UDAYKUMAR CHAGANLAL JAIN,PUNE V. ADIT(INV)-1, FAIU, PUNE, PUNE

BMA 6/PUN/2024

AI Insights

The case involves Udaykumar Chaganlal Jain, an Indian resident and partner in Drushti Technet LLP, who faced penalties under the Black Money Act for not disclosing foreign assets in his income tax returns for the assessment years 2018-19 and 2023-24. The assets in question were 1250 shares of Key Circle Marketing Ltd., a company incorporated in the British Virgin Islands. The Assessing Officer and CIT(A) had earlier upheld the penalties, asserting that the appellant had willfully not disclosed his foreign income. However, the Tribunal found that the shares were received in lieu of professional services and had no market value, thus overturning the penalties.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772172 (ITAT-PUNE)
• Appeal Type: Black Money Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2023-2024
• Other Referred Cases: Anshul Anil Goel vs. DCIT, CIT vs. Calcutta Export Company, Allied Motors Pvt. Ltd. vs. CIT, Genpact India Pvt. Ltd. vs. DCIT, ACIT vs. Leena Gandhi Tiwari, Prasad Nimmagadda vs. DIT
• 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: AKHILESH SRIVASTVA
• Assessee Lawyers: NIKHIL S PATHAK
• Keywords: Set aside; Retrospective amendment; Reasonable cause; Fair market value; TDS; Bonafide mistake; Initiation of penalty proceedings; Residential status
• Section: 143(3); 139; 43B; 40(a)(ia)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER BMA Nos.4, 5 & 6/PUN/2024 Assessment years : 2023-24, 2018-19 & 2023-24 Udaykumar Chaganlal Jain B-1103, Hydepark, Market Yard, Pune – 411037 Vs. ADIT(Inv)-1, FAIU,Pune PAN : ADFPJ0151P (Appellant) (Respondent) Assessee by : Shri Nikhil S Pathak Department by : Shri Akhilesh Srivastva, Addl.CIT Date of hearing : 26-06-2025 Date of pronouncement : 26-08-2025 O R D E R PER R.K. PANDA, V.P: BMA No.4/PUN/2024 filed by the assessee is directed against the order dated 25.06.2024 of the Ld. CIT(A), Pune -11 relating to assessment year 2023-24. BMA No.5/PUN/2024 and 6/PUN/2024 filed by the assessee are directed against the separate orders dated 28.11.2024 of the Ld. CIT(A), Pune -11 relating to assessment year 2018-19 and 2023-24 respectively. For the sake of convenience, all these appeals were heard together and are being disposed of by this common order. 2. Facts of the case, in brief, are that the assessee is an Indian Resident having registered address at Abhinav Apt, Congress Bhavan Road, Pune 411005 and is a partner of Drushti Technet LLP. Information pertaining to the assessee was Printed from counselvise.com 2 BMA Nos.4 to 6/PUN/2024 received from the CBDT through email dated 02.02.2022 according to which the assessee is the ultimate beneficial owner of shares of ‘Key Circle Marketing Ltd.’ which was incorporated on 23.10.2017 in British Virgein Islands. On perusal of ITR for assessment year 2018-19 the Assessing Officer noted that the assessee has failed to disclose the details of 1250 shares of ‘Key Circle Marketing Ltd.’ held by him in the schedule FA of the ITR filed for assessment year 2018-19. He, therefore, initiated assessment proceedings under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as ‘the Act’) and notice u/s 10(1) of the Act was issued to the assessee on 08.08.2022. 3. The assessee in response to the said notice submitted that Drushti Technet LLP (where he is one of the partners) provided web designing services to UKR General Trading LLC. It was submitted that against the total consideration receivable for providing the IT services, part of the consideration was adjusted against the issue of 1250 shares of Key Circle Marketing Ltd. being 2.5% of the total equity shares of the company. The assessee also produced the e-mail conversation dated 06.07.2018 and 07.07.2018 between Pankaj Khadloya and the assessee, the balance sheet of the LLP, invoice, ledger account etc. 4. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. According to him the shares were allotted to the assessee on 23.10.2017 while the invoices raised by Drushti Technnet LLP on Printed from counselvise.com 3 BMA Nos.4 to 6/PUN/2024 UKR General Trading LLC was dated 05.02.2018. According to the Assessing Officer, the contention of the assessee was an afterthought, since the mail conversation between the assessee and his CA Shri Pankaj Khadloya shows that Shri Khadloya has written to Uday Jain mentioning that “Kindly share the fair market value of these shares at the time of acquisition, we need to offer these income to Indian income tax. Accordingly, these shares can be incorporated in your books with appropriate foreign asset disclosure in the ITR.” Thus, according to the Assessing Officer the assessee was aware of the fact that the fair market value of the shares of Key Circle Marketing Ltd. needs to be offered to tax and still the same were neither shown nor offered to tax in the return of income by the assessee. This shows that the assessee willfully did not disclose his foreign income in the ITR. In view of the above, the Assessing Officer held that the assessee was unable to explain the source of acquisition of the shares of the said company. He accepted the FMV of the said shares as NIL as per Rule 3(1)(c)(II) of the Black Money (UFIA) and Imposition of Tax Act, 2015. He, however, worked out the cost of the shares at Rs.94,763/- and taxed the same in the hands of the assessee @ 30% as per section 3(1) of the Black Money Act. 5. Since the fair market value of the shares of Key Circle Marketing Ltd. held by the assessee was determined at Rs.94,763/- and the explanation for the source of investment in foreign assets was not satisfactory according to the Assessing Officer, therefore, he levied penalty of Rs.85,275/- being 300% tax on such foreign income under section 41 of the Black Money (UFIA) and Imposition of Tax Act, Printed from counselvise.com 4 BMA Nos.4 to 6/PUN/2024 2015 for assessment year 2023-24. Similarly the Assessing Officer levied penalty of Rs.10,00,000/- u/s 43 of the Black Money (UFIA) and Imposition of Tax Act, 2015. 6. In appeal, the Ld. CIT(A) upheld the action of the Assessing Officer. 7. Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds: Grounds raised in BMA No.4/PUN/2024 (A.Y. 2023-24) 1] The order passed by the Ld. CIT(A) u/s. 16 of the Black Money (UFIA) and Imposition of Tax Act is illegal and void as the same is passed in predetermined manner without considering the true facts. The additions made merely on the basis of presumptions & surmises is unjustified which needs to be deleted. 1.1] The ld. CIT(A) failed to appreciate that the assessment order is void and bad in law, as the ld. AO ought to have made the assessment for AY 2022- 23 as alleged undisclosed foreign asset came to his notice in FY 2021-22 pertaining to AY 2022-23 and not in AY 2023-24 2] The Ld. CIT(A) has erred in holding that the appellant is the holder of undisclosed foreign assets being 1250 shares of M/s. Key Circle Marketing Ltd. (a BVI Company) without appreciating that the same were duly accounted in the books of account in the year 2017-18 and the sources thereof were also fully accounted. 2.1] The Ld. CIT(A) ought to have appreciated that consideration towards the impugned shares of foreign company was duly debited by the group company against the consideration for professional services provided to it. Thus, it cannot be said to be unaccounted. 2.2] The ld. CIT(A) failed to appreciate that there was no undisclosed foreign asset and that mere non-disclosure of the alleged shares in the ITR does means that the same were unaccounted. There was reasonable clause in non-disclosure of the same shares in ITR. 2.3] The Ld. CIT(A) erred in not appreciating that the law of the Black Money (UFIA) and Imposition of Tax Act was introduced to bring black money Printed from counselvise.com 5 BMA Nos.4 to 6/PUN/2024 back into country which was stashed away abroad by big tax defaulters and not to do inconvenience to common people In case of their genuine omission/mistake like in the case of the appellant. 4] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. Grounds raised in BMA No.5/PUN/2024 (A.Y. 2018-19) 1] The order passed u/s 16 of the Black Money (UFIA) and Imposition of Tax Act by the ld. CIT(A) is illegal and void as the same is passed without considering true facts of the case. Thus, the penalty levied merely on the basis of presumptions and surmises is not justified. 1.1] The order u/s. 43 of the Act levying the penalty is void-ab-initio, as the order passed u/s. 10(1) itself is invalid and illegal. 2] The order u/s 10(1) was passed for AY 2023-24 and there was no specific mention in the order u/s. 10(1) that penalty proceedings u/s. 43 are initiated for AY 2018-19. The initiation of penalty proceedings for AY 2018- 19 is, therefore, bad in law and accordingly the penalty order for AY 2018- 19 needs to be quashed. 3] The Ld. CIT(A) is not justified in levying the penalty of Rs.10,00,000/- u/s. 43 of the Act without appreciating that there was a reasonable cause for non-disclosure of the same in the ITR and accordingly, no penalty was leviable in this case. 3.1] The Ld. CIT(A) failed to appreciate that the appellant did not disclose the shares of foreign company in its ITR, as the same were already written off before year end after being duly accounting the same in the books of accounts. 3.2] The Ld. CIT(A) has erred in holding that the appellant is the holder of undisclosed foreign assets being 1250 shares of M/s. Key Circle Marketing Ltd. (a BVI Company) without appreciating that the same were duly accounted in the books of account in the year 2017-18 and the sources thereof were also fully accounted. 3.3) The Ld. CIT(A) erred in not appreciating that Black Money (UFIA) & Imposition of Tax Act was introduced to bring black money back into country which was stashed away abroad by big tax defaulters and not to do inconvenience to genuine people like the appellant. 3.4] The Ld. CIT(A) failed to take into account various submissions and case laws furnished by the appellant in support of its contention and rather levied the penalty under predetermined & prejudiced manner which is unjustified. Printed from counselvise.com 6 BMA Nos.4 to 6/PUN/2024 4] The Ld. CIT(A) erred in not even discussing the issue raised by the appellant in respect of recent amendment in Finance Act (No. 2) 2024 wherein the law makers have acknowledged that the penalty u/s 43 is resulting into hardship in genuine / small cases. As per the amended provisions no penalty shall be levied in cases where the aggregate value of alleged undisclosed asset does not exceed twenty lakh rupees. Thus, applying the newly amended provision penalty ought to have been deleted in this case. 5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. Grounds raised in BMA No.6/PUN/2024 (A.Y. 2023-24) 1] The order passed u/s 16 of the Black Money (UFIA) and Imposition of Tax Act by the Ld CIT(A) is illegal and void as the same is passed without considering true facts of the case. Thus, the penalty levied merely on the basis of presumptions and surmises is not justified. 1.1] The order u/s. 43 of the Act levying the penalty is void ab-initio, as the order passed u/s 10(1) itself is invalid and illegal. 2] The Ld. CIT(A) is not justified in confirming the penalty of Rs.85,275/ u/s 41 of the Act without appreciating that there was no undisclosed foreign asset and that there was a reasonable cause for non-disclosure of the said asset in the ITR and accordingly, no penalty was leviable in this case. 2.1] The Ld. CIT(A) has erred in upholding that the appellant is the holder of undisclosed foreign assets being 1250 shares of M/s Key Circle Marketing Ltd. (a BVI Company) without appreciating that the same were duly accounted in the books of account in the year 2017-18 and the sources thereof were also fully accounted. 2.2] The Ld. CIT(A) ought to have appreciated that consideration towards the impugned shares of foreign company was duly debited by the group company against the consideration for professional services provided to it. Thus, it cannot be said to be unaccounted. 2.3] The Ld. CIT(A) erred in not appreciating that Black Money (UFIA) & Imposition of Tax Act was introduced to bring black money back into country which was stashed away abroad by big tax defaulters and not to do inconvenience to common people in case of their genuine omission/mistake like in the case of the appellant. 3] The Ld. CIT(A) failed to take into account various submissions and case laws furnished by the appellant in support of its contention and rather Printed from counselvise.com 7 BMA Nos.4 to 6/PUN/2024 levied the penalty under predetermined & prejudiced manner which is unjustified. 4] The Ld. CIT(A) erred in not even discussing the issue raised by the appellant in respect of recent amendment in Finance Act (No. 2) 2024 wherein the law makers have acknowledged that the penalty provisions in this case are resulting into hardship in genuine / small cases. Accordingly, no penalty ought to have been levied in this case considering the smallness of amounts involved. 5] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 8. The Ld. Counsel for the assessee reiterated the same arguments as made before the Assessing Officer and Ld. CIT(A). He submitted that the assessee, during the course of assessment proceedings has clarified that he was a partner in Drushti Technet LLP which was engaged in the business of web designing services. It was further submitted that the said LLP had provided professional services to UKR General Trading LLC, a group entity of Key Circle Marketing Ltd. It was further explained that as against the total consideration receivable for providing IT services, a part of the consideration was adjusted against the issue of 1250 shares of Key Circle Marketing Ltd. being 2.5% of the total equity of the said company. He submitted that all the relevant evidences including mail trail, balance sheet of the LLP, invoice, ledger account etc were submitted before the Assessing Officer. 9. Referring to page 35 of the paper book the Ld. Counsel for the assessee submitted that Drushti Technet LLP had provided professional services to UKR General Trading LLC and a part of the consideration has been adjusted against the Printed from counselvise.com 8 BMA Nos.4 to 6/PUN/2024 shares allotted to the assessee which is apparent from the copy of mail dated 04.09.2018 wherein it has been clearly mentioned that part of the consideration to be payable to the LLP would be adjusted against the issue of shares to the assessee. 10. Referring to page 24 of the paper book he submitted that Drushti Technet LLP has raised an invoice of USD 8750 on UKR. He submitted that thereafter UKR paid 7500 USD to Drushti and the balance USD 1250 was adjusted against the issue of shares. He submitted that Drushti has offered entire USD 8750 as its income and USD 1250 was debited to the account of the assessee which is evident from page 34 of the paper book. 11. Referring to pages 16 to 23 of the paper book which contains the balance sheet of Drushti, he submitted that the said balance sheet was audited on 30.09.2018. Therefore, in view of the above evidences it is crystal clear that the assessee has not paid any amount for acquisition of shares and the consideration receivable by Drushti towards professional services has been partly adjusted against the issue of shares to the assessee. 12. So far as the observation of the Assessing Officer regarding the mail between the assessee and his CA according to which the CA has asked regarding the fair market value of shares is concerned, he submitted that in the mail trail the assessee had written that he was allotted shares in lieu of consulting services. Printed from counselvise.com 9 BMA Nos.4 to 6/PUN/2024 Thus, from the said mail it is clear that the assessee never paid any money for the acquisition of shares. Therefore, no addition should be made. 13. So far as the observations of the Assessing Officer that the contention of the assessee is an afterthought is concerned he submitted that a perusal of the mail conversation between the assessee and his CA dated 06.07.2018 shows that it is clearly mentioned that the shares were allotted in lieu of providing services. Similarly the various other evidences referred by the assessee also indicate that the shares were allotted in lieu of professional services provided, therefore, the contention of the Assessing Officer is not justified. 14. So far as the levy of penalty u/s 41 is concerned, the Ld. Counsel for the assessee submitted that once the addition made is not justified, the penalty levied at 3 times the tax amount is not at all justified. 15. The Ld. Counsel for the assessee further submitted that the Assessing Officer has levied penalty of Rs.10 lakhs u/s 43 on account of non disclosure of the investment in the shares of Key Circle Marketing Ltd. in the return filed. He drew the attention of the Bench to the provisions of section 43 and submitted that the aggregate balance does not exceed Rs.5 lakhs. Further, the provisions of section 43 have been amended by the Finance Act, 2024 according to which the penalty u/s 43 is not leviable where the aggregate value of the assets other than immovable property does not exceed Rs.20 lakhs. He submitted that while amending the said Printed from counselvise.com 10 BMA Nos.4 to 6/PUN/2024 proviso it has been mentioned that the threshold limit of Rs.5 lakhs was very low which resulted in levying of penalties where the value of the asset itself was less than the amount of penalty levied. Thus, section 43 has been amended to provide that no penalty is leviable in respect of an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed Rs.20 lakhs. 16. The Ld. Counsel for the assessee relying on various decisions submitted that the amendment to the proviso to section 43 should be considered as retrospective in nature since the proviso has been amended in order to provide a remedy for the unintended consequences. Referring to the Memorandum explaining the provisions, he submitted that the limit has been increased since the original threshold limit was very low which resulted in levy of penalty even where the asset value was less than the penalty amount. For the above proposition, he relied on the following decisions: i) Anshul Anil Goel vs. DCIT (2025) 171 taxmann.com 382 (Pune-Trib.) ii) CIT vs. Calcutta Export Company (2018) 93 taxmann.com 51 (SC) iii) Allied Motors Pvt. Ltd. vs. CIT (1997) 224 ITR 677 17. The Ld. Counsel for the assessee accordingly submitted that the amendment to the provisions of section 43 of the said Act should be treated as retrospective in nature. Since in the present case the value of shares of Key Circle Marketing Ltd. Printed from counselvise.com 11 BMA Nos.4 to 6/PUN/2024 has been worked out at Rs.94,763/- which is less than Rs.20 lakhs, therefore, no penalty is leviable u/s 43 of the Act. 18. The Ld. Counsel for the assessee further submitted that the company Key Circle Marketing Ltd. did not carry out any business and it was struck off of BVI Registrar of Companies on 01.05.2019. Referring to page 36 of the paper book he drew the attention of the Bench to the copy of mail written by enforcement division of BVI Financial Service Commission clarifying the above fact. Thus, the fair market value of the said shares was Rs.Nil. Therefore, when the value of the asset itself has reduced to Rs.Nil, there is no reason to levy penalty u/s 43. He accordingly submitted that non reporting of the said investment is a mere omission and therefore, no penalty u/s 43 should be levied. For the above proposition, he relied on the following decisions: i) ACIT vs. Leena Gandhi Tiwari (2022) 136 taxmann.com 409 (Mumbai- Trib) ii) Prasad Nimmagadda vs. DIT (2025) 173 taxmann.com 444 (Hyderabad – Trib.) 19. Referring to the decision of Mumbai Bench of the Tribunal in the case of Addl.CIT vs. Leena Gandhi Tiwari, he submitted that the Tribunal in the said decision has held that where assessee was a signatory in a foreign bank account owned by her mother and she failed to disclose same while filing her income-tax return, however disclosure was made while filing return under section 153A, since such non-disclosure of a foreign asset was a bona fide mistake, penalty could not be imposed under section 43 of Black Money Act. Printed from counselvise.com 12 BMA Nos.4 to 6/PUN/2024 20. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of Prasad Nimmagadda vs. DIT (2025) 173 taxmann.com 444 (Hyderabad-Trib.), he submitted that the Tribunal in the said decision has held that where assessee failed to disclose investments in foreign assets for Assessment Year 2017-18 however Assessing Officer accepted source of investment and made no addition under Section 10 omission was a bona fide mistake, and thus penalty under section 43 was to be deleted. 21. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). 22. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case passed the order u/s 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 on the ground that the assessee has not disclosed the investment of Rs.94,763/- in the return of income for which he levied tax @ 30% on the amount of Rs.94,763/- in the hands of the assessee being cost of shares. After imposition of tax u/s 10 the Assessing Officer levied penalty u/s 41 amounting to Rs.85,275/- which is 3 times the tax computed u/s 10 of the said Act. Further, the Assessing Officer also levied penalty of Rs.10 lakhs u/s 43 for non disclosure of the value of shares in the return of income filed by the assessee. We find the Ld. CIT(A) Printed from counselvise.com 13 BMA Nos.4 to 6/PUN/2024 upheld the action of the Assessing Officer in levying the tax and penalty as mentioned above. 23. It is the submission of the Ld. Counsel for the assessee that the assessee was a partner in Drushti Technet LLP which was engaged in the business of web designing services. The said LLP has provided professional services to UKR General Trading LLC, a group entity of Key Circle Marketing Ltd. As against the total consideration receivable for providing IT services, part of the consideration was adjusted against the issue of 1250 shares of Key Circle Marketing Ltd. being 2.5% of the total equity of the said company. It is also his submission that the assessee has not paid any money for acquisition of the shares but he was allotted the shares in lieu of the consulting services. It is also his submission that Drushti has offered entire USD 8750 as its income and USD 1250 was debited to the account of the assessee. It is his submission that as per the provisions of section 43, the said provisions are not applicable where an asset, being one or more bank accounts and the aggregate value does not exceed Rs.5 lakhs. Further, certain amendments were made to the proviso, according to which the penalty u/s 43 is not leviable where the aggregate value of an asset other than the immovable property does not exceed Rs.20 lakhs. Although these amendments are made in the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 by the Finance Act, 2024, however, these being beneficial provisions should be considered as retrospective in nature since the proviso has been amended in order to provide a remedy for the unintended consequences. Printed from counselvise.com 14 BMA Nos.4 to 6/PUN/2024 24. We find some force in the above arguments of the Ld. Counsel for the assessee. The provisions of section 43 before the amendment read as under: “Sec. 43. If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub- section (4) or sub-section (5) of section 139 of the said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, at any time during such previous year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees: Provided that this section shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year Explanation - The Value equivalent in rupees shall be determined in the manner provided in the Explanation to section 42.” 25. We find the above proviso has been amended by the Finance Act, 2024 and the amended proviso reads as under: “[Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees.) Explanation. The value equivalent in rupees shall be determined in the manner provided in the Explanation to section 42.” 26. We find the relevant Memorandum explaining the provisions reads as under: “Amendments in section 42 and 43 of the Black Money Act, 2015 relating to penalty for failure to disclose foreign income and asset in the ITR: Section 42 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Act) provides for penalty for failure to furnish details of foreign income and assets in the return of income. The said section 58 is applicable in respect of an assessee being a resident other than not ordinarily resident in India who has failed to furnish the return of income when such assessee is having any asset, or is a beneficiary of an asset located outside India or is having any income from a source located outside India. Similarly, section 43 of the Black Money Act provides for penalty for failure to furnish in return of income, an information or furnish inaccurate particulars about an asset Printed from counselvise.com 15 BMA Nos.4 to 6/PUN/2024 (including financial interest in any entity) located outside India. The said section is applicable when the assessee being a resident other than not ordinarily resident in India has failed to furnish the details of any asset located outside India, held by him as a beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India. 2. In view of the above, every resident and ordinarily resident, while filing the return of income, shall disclose all foreign assets (including investment in shares and securities) and income from such foreign assets in the Income Tax Return. Failure to furnish the ITR in relation to foreign income and asset or to report such foreign income and assets located outside India in the ITR may attract a penalty under section 42 or 43 of the Black Money Act, of an amount of ten lakh rupees regardless of the value of asset located outside India. 3. Further, provisos to the aforementioned sections of the Black Money Act state that the provisions of these sections shall not apply in respect of an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year. Suggestions have been received from various stakeholders that the threshold limit of five lakh rupees is very low which results in many penalties where the asset value itself is less than the penalty amount. 4. It is proposed to amend the provisos to sections 42 and 43 of the Black Money Act to provide that the provisions of the said sections shall not apply in respect of an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed twenty lakh rupees. 5. This amendment will take effect from the 1st day of October, 2024\" 27. We therefore find merit in the arguments of the Ld. Counsel for the assessee that while amending the said proviso the threshold limit was enhanced to Rs.20 lakhs on the ground that threshold limit of Rs.5 lakhs was very low which resulted in levying of penalties where the value of the asset itself was less than the amount of penalty levied and therefore, the said amendment should be held as retrospective in nature. 28. We find the Pune Bench of the Tribunal in the case of Anshul Anil Goel vs. DCIT (supra) while holding the provisions in the Finance Bill 2024 regarding Tax Credit as retrospective in nature has held as under: Printed from counselvise.com 16 BMA Nos.4 to 6/PUN/2024 “14. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. Addl./JCIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the assessee in the instant case filed his return of income declaring total income of Rs.38,76,29,470/- which included his income as well as the income of his minor child which has been clubbed as per the provisions of section 64(1A). Similarly, we find the assessee claimed TDS of Rs.14,53,50,759/- and TCS of Rs.25,28,802/- and the said TCS of Rs.25,28,802/- constitutes of an amount of Rs.15,78,602/- collected for self and TCS of Rs.9,50,200/- collected in the hands of his minor child whose income was clubbed with his income. Since the income of the minor child was required to be clubbed in the hands of the assessee, the assessee claimed the TCS collected in the name of minor child which was denied by the CPC. We find the Ld. Addl./JCIT(A) admitted that such income of the minor child has been clubbed with the income of the assessee and the assessee has claimed such TCS collected in the hands of the minor child. However, he dismissed the claim on the ground that the Memorandum explaining the provisions in the Finance Bill, 2024 regarding credit of tax collected to be given to the persons other than the collectee, is applicable from 1st day of January, 2025 and since no other mechanism has been provided to allow such TCS credit in the Act till the said amendment which took effect only from 1st day of January, 2025, therefore, such claim of the assessee cannot be entertained. In our opinion, since the income of the minor child was clubbed with the income of the assessee, the corresponding TCS collected in the hands of the minor also should be allowed and due credit should be given in the hands of the assessee. In our opinion, the Revenue cannot be allowed to retain the tax deducted at source or tax collected at source without credit being available to anybody. In our opinion, if the credit of tax is not allowed to the assessee, then credit of TCS cannot be taken by anybody. 15. So far as the contention of the Revenue that the Memorandum explaining the provisions in the Finance Bill, 2024 regarding the credit of tax collected to be given to the persons other than the collectee is applicable from 1st day of January, 2025 and since so other mechanism has been provided to allow such TCS in the Act till the amendment which took place effective only from 1st day of January, 2025 and therefore, such claim of the assessee cannot be entertained is concerned, the same, in our opinion, cannot deprive the assessee from his legitimate claim of TDS / TCS, the income of which has already been offered to tax. Therefore, such amendment in our opinion should be held as retrospective in nature and not to the detriment of the assessee against a legitimate claim. 16. We find the Hon'ble Supreme Court in the case of Allied Motors (P) Ltd. vs. CIT (supra) has held that a proviso which is inserted to remedy unintended consequences and to made the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. It has further been held that “it is well settled that if a statute curative or merely declaratory of the previous law retrospective operation is generally Printed from counselvise.com 17 BMA Nos.4 to 6/PUN/2024 intended. In fact the amendment would not serve its object in such a situation unless it is construed as retrospective”. 17. We find the Hon'ble Supreme Court in the case of Genpact India Pvt. Ltd. vs. DCIT (supra) has observed as under: “13. If the submission of the appellant is accepted and the concerned expression as stated hereinabove in Section 246(1)(a) or in Section 246A(1)(a) is to be considered as relatable to the liability of an assessee to be assessed under Section 143(3) as contended, there would be no appellate remedy in case of any determination under Section 115QA. The issues may arise not just confined to the question whether the company is liable at all but may also relate to other facets including the extent of liability and also with regard to computation. If the submission is accepted, every time the dispute will be required to be taken up in proceedings such as a petition under Article 226 of the Constitution, which Civil Appeal No. 8945 of 2019 @ SLP(C) No.20728 of 2019 Genpact India Private Limited v. Deputy Commissioner of Income Tax & Anr. normally would not be entertained in case of any disputed questions of fact or concerning factual aspects of the matter. The assessee may thus, not only lose a remedy of having the matter considered on factual facets of the matter but would also stand deprived of regular channels of challenges available to it under the hierarchy of fora available under the Act. 14. We, therefore, reject the submissions advanced by the appellant and hold that an appeal would be maintainable against the determination of liability under Section 115QA of the Act.” 18. In view of the above discussion and respectfully following the decisions cited (supra), we hold that depriving the assessee of due credit for TCS in the hands of the minor child whose income has already been clubbed in the hands of the assessee will cause undue hardship to the assessee for non-provision of any other mechanism by the Board. We, therefore, set aside the order of the Ld. Addl./JCIT(A) and direct the Assessing Officer to give due credit of TDS / TCS of the minor child in the hands of the assessee. The grounds raised by the assessee are accordingly allowed.” 29. We find the Hon’ble Supreme Court in the case of CIT vs. Calcutta Export Company (supra) while explaining the retrospective nature of an amendment in the Act has held as under: “27. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious emission in the Section, is required to be read into the Section to give the Section a reasonable Printed from counselvise.com 18 BMA Nos.4 to 6/PUN/2024 interpretation and requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the Section as a whole. 28. The purpose of the amendment made by the Finance Act, 2010 is to solve the anomalies that the Insertion of section 40(a)(ia) was causing to the bona fide tax payer. The amendment, even if not given operation retrospectively, may not materially be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assessees having substantial turnover and equally huge expenses and necessary cushion to absorb the effect. However, marginal and medium taxpayers, who work at low gross product rate and when expenditure which becomes subject matter of an order under Section 40(a)(ia) is substantial, can suffer severe adverse consequences if the amendment made in 2010 is not given retrospective operation i.e. from the date of substitution of the provision. Transferring or shifting expenses to a subsequent year, in such cases, will not wipe off the adverse effect and the financial stress. Such could not be the intention of the legislature. Hence, the amendment made by the Finance Act, 2010 being curative in nature required to be given retrospective operation ie, from the date of insertion of the said provision. 29. Further, in Allied Motors (P) Ltd. case (supra), this Court while dealing with a similar question with regard to the retrospective effect of the amendment made in section 43-B of the Income Tax Act, 1961 has held that the new proviso to Section 43B should be given retrospective effect from the Inception on the ground that the proviso was added to remedy unintended consequences and supply an obvious omission. The proviso ensured reasonable interpretation and retrospective effect would serve the object behind the enactment. The aforesaid view has consistently been followed by this Court in the following cases, viz., Whirlpool of India Ltd., v. CIT (2000) 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd. [2002] 255 ITR 117/[2002] 123 Taxman 74 (SC) and CIT v. Alom Enterprises Ltd (2009) 319 ITR 306/185 Taxman 416 (SC) 30. Hence, in light of the forgoing discussion and the binding effect of the judgment given in Allied Meters (P.) Ltd. case (supra), we are of the view that the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted in, with effect from the Assessment Year 2005-2006 so that an the assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its return on 01.08.2005 ie in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act. 31. In light of the forgoing discussion, we are of the view that judgment of the High Court does not call for any interference and, hence, the appeals are accordingly dismissed. In view of the above, all the connecting appeals, Printed from counselvise.com 19 BMA Nos.4 to 6/PUN/2024 interlocutory applications, if any, transferred cases as well as diary numbers are disposed off accordingly. Parties to bear cost on their own.” 30. We find the Hyderabad Bench of the Tribunal in the case of Prasad Nimmagadda vs. DIT (supra) has held as under: “12. We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the assessee, in the return of income for the AY 2017-18, had failed to disclose the foreign assets held by him outside India, which were required to be disclosed in the return of income. The Ld. CIT(A), in para 6.8 of his order, have captured various investments which were required to be disclosed by the assessee and yet not disclosed in the return of income for the AY 2017-18 which are as under: “i. Investment in Best Skyline Inc., for AY 2017-18. ii. Insurance policies bearing no. 94428125 and 60158671 for 40 million USD in the company Best Skyline Inc, for AY 2017-18. iii. Investment in Lemon Stone Holding Ptd Ltd, Mauritius in the AY 2017-18. iv. Investment amounting to Rs. 7,22,07,540/- in residential flats in Singapore made during FY 2016-17 relevant to AY 2017-18 and investment amounting to Rs. 12,72,798/- in property situated at Malaysia made during FY 2016-17 relevant to AY 2017-18.” 13. The above said non-disclosure of the assets by the assessee in the return of income for the AY 2017-18 had not been disputed. However, the assessee has contended that the failure on the part of the assessee to disclose the same was on account of omission due to inadvertent mistake and it should have been considered as a curable mistake. It was further submitted that the assessee has all along been showing the assets in the return of income for the assessment years prior to AY 2017-18 and thereafter also. Further, the assessee has already furnished the information with regard to the source of the investment during the assessment proceedings for the AY 2019-20. It was submitted that the assessee will not gain by not disclosing the information more particularly, when the assessee has been disclosing the same information in the previous and subsequent assessment years. 14. Section 43 of BMA, Act, 2015 requires the Assessing Officer to impose a penalty of Rs. 10 lakhs in case there is a failure on the part of the assessee to furnish inaccurate particulars of investment outside India. In the present case, admittedly the assessee has failed to disclose the said assets outside India and when this fact came to the notice of the Assessing Officer in the assessment proceedigns for the AY 2019-20 then as per the procedure provided U/s. 46 of the BMA Act, 2015, the Assessing Officer had issued the show cause to the assessee for imposing the penalty. Printed from counselvise.com 20 BMA Nos.4 to 6/PUN/2024 15. The assessee, though had pleaded ignorance or omission or technical glitch to justify non-disclosure in the return of income, the same has been rejected by the Assessing Officer /CIT(A). We are of the opinion that though Section 43 has been couched in the mandatory manner which commands the Assessing Officer to impose the penalty unless some reasonable cause has been demonstrated by the assessee for not disclosing the assets in the return of income. There is sacrosanct purpose for providing this imposition of penalty i.e., to curb the menace of Black Money and the assets possessed outside India with the help of Black Money in foreign countries. But the question arises whether the imposition of penalty is automatic in case there was a venial or technical breach also. In our considered opinion, that cannot be the inference and conclusion. The law has contemplated to issue show cause notice to the assessee as per Section 46 of B.M.A Act and if the penalty is necessarily being required to be imposed then there was no purpose of issuing the show cause notice to the assessee. The Legislature has deliberately provided and mandated for issuance of the show cause notice so that the assessee can explain the reasonable cause for not disclosing the investment in Foreign countries in the return of income. In the present case, the Assessing Officer after examining the case of the assessee had not made any addition under Section 10 of the B.M.A Act as the Assessing Officer was satisfied that the assessee had explained the source of investment which was containing for the earlier years starting from A.Y. 2012-13 onwards. In the present assessment year, no fresh investment was made by the assessee and the previous investments made by the assessee were required to be disclosed during the year under consideration. Undoubtedly, the explanation of source of investment as per Sections 3 and 10 of B.M.A Act and failure to disclose as per Section 43 of B.M.A Act per se may be independent but both are required to be read together and find out the intention of the Legislation. In the present case, since the explanation relating to the source of investment has been accepted and therefore, the failure on the part of the assessee to disclose the assets for the year under consideration cannot be vitiated on account of malafide or an attempt to evade the rigours of the Act. No fresh investment has been made and all the investments made in the earlier years, simply have been continued in the year under consideration. All these aspects clearly show that there was bonafide mistake on the part of the assessee to mention and disclose the same in the return of income. In view of the above, the penalty imposed by the lower authority is required to be deleted. Furthermore, we may follow the reasoning given by the co-ordinate Bench of the Tribunal in the case of Ocean Diving Centre (supra) wherein on identical facts, the Tribunal had deleted the penalty imposed upon the assessee. 16. The reliance of the Revenue on the decision of the coordinate Bench in the case of Ms. Shobha Harish Thawani (supra), is not applicable to the present facts of the case as the assessee in the present case, has all along disclosed the investment in the prior and subsequent assessment years and furthermore, the assessee was able to disclosed and explained the source of investment in foreign countries for the assessment year 2017-18 and therefore, the said decision is not applicable to the facts of the present case. Furthermore, we may fruitfully rely upon the decision of the jurisdictional High Court in the case of Mylan Laboratory reported in [2022] 137 taxmann.com 178 (TELANGANA) wherein it was held as under:- Printed from counselvise.com 21 BMA Nos.4 to 6/PUN/2024 “35. In Union of India v. Kamlakshi Finance Corporation Ltd. 1992 taxmann.com 16, Supreme Court held and reiterated that the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department, which in itself is an objectionable phrase, and is the subject matter of an appeal can be no ground for not following the appellate order unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to the assessee and chaos in administration of the tax laws. 36. Following the above decision, Supreme Court again in Collector of Customs v. Krishna Sales (P.) Ltd. 1994 Supp. (3) SCC 73, reiterated the proposition that mere filing of an appeal does not operate as a stay or suspension of the order appealed against. It was pointed out that if the authorities were of the opinion that the goods ought not to be released pending the appeal, the straight-forward course for them is to obtain an order of stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an order they cannot refuse to implement the order under appeal. 37. Following the above decisions of the Supreme Court, a Division Bench of the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India 2020 (374) ELT 552 held that non-compliance of orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute. Principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. 38. This principle has been reiterated by the Bombay High Court in Himgiri Buildcon & Industries Ltd. v. Union of India 2021 (376) ELT 257. 39. Therefore, the stand taken by the Assessing Officer that since the decision of the Income Tax Appellate Tribunal in the case of the petitioner itself for the assessment year 2014-15 has been appealed against the issue in question has not attained finality, is not only wrong but is required to be deprecated in strong terms being highly objectionable.” 17. Respectfully, following the decision of the coordinate Bench in the case of Ocean Diving (supra) and the judgment of the Hon’ble Telangana High Court in the case of Mylan Laboratories (supra), we hereby allow the appeal of the assessee. 18. Since we have allowed the appeal of assessee on merits, therefore, we have left open the grounds raised by the assessee for the limitation of issuing the show cause notice by the Assessing Officer in the proceedings for A.Y. 2019-20 for the Printed from counselvise.com 22 BMA Nos.4 to 6/PUN/2024 breach happened in the assessment year 2017-18 to be decided in appropriate case. 19. In the result, appeal of the assessee is allowed.” 31. We find the assessee vide email dated 21.03.2018 addressed to his C.A. has stated that he has received the shares in lieu of providing consultancy services. The relevant email reads as under: Printed from counselvise.com 23 BMA Nos.4 to 6/PUN/2024 32. Similarly the email correspondence dated 06.07.2018 between the assessee and Drushti Technet Ltd. and the email correspondence between the C.A. of the assessee Mr. Pankaj and the assessee dated 07.07.2018 read as under: 33. A perusal of the above correspondences clearly indicate that the assessee has not paid any amount towards investment in the shares of the said company. Printed from counselvise.com 24 BMA Nos.4 to 6/PUN/2024 Further the value of such assets have now became zero. Therefore, respectfully following the decision of the Hyderabad Bench of the Tribunal in the case of Prasad Nimmagadda vs. DIT (supra), we are of the considered opinion that no penalty should have been levied on account of an unintended bonafide mistake on the part of the assessee for such non-disclosure. 34. Even otherwise also, in view of the various decisions mentioned earlier the amendment made to the provisions of section 43 raising the limit to Rs.20 lakhs has to be treated as retrospective in nature. In view of the above discussion and in the light of the various decisions cited (supra), we hold that the Ld. CIT(A) is not justified in upholding the action of the Assessing Officer in taxing an amount of Rs.94,763/-, levying penalty of Rs.85,275/- being 3 times the tax and levying penalty of Rs.10 lakhs for non-disclosure of shares in the return of income filed by the assessee. The grounds raised by the assessee in all the appeals are accordingly allowed. 35. In the result, all the three appeals filed by the assessee are allowed. Order pronounced in the open Court on 26th August, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 26th August, 2025 GCVSR Printed from counselvise.com 25 BMA Nos.4 to 6/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 18.08.2025 Sr. PS/PS 2 Draft placed before author 20.08.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "