They have taxed the same foreign asset on a protective basis in three earlier years and substantively in the year of the search. Can they keep all four alive?
No. Section 3 charges undisclosed foreign assets in the previous year in which the asset comes to the notice of the Assessing Officer. Once a substantive addition has been made in that year, the Tribunal held the protective additions in earlier years unsustainable and entirely contrary to s.3, and dismissed the Revenue's appeals against their deletion.
Decided by the ITAT (Sandeep Gosain JM and Rathod Kamlesh Jayantbhai AM) on 2023-04-13, reported as BMA Nos. 01 to 05/JP/2022, assessment years 2016-17 to 2019-20, Income Tax Appellate Tribunal, Jaipur Bench. It bears on section BMA s.3, section BMA s.2(11) of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
Departmental practice under the Act has been to spread the same foreign asset across every year from 2016-17 forward, substantively in one and protectively in the rest. This is the answer: s.3 fixes one year, and the protective additions have nothing to stand on once the substantive year is settled and not disputed.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The proceedings concerned assets said to belong to M/s Agrasen Polymers FZE, a foreign entity, and whether the assessee was their beneficial owner within s.2(11) of the Black Money Act. A search took place in the financial year relevant to assessment year 2019-20. The Assessing Officer made a substantive addition under s.3 in assessment year 2019-20, the year in which the assets came to his notice, and made protective additions of the same assets in assessment years 2016-17, 2017-18 and 2018-19. The CIT(A) deleted the protective additions. The Revenue appealed against those deletions and the assessee appealed against the substantive addition for assessment year 2019-20, and the appeals were heard together.
The Revenue's appeals against the deletion of the protective additions for assessment years 2016-17 to 2018-19 were dismissed (paras 11 to 13). The Tribunal held that where the substantive addition has been made in the year in which the asset came to the notice of the Assessing Officer and can be charged in that year under the clear mandate of s.3, the separate protective additions in the earlier years are not maintainable, and that the CIT(A) had rightly held 'the protective addition for the year under consideration is not warranted as the same is entirely contrary to the provision of section 3 of the Black money Act' (para 12). The Tribunal's conclusion on the assessee's own appeal for assessment year 2019-20 is not present in the text that could be read.
The Tribunal noted that the addition in the assessment order for 2019-20 was made under s.3 on a substantive basis, that the Revenue was challenging the same addition on a substantive footing in that year, and that the appeal for 2019-20 was itself before it; on that footing the protective additions did not need separate adjudication (para 11). It held that the Revenue could not litigate the same addition on a protective basis once the assessee did not dispute the substantive addition and its year of chargeability (para 11). Section 3 was read as containing a clear mandate fixing the charge in the year in which the asset comes to the notice of the Assessing Officer, so that an addition of the same asset in any other year is contrary to the section (para 12).
the protective addition for the year under consideration is not warranted
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Handle my notice → Ask a CA on WhatsAppNo. Section 3 charges undisclosed foreign assets in the previous year in which the asset comes to the notice of the Assessing Officer. Once a substantive addition has been made in that year, the Tribunal held the protective additions in earlier years unsustainable and entirely contrary to s.3, and dismissed the Revenue's appeals against their deletion. This was decided by the ITAT (Sandeep Gosain JM and Rathod Kamlesh Jayantbhai AM) and bears on section BMA s.3, section BMA s.2(11) of the Income Tax Act 1961. It is reported as BMA Nos. 01 to 05/JP/2022, assessment years 2016-17 to 2019-20, Income Tax Appellate Tribunal, Jaipur Bench. Departmental practice under the Act has been to spread the same foreign asset across every year from 2016-17 forward, substantively in one and protectively in the rest. This is the answer: s.3 fixes one year, and the protective additions have nothing to stand on once the substantive year is settled and not disputed. If it applies to you, the first step is this: Identify the previous year in which the asset came to the notice of the Assessing Officer - on this reasoning that is the only year in which s.3 permits the charge.
The proceedings concerned assets said to belong to M/s Agrasen Polymers FZE, a foreign entity, and whether the assessee was their beneficial owner within s.2(11) of the Black Money Act. A search took place in the financial year relevant to assessment year 2019-20. The Assessing Officer made a substantive addition under s.3 in assessment year 2019-20, the year in which the assets came to his notice, and made protective additions of the same assets in assessment years 2016-17, 2017-18 and 2018-19. The CIT(A) deleted the protective additions. The Revenue appealed against those deletions and the assessee appealed against the substantive addition for assessment year 2019-20, and the appeals were heard together. The matter was decided on 2023-04-13 by the ITAT (Sandeep Gosain JM and Rathod Kamlesh Jayantbhai AM). On those facts the ITAT held as follows. The Revenue's appeals against the deletion of the protective additions for assessment years 2016-17 to 2018-19 were dismissed (paras 11 to 13). The Tribunal held that where the substantive addition has been made in the year in which the asset came to the notice of the Assessing Officer and can be charged in that year under the clear mandate of s.3, the separate protective additions in the earlier years are not maintainable, and that the CIT(A) had rightly held 'the protective addition for the year under consideration is not warranted as the same is entirely contrary to the provision of section 3 of the Black money Act' (para 12). The Tribunal's conclusion on the assessee's own appeal for assessment year 2019-20 is not present in the text that could be read.
The Tribunal noted that the addition in the assessment order for 2019-20 was made under s.3 on a substantive basis, that the Revenue was challenging the same addition on a substantive footing in that year, and that the appeal for 2019-20 was itself before it; on that footing the protective additions did not need separate adjudication (para 11). It held that the Revenue could not litigate the same addition on a protective basis once the assessee did not dispute the substantive addition and its year of chargeability (para 11). Section 3 was read as containing a clear mandate fixing the charge in the year in which the asset comes to the notice of the Assessing Officer, so that an addition of the same asset in any other year is contrary to the section (para 12). In the words reproduced by the source cited on this page: "the protective addition for the year under consideration is not warranted"
It was decided by the ITAT on 2023-04-13 and is reported as BMA Nos. 01 to 05/JP/2022, assessment years 2016-17 to 2019-20, Income Tax Appellate Tribunal, Jaipur Bench. 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.3, section BMA s.2(11), 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 cuts both ways and is cited by both sides. The Revenue's appeals against the deletion of the protective additions for assessment years 2016-17 to 2018-19 were dismissed (paras 11 to 13). The Tribunal held that where the substantive addition has been made in the year in which the asset came to the notice of the Assessing Officer and can be charged in that year under the clear mandate of s.3, the separate protective additions in the earlier years are not maintainable, and that the CIT(A) had rightly held 'the protective addition for the year under consideration is not warranted as the same is entirely contrary to the provision of section 3 of the Black money Act' (para 12). The Tribunal's conclusion on the assessee's own appeal for assessment year 2019-20 is not present in the text that could be read. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section BMA s.3, section BMA s.2(11) of the Income Tax Act 1961, and was decided by Sandeep Gosain JM and Rathod Kamlesh Jayantbhai 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. Do not contest the year of chargeability of the substantive addition if the year is right; the Tribunal treated that concession as removing the foundation of the protective additions. Take the protective additions on the short s.3 point rather than on the merits of ownership; it disposes of them without reaching valuation. Keep the ownership argument for the substantive year, where it has to be met.
Searched for later treatment; none was found. That is not the same as a source affirming it. Searched for a High Court appeal and for later Tribunal decisions applying or doubting this order; none was located. The decision sits alongside Rashesh Manhar Bhansali, already in this library, on the proposition that s.3 fixes the charge by reference to the year in which the asset comes to the notice of the Assessing Officer; no decision was found taking the further protective-addition step in a different direction. 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 document truncates inside the assessee's written submissions, so the Tribunal's own findings on beneficial ownership under s.2(11) and on the argument that the assets belonged to M/s Agrasen Polymers FZE as a separate legal entity were not reached. Those arguments appear in the retrieved text only as the assessee's submissions, and nothing in this entry should be read as a holding on beneficial ownership. The mapping of appeal numbers to years could not be settled: one retrieval identified BMA Nos. 03, 04 and 05/JP/2022 as the Revenue's appeals dismissed for assessment years 2016-17 to 2018-19, while the cause-title table gave BMA No. 01 to the assessee for 2019-20 and BMA Nos. 02 to 05 to the Revenue for 2016-17 to 2019-20. What is established is that the Revenue's appeals for assessment years 2016-17 to 2018-19 were dismissed. The discovery note for this decision treats the FZE separate-entity point as engaged; on the text that could be read it was argued but not decided. 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 Revenue's appeals against the deletion of the protective additions for assessment years 2016-17 to 2018-19 were dismissed (paras 11 to 13). The Tribunal held that where the substantive addition has been made in the year in which the asset came to the notice of the Assessing Officer and can be charged in that year under the clear mandate of s.3, the separate protective additions in the earlier years are not maintainable, and that the CIT(A) had rightly held 'the protective addition for the year under consideration is not warranted as the same is entirely contrary to the provision of section 3 of the Black money Act' (para 12). The Tribunal's conclusion on the assessee's own appeal for assessment year 2019-20 is not present in the text that could be read.
TaxSphere, “Addl. CIT v Krishna Das Agarwal”, https://taxnotice.vittsphere.com/caselaw/case/krishna-das-agarwal-v-addl-cit-bma-3-protective-addition/ (validity last checked 2026-09-16)
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