They have issued notices under the Black Money Act for 2014-15 and 2015-16. Can the Act reach those years at all?
No. The Kolkata Bench held that the first previous year under the Act is financial year 2015-16, so the first assessment year it can reach is 2016-17, and assessments framed for 2014-15 and 2015-16 were without jurisdiction. The batch is nine Revenue appeals covering both the assessments made under s.10(3) and the deletion of penalties levied under ss.41 and 43, and all nine were dismissed. On the asset, a fund in the United States built out of salary earned there while the assessee was a tax resident of the United States, and taxed there, was held not to fall within the definition of undisclosed asset under the Act.
Decided by the ITAT (Sanjay Garg JM and Sanjay Awasthi AM) on 2024-12-23, reported as B.M.A. Nos. 4 to 12/Kol/2024, assessment years 2014-15, 2015-16 and 2016-17 (ITAT, Kolkata Bench); no reporter citation printed on the page read. It bears on section BMA s.2(9), section BMA s.2(11), section BMA s.3, section BMA s.10(1), section BMA s.10(3), section BMA s.41, section BMA s.43, section BMA s.1(3) of the Income Tax Act 1961, in Assessment & Scrutiny, Penalty and How Tax Law Is Read matters.
It fixes the earliest year the Act can touch, which is a jurisdictional answer that disposes of the notice without any argument on merits. On the asset it shows a Bench treating a fund built out of foreign salary taxed abroad, and disclosed once the Act's own first year had come, as outside the definition of undisclosed asset - a conclusion reached in the course of the s.43 penalty appeals rather than by a construction of the satisfactory-explanation limb of s.2(11).
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee held a non-retirement fund in the United States which earned dividends of USD 2,750 in 2013-14, USD 2,249 in 2014-15 and USD 2,933 in 2015-16, the dividends being reinvested in the fund. The Assessing Officer received information in financial year 2018-19 and issued notices under s.10(1) of the Black Money Act for assessment years 2014-15, 2015-16 and 2016-17. For assessment year 2014-15 he added USD 63,693 as a notional increase in the value of the fund together with the dividend of USD 2,750, a total of USD 66,443, as undisclosed assets; for 2015-16 he added the reinvested dividend of USD 2,249; and for 2016-17 the reinvested dividend of USD 2,933. Penalties were also levied under ss.41 and 43 of the Act. The assessee's case was that the fund had been built out of salary income earned in the United States on which tax had been paid there; he had been a tax resident of the United States from 1998 to 2007, and he disclosed the foreign assets and income in his return for assessment year 2017-18. The Commissioner (Appeals) deleted all the additions, holding that the Act did not apply to assessment years 2014-15 and 2015-16, and deleted the penalties. The Revenue appealed on both fronts: B.M.A. Nos. 4 to 12/Kol/2024 are nine Revenue appeals across the three years, against the assessments made under s.10(3) and against the deletion of the penalties under ss.41 and 43.
All nine of the Revenue's appeals - those against the assessments under s.10(3) and those against the deletion of the penalties under ss.41 and 43 - were dismissed; the order closes, 'In the result, all the captioned appeals of the revenue are hereby dismissed.' (para 25). The Bench held that although the Act as enacted was to come into force on 1 April 2016, its commencement was advanced to 1 July 2015, with the consequence that 'the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16 and the corresponding AY will be AY 2016-17', and that 'Therefore, the AO could not have assessed the income of the assessee for AYs 2014-15 and 2015-16.' On the merits, in the course of the s.43 penalty discussion, the Bench noted that s.43 levies penalty where an assessee fails to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and 'does not deal with the undisclosed foreign asset or undisclosed foreign income', and held that 'The said fund of the assessee would not fall in the definition of undisclosed asset as defined under the Act' (para 24). The reasons given are that this was the first year of implementation of the Act, that the assessee was a tax resident of the United States from 1998 to 2007 and the income was salary on which he had paid due taxes under United States tax laws, that he was not a person who had stashed away black money to avoid taxes in India, and that he did disclose the foreign assets and income in the return for assessment year 2017-18.
On jurisdiction the Bench worked from the commencement of the Act. The Act was to come into force on 1 April 2016; the notification advancing commencement to 1 July 2015 did not extend its reach backwards, and the first previous year it can operate on is therefore financial year 2015-16, answering to assessment year 2016-17. Notices under s.10(1) for the two earlier years were consequently outside the officer's jurisdiction. On the merits the route runs through s.43 and not through the definition in s.2(11): the Bench noted that s.43 penalises the failure to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and does not itself deal with undisclosed foreign assets or income, and then gave four reasons for holding the fund outside the definition of undisclosed asset - that this was the first year of implementation of the Act, that the assessee had been a tax resident of the United States from 1998 to 2007 and the income was salary taxed there under United States law, that he was not a person who had stashed away black money to avoid Indian tax, and that he did disclose the foreign assets and income in his return for assessment year 2017-18 (para 24). The Bench did not construe the satisfactory-explanation limb of s.2(11) in terms, and the holding on the fund was reached in the penalty discussion.
the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16
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Handle my notice → Ask a CA on WhatsAppNo. The Kolkata Bench held that the first previous year under the Act is financial year 2015-16, so the first assessment year it can reach is 2016-17, and assessments framed for 2014-15 and 2015-16 were without jurisdiction. The batch is nine Revenue appeals covering both the assessments made under s.10(3) and the deletion of penalties levied under ss.41 and 43, and all nine were dismissed. On the asset, a fund in the United States built out of salary earned there while the assessee was a tax resident of the United States, and taxed there, was held not to fall within the definition of undisclosed asset under the Act. This was decided by the ITAT (Sanjay Garg JM and Sanjay Awasthi AM) and bears on section BMA s.2(9), section BMA s.2(11), section BMA s.3, section BMA s.10(1), section BMA s.10(3), section BMA s.41, section BMA s.43, section BMA s.1(3) of the Income Tax Act 1961. It is reported as B.M.A. Nos. 4 to 12/Kol/2024, assessment years 2014-15, 2015-16 and 2016-17 (ITAT, Kolkata Bench); no reporter citation printed on the page read. It fixes the earliest year the Act can touch, which is a jurisdictional answer that disposes of the notice without any argument on merits. On the asset it shows a Bench treating a fund built out of foreign salary taxed abroad, and disclosed once the Act's own first year had come, as outside the definition of undisclosed asset - a conclusion reached in the course of the s.43 penalty appeals rather than by a construction of the satisfactory-explanation limb of s.2(11). If it applies to you, the first step is this: Check the assessment year on the face of the s.10(1) notice first; anything before 2016-17 is met by this order and by Union of India v. Gautam Khaitan.
The assessee held a non-retirement fund in the United States which earned dividends of USD 2,750 in 2013-14, USD 2,249 in 2014-15 and USD 2,933 in 2015-16, the dividends being reinvested in the fund. The Assessing Officer received information in financial year 2018-19 and issued notices under s.10(1) of the Black Money Act for assessment years 2014-15, 2015-16 and 2016-17. For assessment year 2014-15 he added USD 63,693 as a notional increase in the value of the fund together with the dividend of USD 2,750, a total of USD 66,443, as undisclosed assets; for 2015-16 he added the reinvested dividend of USD 2,249; and for 2016-17 the reinvested dividend of USD 2,933. Penalties were also levied under ss.41 and 43 of the Act. The assessee's case was that the fund had been built out of salary income earned in the United States on which tax had been paid there; he had been a tax resident of the United States from 1998 to 2007, and he disclosed the foreign assets and income in his return for assessment year 2017-18. The Commissioner (Appeals) deleted all the additions, holding that the Act did not apply to assessment years 2014-15 and 2015-16, and deleted the penalties. The Revenue appealed on both fronts: B.M.A. Nos. 4 to 12/Kol/2024 are nine Revenue appeals across the three years, against the assessments made under s.10(3) and against the deletion of the penalties under ss.41 and 43. The matter was decided on 2024-12-23 by the ITAT (Sanjay Garg JM and Sanjay Awasthi AM). On those facts the ITAT held as follows. All nine of the Revenue's appeals - those against the assessments under s.10(3) and those against the deletion of the penalties under ss.41 and 43 - were dismissed; the order closes, 'In the result, all the captioned appeals of the revenue are hereby dismissed.' (para 25). The Bench held that although the Act as enacted was to come into force on 1 April 2016, its commencement was advanced to 1 July 2015, with the consequence that 'the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16 and the corresponding AY will be AY 2016-17', and that 'Therefore, the AO could not have assessed the income of the assessee for AYs 2014-15 and 2015-16.' On the merits, in the course of the s.43 penalty discussion, the Bench noted that s.43 levies penalty where an assessee fails to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and 'does not deal with the undisclosed foreign asset or undisclosed foreign income', and held that 'The said fund of the assessee would not fall in the definition of undisclosed asset as defined under the Act' (para 24). The reasons given are that this was the first year of implementation of the Act, that the assessee was a tax resident of the United States from 1998 to 2007 and the income was salary on which he had paid due taxes under United States tax laws, that he was not a person who had stashed away black money to avoid taxes in India, and that he did disclose the foreign assets and income in the return for assessment year 2017-18.
On jurisdiction the Bench worked from the commencement of the Act. The Act was to come into force on 1 April 2016; the notification advancing commencement to 1 July 2015 did not extend its reach backwards, and the first previous year it can operate on is therefore financial year 2015-16, answering to assessment year 2016-17. Notices under s.10(1) for the two earlier years were consequently outside the officer's jurisdiction. On the merits the route runs through s.43 and not through the definition in s.2(11): the Bench noted that s.43 penalises the failure to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and does not itself deal with undisclosed foreign assets or income, and then gave four reasons for holding the fund outside the definition of undisclosed asset - that this was the first year of implementation of the Act, that the assessee had been a tax resident of the United States from 1998 to 2007 and the income was salary taxed there under United States law, that he was not a person who had stashed away black money to avoid Indian tax, and that he did disclose the foreign assets and income in his return for assessment year 2017-18 (para 24). The Bench did not construe the satisfactory-explanation limb of s.2(11) in terms, and the holding on the fund was reached in the penalty discussion. In the words reproduced by the source cited on this page: "the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16"
It was decided by the ITAT on 2024-12-23 and is reported as B.M.A. Nos. 4 to 12/Kol/2024, assessment years 2014-15, 2015-16 and 2016-17 (ITAT, Kolkata Bench); no reporter citation printed on the page read. 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.2(9), section BMA s.2(11), section BMA s.3, section BMA s.10(1), section BMA s.10(3), section BMA s.41, section BMA s.43, section BMA s.1(3), 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. All nine of the Revenue's appeals - those against the assessments under s.10(3) and those against the deletion of the penalties under ss.41 and 43 - were dismissed; the order closes, 'In the result, all the captioned appeals of the revenue are hereby dismissed.' (para 25). The Bench held that although the Act as enacted was to come into force on 1 April 2016, its commencement was advanced to 1 July 2015, with the consequence that 'the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16 and the corresponding AY will be AY 2016-17', and that 'Therefore, the AO could not have assessed the income of the assessee for AYs 2014-15 and 2015-16.' On the merits, in the course of the s.43 penalty discussion, the Bench noted that s.43 levies penalty where an assessee fails to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and 'does not deal with the undisclosed foreign asset or undisclosed foreign income', and held that 'The said fund of the assessee would not fall in the definition of undisclosed asset as defined under the Act' (para 24). The reasons given are that this was the first year of implementation of the Act, that the assessee was a tax resident of the United States from 1998 to 2007 and the income was salary on which he had paid due taxes under United States tax laws, that he was not a person who had stashed away black money to avoid taxes in India, and that he did disclose the foreign assets and income in the return for assessment year 2017-18. It arises in Assessment & Scrutiny, Penalty and How Tax Law Is Read matters, on section BMA s.2(9), section BMA s.2(11), section BMA s.3, section BMA s.10(1), section BMA s.10(3), section BMA s.41, section BMA s.43, section BMA s.1(3) of the Income Tax Act 1961, and was decided by Sanjay Garg JM and Sanjay Awasthi 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. Where the asset was acquired out of foreign income earned while abroad, assemble the payslips, the foreign return and the foreign tax paid; that is the material the Bench acted on here. Take the penalty appeals with the assessment: the penalties under ss.41 and 43 for these years were deleted and the Revenue's appeals against the deletions were dismissed along with the quantum appeals. Deal separately with each year: an addition for a later year made up only of dividend reinvested in the same fund stands or falls with the characterisation of the fund itself. Do not concede that a notional increase in the value of a fund is an undisclosed asset; ask how the figure was arrived at and under which rule.
Searched for later treatment; none was found. That is not the same as a source affirming it. No decision applying, following or doubting this order was located, and nothing was found to show whether the Revenue has appealed. The conclusion on the first assessment year sits with what the Supreme Court said in Union of India v. Gautam Khaitan, that tax under s.3 is charged only from assessment year 2016-17, which this library holds; the two are consistent, but a decision expressly applying this order was not found. 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 paragraph number for the jurisdictional holding could not be fixed from the copy read; the holding on the asset is at para 24 and the closing paragraph is para 25. The Bench's remark that the assessee had not stashed away black money to avoid Indian tax is one of four reasons given on these facts and should not be quoted as though the Act contained such a test. The order does not record the assessee's residential status in India in terms; what was accepted is that he was a tax resident of the United States from 1998 to 2007 and that the salary was taxed there. A later reading of the order against this entry corrected two things: the batch is not a quantum-only batch - B.M.A. Nos. 4 to 12/Kol/2024 are nine Revenue appeals that include the appeals against deletion of the penalties under ss.41 and 43, now recorded in the facts, sections, summary and held - and the merits holding at para 24 was reached in the s.43 penalty discussion and is not a construction of s.2(11), so the earlier statement that the Bench read s.2(11) and decided the case on the satisfactory-explanation limb of that definition has been removed as the entry's framing rather than the Bench's. 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.
All nine of the Revenue's appeals - those against the assessments under s.10(3) and those against the deletion of the penalties under ss.41 and 43 - were dismissed; the order closes, 'In the result, all the captioned appeals of the revenue are hereby dismissed.' (para 25). The Bench held that although the Act as enacted was to come into force on 1 April 2016, its commencement was advanced to 1 July 2015, with the consequence that 'the first previous year under the provisions of Black Money Act, 2015 would be FY 2015-16 and the corresponding AY will be AY 2016-17', and that 'Therefore, the AO could not have assessed the income of the assessee for AYs 2014-15 and 2015-16.' On the merits, in the course of the s.43 penalty discussion, the Bench noted that s.43 levies penalty where an assessee fails to disclose foreign assets and foreign income in a return filed under s.139 of the Income-tax Act and 'does not deal with the undisclosed foreign asset or undisclosed foreign income', and held that 'The said fund of the assessee would not fall in the definition of undisclosed asset as defined under the Act' (para 24). The reasons given are that this was the first year of implementation of the Act, that the assessee was a tax resident of the United States from 1998 to 2007 and the income was salary on which he had paid due taxes under United States tax laws, that he was not a person who had stashed away black money to avoid taxes in India, and that he did disclose the foreign assets and income in the return for assessment year 2017-18.
TaxSphere, “JCIT v Vikash Marda”, https://taxnotice.vittsphere.com/caselaw/case/jcit-v-vikash-marda-bma-first-assessment-year/ (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 department says the Black Money Act applies to my foreign account from July 2015. Is that retrospective?
The department has issued a Black Money Act notice for a foreign bank account opened in 2007. The Act only came into force in 2015. On what does the charge on that asset actually rest, and in which year is it charged?
The assessment under the Black Money Act has been quashed. Does the s.41 penalty go with it, and does the s.43 penalty go too?
I am named as one of several beneficiaries of an offshore discretionary trust my uncle settled. Does that make the trust's assets my undisclosed foreign assets?
