The officer has used s.72(c) to bring my foreign bank interest and dividends into a later year. Does the deeming provision reach income as well as the asset?
No. The Mumbai Bench held that s.72(c) is a deeming provision applicable only to assets and cannot be extended to income components such as bank interest, dividends, redemption gains or consultancy receipts, because a deeming fiction cannot be expanded beyond the purpose for which it was enacted. On the facts it also accepted the assessee's explanations of two credits, supported by affidavits and documents, and deleted additions of Rs 3,17,53,800.
Decided by the ITAT (Vikram Singh Yadav, Accountant Member and Anikesh Banerjee, Judicial Member) on 2026-06-18, reported as BMA No. 9/Mum/2024. It bears on section BMA s.72(c), section BMA s.10, section BMA s.17, section BMA s.2(11) of the Income Tax Act 1961, in Assessment & Scrutiny, Appeals, Evidence & Burden of Proof and How Tax Law Is Read matters.
Section 72(c) is the provision on which most Black Money Act assessments of old foreign accounts rest. Confining it to the asset takes the interest and other income credited to the account out of the deemed year, which on a long-running account is usually the bulk of the addition.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee held four foreign bank accounts: No. 12476037287 opened 28 July 2004 and closed 15 August 2019, No. 1151006210 opened 4 May 1987 and closed 20 August 2019, No. 250013809 opened 1 July 2013 and closed 21 April 2017, and No. 3151047199 opened 1 May 1971 and closed 5 August 2010. The Assessing Officer assessed undisclosed foreign assets of Rs 3,17,53,800 for assessment year 2019-20 and the Commissioner (Appeals) sustained the additions by an order passed under s.17. Two credits were in issue on the facts, EUR 1,40,000 explained as a gift from the assessee's son and US$ 1,79,795.57 explained as the refund of an investment made under the Liberalised Remittance Scheme.
The appeal was allowed and the additions aggregating Rs 3,17,53,800 sustained by the Commissioner (Appeals) were directed to be deleted. Section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components (para 10). The assessee's explanations of the two credits, supported by affidavits and corroborative documentary evidence, were accepted.
The Tribunal accepted the contention that s.72(c) applies to an asset and not to income, and so cannot be invoked to bring to tax an alleged undisclosed foreign income (para 10). It held that the deeming fiction cannot be expanded beyond the purpose for which it was enacted, and that bank interest, dividends, redemption gains and consultancy receipts are income components outside its reach. On the facts, the plausible explanations supported by affidavits and corroborative documentary evidence for the gift from the son and the refund of the remittance were accepted.
section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components
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Handle my notice → Ask a CA on WhatsAppNo. The Mumbai Bench held that s.72(c) is a deeming provision applicable only to assets and cannot be extended to income components such as bank interest, dividends, redemption gains or consultancy receipts, because a deeming fiction cannot be expanded beyond the purpose for which it was enacted. On the facts it also accepted the assessee's explanations of two credits, supported by affidavits and documents, and deleted additions of Rs 3,17,53,800. This was decided by the ITAT (Vikram Singh Yadav, Accountant Member and Anikesh Banerjee, Judicial Member) and bears on section BMA s.72(c), section BMA s.10, section BMA s.17, section BMA s.2(11) of the Income Tax Act 1961. It is reported as BMA No. 9/Mum/2024. Section 72(c) is the provision on which most Black Money Act assessments of old foreign accounts rest. Confining it to the asset takes the interest and other income credited to the account out of the deemed year, which on a long-running account is usually the bulk of the addition. If it applies to you, the first step is this: Split the assessment into the asset and the income credited to it, and apply s.72(c) only to the former.
The assessee held four foreign bank accounts: No. 12476037287 opened 28 July 2004 and closed 15 August 2019, No. 1151006210 opened 4 May 1987 and closed 20 August 2019, No. 250013809 opened 1 July 2013 and closed 21 April 2017, and No. 3151047199 opened 1 May 1971 and closed 5 August 2010. The Assessing Officer assessed undisclosed foreign assets of Rs 3,17,53,800 for assessment year 2019-20 and the Commissioner (Appeals) sustained the additions by an order passed under s.17. Two credits were in issue on the facts, EUR 1,40,000 explained as a gift from the assessee's son and US$ 1,79,795.57 explained as the refund of an investment made under the Liberalised Remittance Scheme. The matter was decided on 2026-06-18 by the ITAT (Vikram Singh Yadav, Accountant Member and Anikesh Banerjee, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed and the additions aggregating Rs 3,17,53,800 sustained by the Commissioner (Appeals) were directed to be deleted. Section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components (para 10). The assessee's explanations of the two credits, supported by affidavits and corroborative documentary evidence, were accepted.
The Tribunal accepted the contention that s.72(c) applies to an asset and not to income, and so cannot be invoked to bring to tax an alleged undisclosed foreign income (para 10). It held that the deeming fiction cannot be expanded beyond the purpose for which it was enacted, and that bank interest, dividends, redemption gains and consultancy receipts are income components outside its reach. On the facts, the plausible explanations supported by affidavits and corroborative documentary evidence for the gift from the son and the refund of the remittance were accepted. In the words reproduced by the source cited on this page: "section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components"
It was decided by the ITAT on 2026-06-18 and is reported as BMA No. 9/Mum/2024. 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.72(c), section BMA s.10, section BMA s.17, 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 helps the taxpayer. The appeal was allowed and the additions aggregating Rs 3,17,53,800 sustained by the Commissioner (Appeals) were directed to be deleted. Section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components (para 10). The assessee's explanations of the two credits, supported by affidavits and corroborative documentary evidence, were accepted. It arises in Assessment & Scrutiny, Appeals, Evidence & Burden of Proof and How Tax Law Is Read matters, on section BMA s.72(c), section BMA s.10, section BMA s.17, section BMA s.2(11) of the Income Tax Act 1961, and was decided by Vikram Singh Yadav, Accountant Member and Anikesh Banerjee, Judicial Member. 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. For each income component, ask which year it arose in and whether the Black Money Act charge reaches that year at all. Where a credit is a gift or the return of a remittance, put the explanation on affidavit and support it with the transfer records; that is what carried the two credits here. Keep the Liberalised Remittance Scheme paperwork for any investment made out of India; the refund of one such investment was accepted on that footing.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 18 June 2026. Nothing applying, doubting or overruling it was located. It sits alongside the Kolkata Bench in Ajay Kumar Patel, decided 20 January 2026, which reaches the same separation between the charge on a foreign asset and the charge on foreign income by a different route, through s.3(1) and s.4(1). 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 full text of this order could not be obtained. The print view returned a 403 once and thereafter returned a condensed version, so only the para 10 holding on s.72(c), the facts as to the four accounts and the two explained credits, and the operative direction could be established. The paragraph numbering of the rest of the reasoning, the grounds of appeal and the date of the Commissioner (Appeals) order are not known, and the quotations in the summary of the Tribunal's words on income components come from a condensed view rather than the running text. The order should be read in full before it is relied on. No reporter citation is printed on the pages read. 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 appeal was allowed and the additions aggregating Rs 3,17,53,800 sustained by the Commissioner (Appeals) were directed to be deleted. Section 72(c) is a deeming provision applicable only to assets and cannot be extended to bring to tax income components (para 10). The assessee's explanations of the two credits, supported by affidavits and corroborative documentary evidence, were accepted.
TaxSphere, “Satish Gopal Rao v DDIT / ADIT (Inv.)”, https://taxnotice.vittsphere.com/caselaw/case/satish-gopal-rao-v-ddit-bma-72c-reaches-assets-not-income/ (validity last checked 2026-09-16)
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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?
I am a foreign national who became resident in India and missed Schedule FA in my first return, but I put it right in a revised return. Is the Rs 10 lakh penalty still due?
What are the time limits, forms and fees for an appeal under the Black Money Act, and where do they differ from the Income-tax Act?
My foreign bank account was closed years before 2015. Can it still be taxed under the Black Money Act?
