wherein dividends were reinvested from these shares. The dividends received were subject to US withholding tax and net dividends were re-invested directly without being credited to bank account of the assessee. 3.1. During the AY 2016-17, the assessee got the status as a resident Indian, his global income is taxable in India regardless of foreign withholding tax. He subsequently reported and paid taxes on his foreign income for that and subsequent years. Although the assessee initially did not offer dividend income in return of income, he had incurred withholding tax in U.S.A. The assessee was under a bona fide belief that since withholding taxes are being deducted abroad, there is no requirement of disclosure and paying taxes under the Indian Income Tax law. If reported, he could have claimed relief under Section 90 of the Income Tax Act, 1961 of 30% of withholding tax on dividend. Thus, there would have been no loss to the revenue. Printed from counselvise.com 4 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar 3.2. During impugned assessment year the Ld. AO received information from Addl. DIT (I & C Investigation), Unit-1, Mumbai that the assessee received the dividend income for AY 14-15 & AY 2015-16 amount to US$ 3373 & 2090 respectively. In this regard notice U/s 133(6) of the Income tax Act. The assessee replied that due DTAA no tax is payable in India related to dividend earned in USA. Hence, the income is not declared in India. On perusal of the record the revenue found that the assessee disclosed the foreign assets in schedule FA in AY 2016-17. However, the assessee has not declared the foreign dividend income in India in his ITRs for relevant AYs. With respect to such dividend income received by the assessee for AY 14-15, AY 15-16 and AY 16-17 is annexed below in tabulated format. A.Y US$ Rs. Remarks 2014-15 812 48,665.00 Converted @59.92 as on 31/03/2014 2015-16 3440 2,14,209.00 Converted @59.92 as on 31/03/2015 2016-17 2979 1,97,359.00 Converted @59.92 as on 31/03/2016 Total 7231 4,60,223.00 3.3. The Ld.AO initiated proceedings under section 10(3) of BMA and determined the undisclosed foreign income amounting to US$ 10,114.72 (Rs. 6,72,123.14) for AY 2019-20 by applying the proviso to section 3(1) of BMA Act. The proviso says that the \"undisclosed asset\" shall be charged to tax in the year in which it comes to notice of the Ld. AO. The AO computed tax liability at 30%, resulting in an amount of Rs. 2,01,637/- payable for AY 2019-20. Being aggrieved the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) uphold the impugned assessment order. Being aggrieved the assessee filed as appeal before us. Printed from counselvise.com 5 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar 4. The Ld. AR argued and filed a paper book containing page 1 to 58 which has been placed on record. The Ld. AR argued that the income in the form of dividend was duly generated from the year 2014-15. The year wise details as submitted by the assessee are annexed in the tabular as follows: A.Y US$ Rs. 2014-15 812 48,665.00 2015-16 3440 2,14,209.00 2016-17 2979 1,97,359.00 Total 7231 4,60,223.00 5. The Ld. AR stated that the assessee filed the return for A.Y. 2016-17 under Income tax Act & disclosed the foreign in schedule FA of ROI. The assessee has received the Employees Stock Purchase Plan (ESPP) of the company M/s. “Bexter International Inc” and common stock each month at 15% discount. Accordingly dividend was generated and which is further reinvested in he said investment in option plan. The dividend received from shares of “Bexter International Inc” was reinvested directly to the stock. The TDS was deducted in USA and assessee in opinion that the said income is not required to declare in the ROI in India. The Ld. AR filed a “Brief Written Submission” which is annexed in APB pages 1 to 5. The relevant paragraphs are reproduced as below:- “It is humbly submitted that since the Ld. AO himself has accepted that the source of such investment is dividend income, he has grossly erred in making the impugned addition by invoking the provisions of section 2(11) as the source having been explained, it can under no stretch of imagination be said to be an \"undisclosed asset\". For this proposition, reliance can be placed on the ACIT vs Srinjoy Bose 2023 (6) TMI 22-ITAT Kolkata (Annexure-I), \"13. Now, in light of the provisions of Section 2(11) & 2(12) of the Black Money Act, 2015 first we notice that in the instant case the issue is only with regard to the alleged undisclosed foreign asset ie. the investment in the insurance policy and there is no issue of Printed from counselvise.com 6 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar undisclosed foreign income because the assessee only received the reduced amount of investment. So, we will just focus on the issue that as to whether the alleged foreign asset is an undisclosed asset located outside India. Provision of Section 2(11) of the Black Money Act, 2015 provides for the definition of undisclosed asset located outside India as stated above, and in our humble understanding, following two conditions need to be fulfilled by the Revenue authorities to bring a particular foreign asset under the category of undisclosed asset located outside India held by the assessee in his name or in respect of which he is a beneficial owner. The first condition is that such asset is not disclosed by the assessee in the return of income or any other place of disclosure as provided under the Black Money Act, 2015 and secondly, the assessee is unable to offer any explanation about the source of investment in such asset or the explanation given by him is unsatisfactory in the opinion of Id.AO.\" 2. The Id. AO has grossly erred in applying the proviso to section 3(1) of BMA as the same is applicable to only undisclosed asset and not undisclosed income. It is submitted that in the impugned assessment order passed under BMA, the Ld. AO has sought to bring to tax the dividend income received by the assessee in AY 14-15, 15-16 and 16-17 by applying the proviso to 3(1). It is pertinent to mention here that as per proviso 3(1) only an undisclosed asset can be charged to tax in the year in which it comes to the notice of the assessing officer. In the present case it is undisputed that the dividend received by the assessee is an income and not an asset, let alone undisclosedasset. Hence, the deeming fiction as contained under section 3(1) cannot be invoked in present facts and circumstances. Hence, the same is liable to be deleted. 3. The Ld. AO was not justified in making the impugned addition as it is not the case of tax evasion or concealment, considering that withholding taxes have already been paid in USA. The Ld. AO has failed to appreciate that there is no element of tax leakage, concealment or an intention to avoid taxes in the present case. It is an undisputed fact that the assessee has paid withholding taxes on such dividend income in the USA. The Ld. AO is also not controverting the said fact and instead in the para 2 of the impugned assessment order makes an observation that the shares of Baxter Inc. were acquired through dividend income net of withholding taxes. This fortifies that it is not a case of tax leakage, since the assessee would have been eligible to avail substantial credit of the withholding taxes paid abroad in line with the India USA DTAA Treaty r.w.s 90 of the Income Tax Act. Assessing Officer has stated in assessment order that under Black Money Act, credit of withholding tax is not allowable. The appellant would like to contend that Black Money Act is not applicable at all in this case. Having observed, that Printed from counselvise.com 7 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar withholding taxes have been paid abroad, the AO was apprised of the fact that there is no tax leakage and hence ought not to have proceeded with making impugned addition. To support this contention the assessee would like to rely on the recent precedent rendered by the Hon'ble Kolkata Tribunal in the case of JCIT us Shri Akhilesh Singh, 2024 (7) TMI 130 (Annexure II) wherein under similar facts and circumstances where taxes were paid abroad and the assessee was eligible for credit of such taxes in terms of India Singapore DTAA, the Hon'ble Tribunal deleted the additions made under section 10(3) by observing as follows: \"24. In the instant case, the alleged addition has been made towards undisclosed assets in the form of funds remitted from India to Singapore in the Bank account held with SBI, Singapore in the name of RBGPL. Admittedly, the assessee is a Director and shareholder of RBGPL. Various documentary evidences have been placed in the paper book, which are more than sufficient to prove that RBGPL is a registered company in Singapore and is regularly assessed to tax and filing the audited financial statement with the authority at Singapore. Secondly it is also an admitted fact that the assessee being a Director has been receiving salary from RBGPL and is regularly filing the income tax return at Singapore and is paying due taxes. The ld. Assessing Officer has taken note of this fact and has observed that the assessee has received income in INR 7,08,47,050 from 2013 to 2019 and had paid total income tax in Singapore at Rs. 82,53,263/-. Though there is a mistake at the end of the assessee that he being a resident of India should have declared global income in his income tax return in India, but apart from not disclosing the global income in the return, sufficient details have been filed to prove that taxes have been paid in the country where salary was earned and there is no prejudice caused to the revenue in terms of Double Taxation Avoidance Agreement (DTAA) with Singapore. We thus note that for the alleged period, income earned by the RBGPL as well as the income received by the assessee from RBGPL has been disclosed with the authorities in the country, where it is earned and due taxes have been paid.\" In view of the above, appellant request for deletion of addition made u/s 10(3) of the Black Money Act.” 6. For strengthening the argument the Ld. AR respectfully relied on the order of the Coordinate Bench of ITAT Kolkata in the case of JCIT vs. Vikash Marda [2025] reported in 174 taxmann.com 251 (Kolkata - Trib.) date of order 23/12/2024. The contention of the bench is reproduced as below. Printed from counselvise.com 8 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar “17. The aforesaid provisions of the Black Money Act, 2015 when applied to the facts of the case, it would show that the NRF fund of the assessee would not fall in the definition of undisclosed asset as the assessee had earned the income during his employment at USA and the aforesaid investment was made out of the disclosed funds of the assessee, that were being taxed in the USA as per the provisions of USA Tax Laws. Section 2(12) of the Black Money Act, 2015 defines \"undisclosed foreign income and asset\", as per which it will be the total amount of undisclosed income of assessee from a source located outside India and the value of undisclosed asset located outside India as referred to in section 4. It is to be noted that \"undisclosed foreign income\" has not been singularly defined in the Black Money Act, 2015. Either as per the definition u/s. 2(12) of the Act or as per the provisions of section 4 of the Black Money Act, 2015, the \"undisclosed foreign income and asset\" have to be taken together for the purpose of assessment for the purpose of assessment u/s. 10 of the Black Money Act, 2015. The collective reading of the aforesaid provisions along with section 3 of the Black Money Act, 2015 would reveal that the undisclosed foreign income and asset of an year are to be assessed together and further as per the proviso to section 3, undisclosed assets located outside India shall be charged to tax on its value in the previous year in which such assets come to the notice of the AO. The collective reading of all the provisions would give an inference that the undisclosed foreign income and asset are to be assessed by the AO under the Black Money Act, 2015 in the year in which it has come to the knowledge of the AO. Admittedly, there was no undisclosed asset of the assessee in the foreign country. Regarding the dividend income earned on the NRF fund, the plea of the Ld. AR of the assessee is that the same would not fall in the definition of income as the assessee had invested in a fund, wherein, the dividend, if any, earned on such fund would automatically form part of the fund and was not separately taxable. Further, the assessment year 2016-17 was the first year when the Black Money Act, 2015 came into force. The foreign income earned by the assessee was taxable, otherwise, in that country.. However, the tax on the said dividend income was withheld as per the USA Tax Law as such dividend income formed part of the investment/fund itself. The Ld. Counsel in this respect has explained that the Black Money Act, 2015 had come into force for the first time in AY 2016-17 only and that the provisions of the Black Money Act, 2015 were not so clear and it was not ascertainable as to whether the dividend earned by the assessee on the fund, which had become part of the investment fund, itself, was required to be disclosed in the return of income filed u/s. 139 of the Act. Moreover, as per the provisions of section 3 of the Act, the undisclosed asset was to be taxed in the year in which the information regarding the same comes to the knowledge of the AO which of course came to his knowledge in November, 2018, relevant to AY 2019-20. Considering the aforesaid facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A) in deleting the impugned addition made by the AO. This appeal of the revenue is accordingly, dismissed.” Printed from counselvise.com 9 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar 7. Ld. AR further respectfully relied on the order of Coordinate bench of ITAT Kolkata, B-Bench in Sri Srinjoy Bose v. A.D.I.T. (Inv.) reported in [2023] 150 taxmann.com 273 (Kolkata-Trib.) date of order 02/02/2023. The relevant observation is reproduced as below:- “13. Now, in light of the provisions of section 2(11) & 2(12) of the Black Money Act, 2015 first we notice that in the instant case the issue is only with regard to the alleged undisclosed foreign asset i.e. the investment in the insurance policy and there is no issue of undisclosed foreign income because the assessee only received the reduced amount of investment. So, we will just focus on the issue that as to whether the alleged foreign asset is an undisclosed asset located outside India. Provision of Section 2(11) of the Black Money Act, 2015 provides for the definition of undisclosed asset located outside India as stated above, and in our humble understanding, following two conditions need to be fulfilled by the Revenue authorities to bring a particular foreign asset under the category of undisclosed asset located outside India held by the assessee in his name or in respect of which he is a beneficial owner. The first condition is that such asset is not disclosed by the assessee in the return of income or any other place of disclosure as provided under the Black Money Act, 2015 and secondly, the assessee is unable to offer any explanation about the source of investment in such asset or the explanation given by him is unsatisfactory in the opinion of ld. AO. 14. Now, so far as explanation about the source of alleged investment, in the case under consideration is concerned, we find that the assessee has successfully explained the source of investment which is undoubtedly from the income earned outside India, part of which was paid by the assessee in the capacity of a non-resident Indian and the remaining part being paid by assessee's father who is also a non-resident Indian from his sources of income/asset located outside India. There is no iota of evidence bring forth by the Revenue authorities which could indicate that any element of the alleged investment in foreign asset is from so-called black money earned in India. Complete details of the bank account along with date of payment of the premium of the insurance policy supports this fact that the assessee has successfully explained the source of investment in the alleged foreign asset in the form of investment in insurance policy. “ 8. The Ld. DR argued and stated that the assessee is contravening provisions of section 72(c) of the BMA Act and assessee has failed to comply the window which was open from 01.07.2015. So, the dividend earned during the AY 2014-15 t0 2016-17 is undisclosed income as per provision of Section 10(2) of the BMA Printed from counselvise.com 10 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar Act. He stands in favor of the orders of revenue authorities. The Ld. DR further argued and invited our attention in impugned appellate order page 9 to 11. The contention of the impugned appellate order is reproduced as below: “12. In Ground No. 2, the appellant has pleaded that the investment in the foreign assets should not be assessed under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 12.1 The appellant has argued that the impugned foreign assets, being the shares of Baxter International Inc., were acquired as a result of re-investment of dividend earned form his original holding of the shares of this company. Also, according to the appellant, he being a salaried individual, had no knowledge of declaration of foreign income and reporting of foreign assets in the return of income filed in India. Also, since the dividend was re-invested after net-off of withholding tax by the USA Tax Authorities, he was under the belief that no tax was payable on this dividend income, which was re-invested. Moreover, the appellant pleaded that the foreign assets, being the shares of Baxter International Inc., had been duly disclosed in the ITR filed for AY 2016-17 onwards. The appellant further argued that the deeming provision under section 3(1) of BMA was applicable to undisclosed asset and not to undisclosed income, which was dividend in his case. Thus, the appellant argued that the provisions of BMA could not be invoked in his case. 12.2 In this regard it is seen that at the time when the dividend income was earned from the shares of Baxter International Inc., the appellant was a resident and his global income was taxable in India. However, the appellant has himself admitted that out of ignorance, the foreign dividend income was not declared in the ITRs filed in India. Ignorance of the law is no plea and this argument of the appellant cannot be accepted. Since, such dividend income was not declared in India and taxes not paid as per the provisions of the Income Tax Act 1961, such dividend income became the undisclosed/unexplained income of the appellant. This undisclosed income was then converted into a foreign asset by way of investment in the shares of Baxter International Inc. The impugned shares of Baxter International Inc were thus foreign assets acquired from income chargeable to tax under the Income Tax Act 1961, which had not been disclosed, and these assets were liable for disclosure under Chapter-VI of the BMA. However, no such disclosure was made by the appellant. The provisions of the law are very clear that once, no disclosure has been made under Chapter-VI of BMA during the period when the compliance window was open from 01.07.2015 to 30.09.2015, as per the provisions of section 72(c) of BMA such assets would be deemed to have been acquired in the year in which it comes to the notice of the AO and provisions of the Act would apply accordingly. The CBDT Circular no. 13 of 2015 Printed from counselvise.com 11 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar dated 07.07.2015 amply clarifies this and the relevant extract of the said circular is reproduced as under: Question No.14: What are the consequences if no declaration under Chapter VI of the Act is made in respect of undisclosed foreign assets acquired prior to the commencement of the Act? Answer: As per section 72(c), where any asset has been acquired prior to the commencement of the Act and no declaration under Chapter VI of the Act is made then such asset shall be deemed to have been acquired in the year in which it comes to the notice of the Assessing Officer and the provisions of the Act shall apply accordingly. India is expected to start receiving information through Automatic Exchange of Information (AEOI) route under FATCA from USA later in the year 2015. Further, under the multilateral agreement India will start receiving information from other countries under AEOI route from 2017 onwards. As at 18th March 2015, 58 jurisdictions (including India) have committed to share information under AEOI by 2017 and 36 jurisdictions have committed to share by 2018, including jurisdictions which have beneficial tax regime. The multilateral agreement is expected to cover all the countries in the near future. The information under the AEOI will include information of controlling persons (beneficial owners) of the asset. The possibility of discovery of an undisclosed asset may arise at any time in the future; say for example, information of an immovable property can be unearthed if any utility bills/property tax or even gardener's /caretaker's salary has been paid through an existing or closed bank account. Therefore, if any information of an undisclosed foreign asset acquired earlier, say in the your 1975, for $ 100,000 comes to the notice of an Assessing Officer later, say in the year 2020, when its value becomes, say, $ 5 Million, the liability under the Act amounting to 120 percent of the fair market value of the asset on the valuation date may arise in the year 2020, besides prosecution and other consequences. In this case if the valuation date is in the year 2020 the amount of tax and penalty under the Act will be $ 6 Million. 12.3 In this regard, section 72(c) of BMA is also reproduced as under Removal of doubts For the removal of doubts is hereby that-72 Remove declared that- -……… (c) where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be Printed from counselvise.com 12 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly. 12.4 Thus the CBDT circular makes the provisions of the law very clear. In the present case, it can be seen that the foreign asset has been acquired from the dividend income on which taxes have not been paid as per the Income Tax Act 1961. Thus, the foreign assets being shares of Baxter International Inc have been acquired from income which was chargeable under the Income Tax Act but was not disclosed in the ITR furnished under the Income Tax Act. Thus, these assets were required to be declared under Chapter-VI of BМА, which was not done by the appellant. Accordingly, as provided for in section 72(c) of BMA, it is held that the AO has rightly proceeded in charging these undisclosed foreign assets u/s 3(1) of BMA in the year in which these undisclosed foreign assets came to the notice of the AO, The action of the AO is accordingly upheld and the ground of appeal is dismissed.” 9. We have carefully considered the rival submissions, perused the material available on record, and examined the statutory provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“BMA Act”), along with the judicial precedents relied upon by both sides. It is an undisputed fact that the shares of “Baxter International Inc.” were acquired by the assessee under the Employee Stock Purchase Plan and subsequent Dividend Re-investment Plan, and that the source of such acquisition, namely dividend income, stands explained and is duly recorded by the Assessing Officer himself in the assessment order. Once the source of investment is explained, the fundamental condition prescribed under section 2(11) of the BMA Act for treating an asset as an “undisclosed asset located outside India” remains unfulfilled. We further find merit in the contention of the Ld. AR that the deeming fiction contained in the proviso to section 3(1) of the BMA Act applies only to undisclosed assets and not to undisclosed income. In the present case, what has been sought to be taxed is dividend income, which by its very nature constitutes Printed from counselvise.com 13 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar income and not an asset. The conversion of such income into further shares through an automatic reinvestment mechanism does not alter the character of the original receipt, particularly when the source thereof is neither unaccounted nor unexplained. Therefore, the invocation of section 3(1) read with section 10(3) of the BMA Act is legally unsustainable on the facts of the present case. The reliance placed by the Ld. CIT(A) on section 72(c) of the BMA Act is also found to be misplaced. Firstly, the said provision was not invoked by the Ld. AO in the assessment order, and secondly, the assessee was not put to notice before the appellate authority invoked the said provision, resulting in violation of the principles of natural justice. More importantly, section 72(c) of the BMA Act presupposes the existence of an “undisclosed asset” as defined under the Act, which condition itself is not satisfied in the present case. We also note that the assessee has disclosed the foreign assets in Schedule FA of the return of income from AY 2016-17 onwards and that taxes on dividend income had already been withheld in the USA. In such circumstances, there is no element of tax evasion or concealment, and no prejudice has been caused to the revenue, particularly when the assessee would have otherwise been eligible to claim relief under section 90 of the Income-tax Act, 1961. The ratio laid down by the Coordinate Benches of the Tribunal in Sri Srinjoy Bose (supra), Vikash Marda (supra) and Akhilesh Singh (supra) squarely applies to the facts of the present case. In view of the foregoing discussion, we hold that the shares of “Baxter International Inc.” cannot be treated as “undisclosed assets located outside India” within the meaning of section 2(11) of the BMA Act, and consequently, the addition made under section 10(3) of the BMA Act is unsustainable in law. Printed from counselvise.com 14 BMA No.10/Mum/2024 Ketan Ramesh Dhamanaskar Accordingly, the impugned order of the Ld. CIT(A) is set aside and the addition made by the Ld. AO is deleted. 10. Considering the foregoing discussion, Ground Nos. 2 to 8 raised by the assessee are allowed. Ground No. 1 is rendered academic in nature and is kept open, and Ground No. 9, being general in nature, does not call for any separate adjudication. 11. In the result, appeal filed by the assesse bearing BMA No. 10/Mum/2024 is allowed. Order pronounced in the open court on 20th day of January, 2026. Sd/- Sd/- (PRABHASH SHANKAR) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 20/01/2026 Saumya Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकरआयुƅ CIT 4. िवभागीयŮितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाडŊफाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI Printed from counselvise.com "