BMA s.10

BMA s.10 — the law in short

What the courts have decided on section BMA s.10, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Binoy Kodiyeri v DDIT High CourtHelps departmentNo later treatment found
  Can I take an assessment under the Black Money Act straight to the High Court?
  Not ordinarily. The Kerala High Court dismissed two writ petitions against proceedings under the Black Money Act because the assessment order was appealable under s.15 of that Act and the petitioner had come to the Court directly without invoking the statutory remedy. The dismissal was without prejudice to the right to appeal, and the Court excluded the period from 24 March 2023 until receipt of the certified copy of the judgment in computing limitation for that appeal.
• Jyotsna Suri v DDIT (Inv.) High CourtCuts both waysNo later treatment found
  The officer has provisionally attached my property in a Black Money Act proceeding. Where does that power come from, and is s.3(2) under challenge?
  The attachment was made under s.84 of the Black Money Act, which applies s.281B of the Income-tax Act to that Act. The Delhi High Court issued notice on a petition seeking to set aside proceedings under s.10 for assessment year 2021-22 and challenging the constitutional validity of s.3(2), gave the petitioner until 8 April 2025 to respond to the show cause notice, directed the officer to hear her and pass an order by 15 May 2025, and directed that any adverse order would not be given effect until the next hearing. Nothing was decided.
• Sanjay Bhandari v Income Tax Office High CourtHelps departmentNo later treatment found
  The assessment under the Black Money Act is not complete, and may now be time-barred. Can they still summon me on a s.51 complaint?
  Yes. The Delhi High Court refused to quash the summoning order, holding that Chapter V of the Black Money Act stands independent of any order made under the Act, so the initiation of prosecution is not dependent on the completion of assessment provided the ingredients of s.51 are made out. Sections 50 and 51 operate in different realms, and whether the conduct was preparation or a punishable attempt is a matter for trial.
• Satish Gopal Rao v DDIT / ADIT (Inv.) ITATHelps taxpayerNo later treatment found
  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.
• Pascal Postel v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  The officer has charged interest under s.40 of the Black Money Act on top of the tax. Is there any machinery for it, and can I still fight the quantum in the appeal against the rectification order?
  Interest under s.40(2) was held unworkable, because the advance-tax machinery on which ss.234B and 234C of the Income-tax Act operate is absent from the Black Money Act, so there is no statutory liability to pay advance tax on which the interest can bite. Interest under s.40(1) was held not to arise where the foreign source itself was disclosed, the expression 'not disclosed' meaning complete suppression of the source and not a difference in the quantum assessed. On the procedural point, where an assessment order under s.10 is altered by a rectification order under s.12, the two are read together as one composite order, so the appeal against the rectified order carries the underlying quantum with it.
• Rashesh Manhar Bhansali v Addl. CIT (miscellaneous application) ITATHelps taxpayerNo later treatment found
  The Tribunal decided my Black Money Act appeal without dealing with the written submissions I filed. Is there any remedy short of the High Court?
  Yes. Section 18(7) of the Black Money Act carries into that Act the same powers the Tribunal exercises under the Income-tax Act, and the Mumbai Bench used it to recall its own order of 2 November 2021 because the coordinate bench had not considered a detailed written submission filed two days before the hearing concluded. Non-consideration of a written submission filed on the record, with supporting evidence, is a mistake apparent from the record.
• Prasad Nimmagadda v DIT (Inv) ITATHelps taxpayerNo later treatment found
  I disclosed the foreign assets in every year except one. Does the s.43 penalty for that one year stand?
  Not on these facts. The Tribunal deleted a s.43 penalty where the same foreign assets had been shown in Schedule FA for the years before and the years after, and the source of the investment had been accepted. It reasoned from s.46 that if the penalty were bound to follow the default there would have been no purpose in requiring a show-cause notice at all.
• Tara Kejriwal v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  The assessment rests on bank statements the department got from a foreign tax authority. They are uncertified and parts are blacked out. Do they prove anything?
  Not by themselves. The Kolkata Bench allowed all three appeals and deleted additions of about Rs 2.52 crore based on four accounts with BNP Paribas, Geneva standing in the names of foreign companies. Copies of bank records that no bank has certified, with portions darkened beyond legibility, have to be corroborated by other evidence before they can establish that the assessee held an asset abroad; passport entries showed the assessee was not in Switzerland when the accounts were opened, and naming in an account opening form did not make him the beneficial owner.
• Jt. CIT v Akhilesh Singh ITATCuts both waysJudgment not reachable
  The addition is built on every credit in a foreign company's bank account. What does the Tribunal look for first under the Black Money Act?
  Whether there is an undisclosed asset located outside India at all. On a Revenue appeal against the deletion of an addition of Rs 1,33,20,62,815 made on the credits in a Singapore bank account of a company in which the assessee was a director and shareholder, the Kolkata Bench confined its adjudication to the one account on which the Assessing Officer had actually made the addition, set out s.2(11), s.2(12) and s.4, and said that the first thing to be identified is whether there is an undisclosed asset located outside India. The only copy of the order that can be reached breaks off in the middle of that sentence, so what the Tribunal went on to decide is not known.
• DCIT v Uday Pratap Singh ITATHelps taxpayerNo later treatment found
  They have taxed me on shares in a struck-off offshore company I paid nothing for. Can there be a charge at all if the shares have no value under the rules?
  No. The Kolkata Bench upheld deletion of an addition of Rs 65,240 on 1,000 shares of a British Virgin Islands company. Rule 3(1)(c) requires unquoted equity shares to be valued at the higher of cost of acquisition and the value worked out from the company's assets and liabilities; the assessee had paid nothing, the company had been struck off and had no balance sheet, so both limbs came to nil and s.3 could not operate, the tax being imposed on the value of the undisclosed asset.
• Rashesh Manhar Bhansali v Addl CIT ITATHelps departmentPartly overruled — read this first
  My foreign bank account was closed years before 2015. Can it still be taxed under the Black Money Act?
  Yes. Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 the charge is fixed by the year in which the undisclosed asset comes to the notice of the Assessing Officer, so it does not matter that the accounts had been closed before the Act commenced. A bank account balance is an 'asset' for this purpose and nothing is deductible against it.
• Addl. CIT v Jatinder Mehra ITATHelps taxpayer
  My name appears as beneficial owner on a foreign bank account opening form I never signed. Is that enough to tax the balance in my hands?
  No. The Delhi Bench upheld deletion of an addition of Rs 5,66,47,000 where the account stood in the name of a British Virgin Islands company whose sole director and shareholder was the assessee's son, and the money had come from a trust. Beneficial ownership under s.2(11) requires that the person provided the consideration and exercises control; a name and a passport number on an account opening form, without more, does not establish it.
• Statutory position — ss.41 and 43 of the Black Money Act and s.72(c): the penalty of three times the tax computed under s.10, the Rs 10 lakh penalty for not reporting a foreign asset in the return with its twenty lakh rupee proviso from 1 October 2024, and the deemed year of acquisition for an asset acquired before commencement CBDT Circulars & InstructionsCuts both ways
  My client's Black Money assessment covers a foreign account opened in 2009 and not declared under the one-time compliance window. The department has charged tax and a penalty of three times the tax, and says the year is fixed by s.72(c). What do those provisions actually say?
  Section 41 provides that the Assessing Officer may direct that, in a case where tax has been computed under s.10 in respect of undisclosed foreign income and asset, the assessee shall pay by way of penalty, in addition to tax if any payable by him, "a sum equal to three times the tax computed under that section". It is therefore a multiple of the tax computed under s.10, and it follows the s.10 computation — if the computation goes, the base of the penalty goes with it. Section 43 is a different and smaller penalty: where a resident other than not ordinarily resident within s.6(6) of the Income-tax Act has furnished a return under s.139(1), (4) or (5) of that Act and fails to furnish any information, or furnishes inaccurate particulars, in that return relating to any asset (including financial interest in any entity) located outside India held by him as beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, the Assessing Officer "may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees". Its proviso, as substituted by the Finance (No. 2) Act, 2024 with effect from 1 October 2024, reads: "Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees." The footnote on the departmental page records that before that substitution the proviso excluded only "an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year". Section 72(c), in the removal-of-doubts provision at the end of the declaration chapter, is the hinge of the retrospectivity argument and reads: "where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly".
• Statutory position — ss.10 and 11 of the Black Money Act: the s.10(1) notice, the enquiry, the s.10(3) assessment and the s.10(4) best judgment assessment, and the two-year limit in s.11 with the exclusions in Explanation 1 and the one-year cap on the exchange-of-information exclusion CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  I have an assessment order under s.10(3) of the Black Money Act. The department says the limitation was extended because a request for exchange of information was pending. How long is the period, and how much can that request add to it?
  Two years, and the exchange-of-information exclusion is capped. Section 11(1) provides that no order of assessment or reassessment shall be made under s.10 after the expiry of two years from the end of the financial year in which the notice under s.10(1) was issued by the Assessing Officer. Explanation 1 to s.11 excludes, in computing that period, (i) the time taken in reopening the whole or any part of the proceeding, (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, and (iii) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in s.90 or s.90A of the Income-tax Act or under s.73 of this Act and ending with the date on which the Principal Commissioner or the Commissioner last receives the information so requested "or a period of one year, whichever is less". The exclusion in clause (iii) therefore cannot add more than one year however long the request remains outstanding. A proviso to the Explanation extends the remaining period to sixty days where, after the exclusion, less than sixty days are left. On the machinery itself: s.10(1) empowers the Assessing Officer, on receipt of information from an income-tax authority or any other authority or on information coming to his notice, to serve a notice requiring production of accounts, documents or evidence on a date to be specified, and to serve further notices; s.10(2) allows him to make such enquiry as he considers necessary; s.10(3) requires him, after considering what he has obtained under s.10(1), what he has gathered under s.10(2) and any other evidence produced by the assessee, to assess or reassess by an order in writing and determine the sum payable; and s.10(4) provides that on a failure to comply with all the terms of the s.10(1) notice he shall, after taking into account all relevant material gathered and after giving the assessee an opportunity of being heard, make the assessment or reassessment to the best of his judgment and determine the sum payable.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.