A foreign life policy was bought and paid for by my brother-in-law with my wife as beneficiary, and another one lapsed in 2014. Do either of them belong in my Schedule FA?
On this order, neither. The Mumbai Tribunal deleted the s.43 penalties for all seven years. On the Isle of Man policy it proceeded on the assessee's claim that his brother-in-law bought the policy and paid every premium and that the assessee's wife was the inducted beneficiary, held that on that footing the assessee cannot be held beneficial owner or beneficiary, and deleted that penalty subject to verification by the Assessing Officer of who purchased the policy and who paid the premiums. On the UAE policy it held that a policy which had lapsed before the penalty provisions came into operation from assessment year 2016-17 could not attract them.
Decided by the ITAT (Narender Kumar Choudhry JM and Prabhash Shankar AM) on 2025-04-30, reported as BMA Nos. 1 to 7/M/2025, assessment years 2016-17 to 2022-23, Income Tax Appellate Tribunal, Mumbai Bench 'E'. It bears on section BMA s.43, section BMA s.2(11), section 139(1) Schedule FA of the Income Tax Act 1961, in Penalty matters.
It decides the two questions on the asset rather than on penalty discretion - who owns a foreign insurance policy someone else funded, and whether a policy that lapsed before the Act's first assessment year exists to be disclosed at all. Those answers survive even where discretion arguments fail.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Penalties under s.43 of Rs 10 lakh were levied for assessment years 2016-17 to 2022-23 in relation to two foreign life insurance policies not shown in Schedule FA. The first was with RL 360 Life Insurance Company, Isle of Man. The assessee's case, which the Tribunal accepted subject to verification by the Assessing Officer, was that his brother-in-law Mr Zahid Kothari had taken that policy in order to protect his sister, that the assessee neither purchased the policy nor paid any premium for it, and that the assessee's wife had been inducted as the beneficiary. The second was with Zurich International Life Ltd., United Arab Emirates. That policy commenced on 1 September 2010, the last premium was paid on 24 March 2014, and the policy thereafter showed the status of lapse.
The appeals were allowed and the penalties deleted. On the RL 360 policy the Tribunal framed the question on the assessee's claim - 'If that is the case so, then in our considered opinion' - and held that 'the Assessee cannot be held as beneficial owner or beneficiary of the policy, as the Assessee's wife was inducted as a beneficiary and therefore the liability on the Assessee for imposing the penalty, cannot be fastened', deleting that penalty 'subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy' (para 20). On the Zurich policy it held that the provisions for imposing penalty under s.43 came into effect from assessment year 2016-17 onwards and that a 'policy if any lapsed before introducing the provisions for levy of penalty for not disclosing the asset, could not be made applicable' (para 21), repeating at para 24 that the policy had lapsed for non-payment of premium in 2014, before the penalty provisions were enacted and enforced, so that the penalty on it is unsustainable. The order records at para 24.1 that 'the penalty imposed, is deleted in the aforesaid terms', that the orders passed by the authorities below are set aside and that the appeal of the assessee is allowed - 'in the aforesaid terms' carrying the verification rider forward.
On the first policy the Tribunal went to who acquired the asset and who funded it, taking the assessee's claim that the brother-in-law had taken the policy for the protection of his sister and that the assessee neither purchased it nor paid any premium, and that the assessee's wife and not the assessee was the inducted beneficiary. On that footing there was nothing on which to fix the assessee as beneficial owner or as beneficiary, and the penalty was deleted subject to the Assessing Officer verifying the purchase and the subsequent payment of premiums (para 20). On the second policy the reasoning is one of time rather than ownership: the provisions for levy of penalty for non-disclosure of a foreign asset operate from assessment year 2016-17, and a policy which had already lapsed before those provisions were introduced could not be brought within them (paras 21 and 24).
the Assessee cannot be held as beneficial owner or beneficiary of the policy
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Handle my notice → Ask a CA on WhatsAppOn this order, neither. The Mumbai Tribunal deleted the s.43 penalties for all seven years. On the Isle of Man policy it proceeded on the assessee's claim that his brother-in-law bought the policy and paid every premium and that the assessee's wife was the inducted beneficiary, held that on that footing the assessee cannot be held beneficial owner or beneficiary, and deleted that penalty subject to verification by the Assessing Officer of who purchased the policy and who paid the premiums. On the UAE policy it held that a policy which had lapsed before the penalty provisions came into operation from assessment year 2016-17 could not attract them. This was decided by the ITAT (Narender Kumar Choudhry JM and Prabhash Shankar AM) and bears on section BMA s.43, section BMA s.2(11), section 139(1) Schedule FA of the Income Tax Act 1961. It is reported as BMA Nos. 1 to 7/M/2025, assessment years 2016-17 to 2022-23, Income Tax Appellate Tribunal, Mumbai Bench 'E'. It decides the two questions on the asset rather than on penalty discretion - who owns a foreign insurance policy someone else funded, and whether a policy that lapsed before the Act's first assessment year exists to be disclosed at all. Those answers survive even where discretion arguments fail. If it applies to you, the first step is this: Trace the premium payments and be ready to prove them; the deletion here was made subject to the officer verifying who purchased the policy and who made the subsequent payments.
Penalties under s.43 of Rs 10 lakh were levied for assessment years 2016-17 to 2022-23 in relation to two foreign life insurance policies not shown in Schedule FA. The first was with RL 360 Life Insurance Company, Isle of Man. The assessee's case, which the Tribunal accepted subject to verification by the Assessing Officer, was that his brother-in-law Mr Zahid Kothari had taken that policy in order to protect his sister, that the assessee neither purchased the policy nor paid any premium for it, and that the assessee's wife had been inducted as the beneficiary. The second was with Zurich International Life Ltd., United Arab Emirates. That policy commenced on 1 September 2010, the last premium was paid on 24 March 2014, and the policy thereafter showed the status of lapse. The matter was decided on 2025-04-30 by the ITAT (Narender Kumar Choudhry JM and Prabhash Shankar AM). On those facts the ITAT held as follows. The appeals were allowed and the penalties deleted. On the RL 360 policy the Tribunal framed the question on the assessee's claim - 'If that is the case so, then in our considered opinion' - and held that 'the Assessee cannot be held as beneficial owner or beneficiary of the policy, as the Assessee's wife was inducted as a beneficiary and therefore the liability on the Assessee for imposing the penalty, cannot be fastened', deleting that penalty 'subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy' (para 20). On the Zurich policy it held that the provisions for imposing penalty under s.43 came into effect from assessment year 2016-17 onwards and that a 'policy if any lapsed before introducing the provisions for levy of penalty for not disclosing the asset, could not be made applicable' (para 21), repeating at para 24 that the policy had lapsed for non-payment of premium in 2014, before the penalty provisions were enacted and enforced, so that the penalty on it is unsustainable. The order records at para 24.1 that 'the penalty imposed, is deleted in the aforesaid terms', that the orders passed by the authorities below are set aside and that the appeal of the assessee is allowed - 'in the aforesaid terms' carrying the verification rider forward.
On the first policy the Tribunal went to who acquired the asset and who funded it, taking the assessee's claim that the brother-in-law had taken the policy for the protection of his sister and that the assessee neither purchased it nor paid any premium, and that the assessee's wife and not the assessee was the inducted beneficiary. On that footing there was nothing on which to fix the assessee as beneficial owner or as beneficiary, and the penalty was deleted subject to the Assessing Officer verifying the purchase and the subsequent payment of premiums (para 20). On the second policy the reasoning is one of time rather than ownership: the provisions for levy of penalty for non-disclosure of a foreign asset operate from assessment year 2016-17, and a policy which had already lapsed before those provisions were introduced could not be brought within them (paras 21 and 24). In the words reproduced by the source cited on this page: "the Assessee cannot be held as beneficial owner or beneficiary of the policy"
It was decided by the ITAT on 2025-04-30 and is reported as BMA Nos. 1 to 7/M/2025, assessment years 2016-17 to 2022-23, Income Tax Appellate Tribunal, Mumbai Bench 'E'. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section BMA s.43, section BMA s.2(11), section 139(1) Schedule FA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were allowed and the penalties deleted. On the RL 360 policy the Tribunal framed the question on the assessee's claim - 'If that is the case so, then in our considered opinion' - and held that 'the Assessee cannot be held as beneficial owner or beneficiary of the policy, as the Assessee's wife was inducted as a beneficiary and therefore the liability on the Assessee for imposing the penalty, cannot be fastened', deleting that penalty 'subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy' (para 20). On the Zurich policy it held that the provisions for imposing penalty under s.43 came into effect from assessment year 2016-17 onwards and that a 'policy if any lapsed before introducing the provisions for levy of penalty for not disclosing the asset, could not be made applicable' (para 21), repeating at para 24 that the policy had lapsed for non-payment of premium in 2014, before the penalty provisions were enacted and enforced, so that the penalty on it is unsustainable. The order records at para 24.1 that 'the penalty imposed, is deleted in the aforesaid terms', that the orders passed by the authorities below are set aside and that the appeal of the assessee is allowed - 'in the aforesaid terms' carrying the verification rider forward. It arises in Penalty matters, on section BMA s.43, section BMA s.2(11), section 139(1) Schedule FA of the Income Tax Act 1961, and was decided by Narender Kumar Choudhry JM and Prabhash Shankar AM. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Identify who was inducted as beneficiary and when - here the wife's induction as beneficiary was the reason the assessee was held neither owner nor beneficiary. For a lapsed policy, put on record the commencement date, the date of the last premium and the status shown by the insurer; here the policy ran from 1 September 2010, the last premium was paid on 24 March 2014, and it showed as lapsed thereafter. Take the lapse point before the discretion point: a policy that lapsed before assessment year 2016-17 is outside the penalty provisions altogether on this reasoning.
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, doubting or overruling this order was located. It runs with Sanjay Bhupatrai Shah, already in this library, on the point that funding by another person does not make the person named on the paperwork the owner; it goes further in holding that a foreign policy which lapsed before assessment year 2016-17 is outside the penalty provisions, and no decision was found either adopting or questioning that second proposition. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The reasoning at para 21 on the lapsed policy is expressed shortly and does not identify the provision under which the lapse takes the policy outside the Act, nor whether the surrender or paid-up value continued to exist; treat it as a finding on these facts and not as a general rule that a lapsed policy is never an asset. The order does not set out the sums assured or the premium amounts. The discovery note records the closing line as 'All the appeals under consideration stands allowed in the same terms.'; the text read here gives para 24.1 as deleting the penalty in the aforesaid terms, setting aside the orders below and allowing the appeal. The two are consistent, and all seven appeals were allowed. A later reading of the order against this entry corrected the RL 360 holding: para 20 is framed on the assessee's claim rather than on findings of fact, and the deletion is expressly 'subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy' - a condition the entry had dropped and which now appears in the summary, facts, held and reasoning. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were allowed and the penalties deleted. On the RL 360 policy the Tribunal framed the question on the assessee's claim - 'If that is the case so, then in our considered opinion' - and held that 'the Assessee cannot be held as beneficial owner or beneficiary of the policy, as the Assessee's wife was inducted as a beneficiary and therefore the liability on the Assessee for imposing the penalty, cannot be fastened', deleting that penalty 'subject to verification by the AO qua purchasing and making subsequent payment of the instant insurance policy' (para 20). On the Zurich policy it held that the provisions for imposing penalty under s.43 came into effect from assessment year 2016-17 onwards and that a 'policy if any lapsed before introducing the provisions for levy of penalty for not disclosing the asset, could not be made applicable' (para 21), repeating at para 24 that the policy had lapsed for non-payment of premium in 2014, before the penalty provisions were enacted and enforced, so that the penalty on it is unsustainable. The order records at para 24.1 that 'the penalty imposed, is deleted in the aforesaid terms', that the orders passed by the authorities below are set aside and that the appeal of the assessee is allowed - 'in the aforesaid terms' carrying the verification rider forward.
TaxSphere, “Akil Abbas Rassai v DDIT (Inv)”, https://taxnotice.vittsphere.com/caselaw/case/akil-abbas-rassai-v-ddit-bma-43-foreign-insurance-policy/ (validity last checked 2026-09-16)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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The foreign investment was in the audited balance sheet and in Part A-BS of the return but not in Schedule FA. Is that a failure to furnish information for s.43?
I left my foreign ESOPs out of Schedule FA. Is the Rs 10 lakh penalty automatic?
The foreign investment was in my balance sheet and elsewhere in the return, just not in Schedule FA. Does that still cost Rs 10 lakh?
Your return for the year was late and treated as invalid, though it did disclose the foreign assets in Schedule FA. Can the Rs 10 lakh penalty under s.42 still stand?
