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?
Not on these facts. The Mumbai Bench deleted a penalty under s.43 where a British citizen, resident in India for a fixed five-year assignment, omitted his United Kingdom assets from Schedule FA in the original return and disclosed them in a revised return filed within the time allowed by s.139(5). The Tribunal held that the Revenue had not established that he had ever been an Indian citizen or that the foreign investments came out of undisclosed Indian income, and that the Act is aimed at undisclosed foreign income and assets, not at a bona fide omission.
Decided by the ITAT (Amarjit Singh, Accountant Member and Anikesh Banerjee, Judicial Member) on 2025-02-04, reported as B.M.A. No. 29/Mum/2024. It bears on section BMA s.43, section BMA s.2(2), section BMA s.17, section 139(5), section 139(1) Schedule FA, section 131(1A), section 6 of the Income Tax Act 1961, in Penalty, Residence & Treaty Benefit and Appeals matters.
The commonest fact pattern for an inbound expatriate or a returning Indian: the assets were acquired abroad while non-resident, out of taxed foreign income, and the reporting obligation is missed in the first year of residence. It also settles, at Tribunal level, the effect of a revised return under s.139(5) on a s.43 penalty, and it does so after a summons had already issued.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, a citizen of the United Kingdom born on 11 July 1959, came to India on 20 January 2019 to serve a fixed five-year term with Reliance Industries as Head of NMACC, and left India in January 2024. His stay was 71 days in financial year 2018-19, when he was non-resident, 343 days in 2019-20 and 365 days in 2020-21, when he was resident but not ordinarily resident, and 307 days in 2021-22, when he was resident. He became a tax resident in assessment year 2022-23. His overseas assets were three savings accounts and a current account with United Kingdom banks, a joint interest with his wife in a house in the United Kingdom, investments managed by AFH Independent Financial Services Limited including a jointly held Canada Life Offshore Bond, a Stocks and Shares ISA and a James Hay pension, and a Virgin Fixed Rate Cash ISA. He filed his return for assessment year 2022-23 on 30 July 2022 showing his status as resident but omitting the foreign assets and his global income, on advice that global income would become taxable only after four years. A summons under s.131(1A) of the Income-tax Act dated 7 October 2022 was issued concerning the Canada Life Offshore Bond registered in the Isle of Man. He filed a revised return on 24 November 2022 within the time allowed by s.139(5), declaring the overseas income and disclosing the foreign assets in Schedule FA, and it was processed under s.143(1) the same day. The Assessing Officer nevertheless imposed a penalty of Rs 10,00,000 under s.43, and the Commissioner (Appeals)-54, Mumbai upheld it by order dated 27 May 2024.
The appeal was allowed. The penalty of Rs 10,00,000 imposed under s.43 was deleted and the order of the Commissioner (Appeals) set aside.
The Tribunal framed three questions: whether the assessee disclosed the foreign asset to the Indian tax authority in accordance with the Act, whether the return was filed only after a notice from the authority, and whether a penalty is attracted where the asset was declared in a revised return filed within the prescribed time. It held that the legislative intent of the Act is to address undisclosed foreign income and assets, and recorded that the assessee is a British citizen, that the Revenue had not established that he was previously an Indian citizen and had not established that the foreign investment was made out of undisclosed Indian income. It followed the coordinate bench in ACIT v. Rohit Krishna for the proposition that the reporting requirement in Schedule FA exists to track investments held abroad by residents and that the Act must not be invoked to punish a technical, venial or bona fide breach of a statutory obligation, that bench having drawn on Hindustan Steel Ltd. It relied on the Karnataka High Court in K Mohammad Haris for the proposition that once an assessee declares foreign assets within the time allowed by s.139(5) and pays the tax, it cannot be concluded that he wilfully failed to declare them. The decisions relied on by the Departmental Representative and by the Commissioner (Appeals), including Nirmal Bhanwarlal Jain, were held factually distinguishable, that case having concerned a resident Indian citizen who furnished inaccurate particulars.
the penalty of Rs.10,00,000/- imposed under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, is deleted
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Handle my notice → Ask a CA on WhatsAppNot on these facts. The Mumbai Bench deleted a penalty under s.43 where a British citizen, resident in India for a fixed five-year assignment, omitted his United Kingdom assets from Schedule FA in the original return and disclosed them in a revised return filed within the time allowed by s.139(5). The Tribunal held that the Revenue had not established that he had ever been an Indian citizen or that the foreign investments came out of undisclosed Indian income, and that the Act is aimed at undisclosed foreign income and assets, not at a bona fide omission. This was decided by the ITAT (Amarjit Singh, Accountant Member and Anikesh Banerjee, Judicial Member) and bears on section BMA s.43, section BMA s.2(2), section BMA s.17, section 139(5), section 139(1) Schedule FA, section 131(1A), section 6 of the Income Tax Act 1961. It is reported as B.M.A. No. 29/Mum/2024. The commonest fact pattern for an inbound expatriate or a returning Indian: the assets were acquired abroad while non-resident, out of taxed foreign income, and the reporting obligation is missed in the first year of residence. It also settles, at Tribunal level, the effect of a revised return under s.139(5) on a s.43 penalty, and it does so after a summons had already issued. If it applies to you, the first step is this: Work out the residential status year by year and put the day counts on the record; the Tribunal set out four years of them.
The assessee, a citizen of the United Kingdom born on 11 July 1959, came to India on 20 January 2019 to serve a fixed five-year term with Reliance Industries as Head of NMACC, and left India in January 2024. His stay was 71 days in financial year 2018-19, when he was non-resident, 343 days in 2019-20 and 365 days in 2020-21, when he was resident but not ordinarily resident, and 307 days in 2021-22, when he was resident. He became a tax resident in assessment year 2022-23. His overseas assets were three savings accounts and a current account with United Kingdom banks, a joint interest with his wife in a house in the United Kingdom, investments managed by AFH Independent Financial Services Limited including a jointly held Canada Life Offshore Bond, a Stocks and Shares ISA and a James Hay pension, and a Virgin Fixed Rate Cash ISA. He filed his return for assessment year 2022-23 on 30 July 2022 showing his status as resident but omitting the foreign assets and his global income, on advice that global income would become taxable only after four years. A summons under s.131(1A) of the Income-tax Act dated 7 October 2022 was issued concerning the Canada Life Offshore Bond registered in the Isle of Man. He filed a revised return on 24 November 2022 within the time allowed by s.139(5), declaring the overseas income and disclosing the foreign assets in Schedule FA, and it was processed under s.143(1) the same day. The Assessing Officer nevertheless imposed a penalty of Rs 10,00,000 under s.43, and the Commissioner (Appeals)-54, Mumbai upheld it by order dated 27 May 2024. The matter was decided on 2025-02-04 by the ITAT (Amarjit Singh, Accountant Member and Anikesh Banerjee, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed. The penalty of Rs 10,00,000 imposed under s.43 was deleted and the order of the Commissioner (Appeals) set aside.
The Tribunal framed three questions: whether the assessee disclosed the foreign asset to the Indian tax authority in accordance with the Act, whether the return was filed only after a notice from the authority, and whether a penalty is attracted where the asset was declared in a revised return filed within the prescribed time. It held that the legislative intent of the Act is to address undisclosed foreign income and assets, and recorded that the assessee is a British citizen, that the Revenue had not established that he was previously an Indian citizen and had not established that the foreign investment was made out of undisclosed Indian income. It followed the coordinate bench in ACIT v. Rohit Krishna for the proposition that the reporting requirement in Schedule FA exists to track investments held abroad by residents and that the Act must not be invoked to punish a technical, venial or bona fide breach of a statutory obligation, that bench having drawn on Hindustan Steel Ltd. It relied on the Karnataka High Court in K Mohammad Haris for the proposition that once an assessee declares foreign assets within the time allowed by s.139(5) and pays the tax, it cannot be concluded that he wilfully failed to declare them. The decisions relied on by the Departmental Representative and by the Commissioner (Appeals), including Nirmal Bhanwarlal Jain, were held factually distinguishable, that case having concerned a resident Indian citizen who furnished inaccurate particulars. In the words reproduced by the source cited on this page: "the penalty of Rs.10,00,000/- imposed under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, is deleted" The decision followed or applied ACIT, CC-22(1) v. Rohit Krishna, BMA Nos. 36-40/Mum/2024 dated 27 November 2024 - followed on technical and venial breach; K Mohammad Haris v. ITO (2022) 448 ITR 707 (Kar) - relied on for the effect of a revised return under s.139(5); Hindustan Steel Ltd - applied through Rohit Krishna.
It was decided by the ITAT on 2025-02-04 and is reported as B.M.A. No. 29/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.43, section BMA s.2(2), section BMA s.17, section 139(5), section 139(1) Schedule FA, section 131(1A), section 6, 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. The penalty of Rs 10,00,000 imposed under s.43 was deleted and the order of the Commissioner (Appeals) set aside. It arises in Penalty, Residence & Treaty Benefit and Appeals matters, on section BMA s.43, section BMA s.2(2), section BMA s.17, section 139(5), section 139(1) Schedule FA, section 131(1A), section 6 of the Income Tax Act 1961, and was decided by Amarjit Singh, 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. If Schedule FA was missed, file a revised return under s.139(5) within time even after a summons has issued; that is what happened here and the Tribunal treated it as disclosure. Show where the assets came from - foreign employment, accumulated foreign investments - and press the Revenue to establish a link with undisclosed Indian income. Distinguish the Nirmal Bhanwarlal Jain line, which the Department cites for the proposition that inaccurate particulars attract s.43 even where a disclosure is made, on the footing that it concerned a resident Indian citizen.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 4 February 2025. Nothing applying, doubting or overruling it was located. It stands with the Special Bench in Vinil Venugopal, decided 14 October 2025, which held the power under s.43 to be discretionary, and with the coordinate bench decisions in Ocean Diving Centre, Rohit Krishna and Adijin Perfumes. The Karnataka High Court decision in K Mohammad Haris, on which it relies, was not opened. 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 does not in terms construe s.2(2) of the Black Money Act; the section is tagged because the decision turns on the assessee's residence and on his having become an assessee under the Act only when he became resident. The two citations for the Karnataka High Court decision differ between the sources read - K Mohammad Haris v ITO (2022) 448 ITR 707 (Kar) here, and K. Mohammed Haris v Income-tax Department (2023) 147 taxmann.com 370 in the Kolkata Bench order in Ajay Kumar Patel - and neither was verified against the judgment. The penalty year is assessment year 2022-23. The operative paragraph is not numbered on the page 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. The penalty of Rs 10,00,000 imposed under s.43 was deleted and the order of the Commissioner (Appeals) set aside.
TaxSphere, “Timothy John Brinkman v DDIT (Inv.)”, https://taxnotice.vittsphere.com/caselaw/case/timothy-brinkman-v-ddit-bma-43-revised-return-within-time/ (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 bought a house abroad years ago while I was a non-resident. Now that I have been resident in India, can it be taxed under the Black Money Act?
The officer valued my foreign shareholding under the rule meant for bank accounts. Does that stand, and was I even an 'assessee' under the Act as a not ordinarily resident?
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?
