Both a s.41 and a s.43 penalty have been levied on me under the Black Money Act for the same year. Are they attacked the same way?
No. The s.41 penalty is arithmetic tied to the assessment, so where the addition is reduced in the quantum appeal the Tribunal simply sends the penalty back to be recomputed. The s.43 penalty is a separate levy needing its own foundation, and here it was quashed outright because the Assessing Officer had recorded satisfaction for assessment years 2012-13 to 2017-18 but not for the year in which the penalty was imposed.
Decided by the ITAT (Shri Yogesh Kumar U.S., Judicial Member and Shri Avdhesh Kumar Mishra, Accountant Member) on 2025-03-28, reported as BMA Nos. 1 to 4/Del/2023, assessment year 2018-19. It bears on section BMA s.41, section BMA s.43, section BMA s.10(3), section 139(1) Schedule FA of the Income Tax Act 1961, in Penalty and Assessment & Scrutiny matters.
It gives a practitioner two distinct lines of attack where both penalties land together, and it establishes that a s.43 penalty must rest on satisfaction recorded for the very assessment year to which it relates. Borrowed satisfaction from neighbouring years will not do.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Four appeals for assessment year 2018-19 were heard together against orders of the Commissioner of Income Tax (Appeals)-31, New Delhi, dated 15 November 2022 (para 1). BMA Nos. 1 and 2 were Shiv Kumar Nayyar's and concerned penalty under s.41 of the Black Money Act; BMA Nos. 3 and 4 were Neetu Nayyar's and concerned penalty of Rs 10,00,000 each under s.43. The assessment order had recorded that penalty proceedings under s.43 were initiated because the assessee had failed to furnish information about foreign income and assets in the returns filed for assessment years 2012-13 to 2017-18. Material seized in the course of the proceedings showed commission receipts in foreign currency which the Tribunal apportioned between the two assessees. The quantum additions had already been reduced by a coordinate bench.
On the s.41 penalties the Tribunal held that the penalty is 'also required to be computed as per Section 41' of the Black Money Act on the additions as finally sustained, and directed the Assessing Officer to recompute the amount of penalty and pass an order accordingly (para 5); BMA Nos. 1 and 2 were partly allowed for statistical purposes (para 6). On the s.43 penalties the Tribunal found that 'no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19' (para 10) and held that the imposition of penalty for that year could not be sustained (para 11). The orders of the Commissioner (Appeals) confirming the penalties were quashed and BMA Nos. 3 and 4 were allowed (para 12).
The s.41 penalty is measured on the undisclosed foreign income and asset assessed under s.10, so where the coordinate bench had reduced the additions the penalty could not stand at its original figure and had to be worked out afresh on the sustained amounts (para 5). On s.43 the Tribunal went to the assessment order itself and found that the satisfaction recorded there was directed at the returns for assessment years 2012-13 to 2017-18 and said nothing about assessment year 2018-19, which was the year of the penalty. Without satisfaction for that year the penalty had no foundation (paras 10 and 11).
no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19
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Handle my notice → Ask a CA on WhatsAppNo. The s.41 penalty is arithmetic tied to the assessment, so where the addition is reduced in the quantum appeal the Tribunal simply sends the penalty back to be recomputed. The s.43 penalty is a separate levy needing its own foundation, and here it was quashed outright because the Assessing Officer had recorded satisfaction for assessment years 2012-13 to 2017-18 but not for the year in which the penalty was imposed. This was decided by the ITAT (Shri Yogesh Kumar U.S., Judicial Member and Shri Avdhesh Kumar Mishra, Accountant Member) and bears on section BMA s.41, section BMA s.43, section BMA s.10(3), section 139(1) Schedule FA of the Income Tax Act 1961. It is reported as BMA Nos. 1 to 4/Del/2023, assessment year 2018-19. It gives a practitioner two distinct lines of attack where both penalties land together, and it establishes that a s.43 penalty must rest on satisfaction recorded for the very assessment year to which it relates. Borrowed satisfaction from neighbouring years will not do. If it applies to you, the first step is this: Read the assessment order for the penalty year and identify the exact words in which s.43 satisfaction is recorded, and for which assessment year.
Four appeals for assessment year 2018-19 were heard together against orders of the Commissioner of Income Tax (Appeals)-31, New Delhi, dated 15 November 2022 (para 1). BMA Nos. 1 and 2 were Shiv Kumar Nayyar's and concerned penalty under s.41 of the Black Money Act; BMA Nos. 3 and 4 were Neetu Nayyar's and concerned penalty of Rs 10,00,000 each under s.43. The assessment order had recorded that penalty proceedings under s.43 were initiated because the assessee had failed to furnish information about foreign income and assets in the returns filed for assessment years 2012-13 to 2017-18. Material seized in the course of the proceedings showed commission receipts in foreign currency which the Tribunal apportioned between the two assessees. The quantum additions had already been reduced by a coordinate bench. The matter was decided on 2025-03-28 by the ITAT (Shri Yogesh Kumar U.S., Judicial Member and Shri Avdhesh Kumar Mishra, Accountant Member). On those facts the ITAT held as follows. On the s.41 penalties the Tribunal held that the penalty is 'also required to be computed as per Section 41' of the Black Money Act on the additions as finally sustained, and directed the Assessing Officer to recompute the amount of penalty and pass an order accordingly (para 5); BMA Nos. 1 and 2 were partly allowed for statistical purposes (para 6). On the s.43 penalties the Tribunal found that 'no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19' (para 10) and held that the imposition of penalty for that year could not be sustained (para 11). The orders of the Commissioner (Appeals) confirming the penalties were quashed and BMA Nos. 3 and 4 were allowed (para 12).
The s.41 penalty is measured on the undisclosed foreign income and asset assessed under s.10, so where the coordinate bench had reduced the additions the penalty could not stand at its original figure and had to be worked out afresh on the sustained amounts (para 5). On s.43 the Tribunal went to the assessment order itself and found that the satisfaction recorded there was directed at the returns for assessment years 2012-13 to 2017-18 and said nothing about assessment year 2018-19, which was the year of the penalty. Without satisfaction for that year the penalty had no foundation (paras 10 and 11). In the words reproduced by the source cited on this page: "no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19"
It was decided by the ITAT on 2025-03-28 and is reported as BMA Nos. 1 to 4/Del/2023, assessment year 2018-19. 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.41, section BMA s.43, section BMA s.10(3), 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. On the s.41 penalties the Tribunal held that the penalty is 'also required to be computed as per Section 41' of the Black Money Act on the additions as finally sustained, and directed the Assessing Officer to recompute the amount of penalty and pass an order accordingly (para 5); BMA Nos. 1 and 2 were partly allowed for statistical purposes (para 6). On the s.43 penalties the Tribunal found that 'no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19' (para 10) and held that the imposition of penalty for that year could not be sustained (para 11). The orders of the Commissioner (Appeals) confirming the penalties were quashed and BMA Nos. 3 and 4 were allowed (para 12). It arises in Penalty and Assessment & Scrutiny matters, on section BMA s.41, section BMA s.43, section BMA s.10(3), section 139(1) Schedule FA of the Income Tax Act 1961, and was decided by Shri Yogesh Kumar U.S., Judicial Member and Shri Avdhesh Kumar Mishra, Accountant 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. If the satisfaction names other years, take that as your first ground; it is a jurisdictional objection and does not require you to argue the merits. For the s.41 penalty, press the quantum appeal first - any reduction in the addition carries straight through to the penalty. Ask for a direction that the Assessing Officer recompute the s.41 penalty on the sustained addition rather than leaving the original figure standing.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, following or doubting this order was located on indiankanoon. No appeal against it to the Delhi High Court was 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 order is indexed on indiankanoon under both assessees' names at four separate document numbers; all four carry the same composite order. Two appeals (BMA Nos. 1 and 2) were filed by Shiv Kumar Nayyar for the same assessment year, and the reason for two appeals for one year is not explained in the text. Nothing in the order records the size of the s.41 penalty or the amount of the sustained addition; the direction is simply to recompute. This is not to be confused with the Delhi High Court decision in PCIT v Shiv Kumar Nayyar on s.153D approval, which is a different matter. 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.
On the s.41 penalties the Tribunal held that the penalty is 'also required to be computed as per Section 41' of the Black Money Act on the additions as finally sustained, and directed the Assessing Officer to recompute the amount of penalty and pass an order accordingly (para 5); BMA Nos. 1 and 2 were partly allowed for statistical purposes (para 6). On the s.43 penalties the Tribunal found that 'no satisfaction has been recorded by the AO for the year under consideration i.e. Assessment Year 2018-19' (para 10) and held that the imposition of penalty for that year could not be sustained (para 11). The orders of the Commissioner (Appeals) confirming the penalties were quashed and BMA Nos. 3 and 4 were allowed (para 12).
TaxSphere, “Shiv Kumar Nayyar v Addl. CIT”, https://taxnotice.vittsphere.com/caselaw/case/shiv-kumar-nayyar-v-addl-cit-bma-41-and-43-together/ (validity last checked 2026-09-16)
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