BMA s.2(11)

BMA s.2(11) — the law in short

What the courts have decided on section BMA s.2(11), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sarvesh Naidu v DDIT (Inv) ITATHelps taxpayerNo later treatment found
  My foreign life policy matured and the department has taxed the proceeds under the Black Money Act. Does s.10(10D) help when the insurer is foreign?
  Yes. The Tribunal held that s.10(10D) of the Income-tax Act draws no distinction between an Indian and a foreign insurer, and that where the premiums were paid out of income not chargeable to tax in India and out of income that had already suffered tax, the maturity proceeds of the policy could not be treated as undisclosed foreign income or an undisclosed foreign asset under the Black Money Act.
• 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.
• Atanu Banerjee v DDIT (Investigation) ITATCuts both waysNo later treatment found
  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 argument that acquisition while non-resident puts the asset outside the Act did not succeed before the Delhi Bench. The Tribunal proceeded on the basis that the assessee, being resident in India from assessment year 2016-17, was required to declare the foreign asset and explain its source, and that s.72(c) deems a pre-commencement asset in respect of which no declaration was made under Chapter VI to have been acquired in the year the s.10 notice was issued. It did not decide the appeal: it restored the matter to the Commissioner (Appeals) for fresh adjudication so that the assessee could produce evidence of the source of the investment and of his residential status.
• Ajay Kumar Patel v Addl. CIT ITATHelps taxpayerNo later treatment found
  The s.10 notice does not say which year it relates to, and my foreign account was inherited and already put in a revised return. Can the assessment stand?
  No, on both counts. A notice under s.10(1) that omits the relevant financial year, coupled with delay in initiating the proceedings, goes to the root of jurisdiction, and s.81 of the Black Money Act, being in pari materia with s.292B of the Income-tax Act, protects only clerical or technical mistakes and not jurisdictional infirmities. Separately, an inherited foreign deposit whose source is explained and which was disclosed in revised returns and by a letter to the jurisdictional officer before the s.10(1) notice is not an undisclosed asset within s.2(11), and historic interest of earlier years cannot be charged under the Black Money Act at all.
• Addl. CIT v Yashovardhan Birla ITATHelps taxpayerUnder appeal
  I am named as one of several beneficiaries of an offshore discretionary trust my uncle settled. Does that make the trust's assets my undisclosed foreign assets?
  No, on this line of orders. The Mumbai Bench dismissed the Revenue's appeal and upheld the setting aside of an assessment under s.10(3), following the coordinate Bench in the assessee's own case which had held the s.10(1) notice invalid. A discretionary trust gives a beneficiary no right to any part of the income but vests a discretionary power in the trustees, and where the trust was irrevocable, settled by another, and the assessee was one of several beneficiaries without control, ownership of the assets could not be thrust on him.
• Akil Abbas Rassai v DDIT (Inv) ITATHelps taxpayerNo later treatment found
  A foreign life policy was bought and paid for by my brother-in-law with my wife as beneficiary, and another one lapsed in 2014. Do either of them belong in my Schedule FA?
  On this order, neither. The Mumbai Tribunal deleted the s.43 penalties for all seven years. On the Isle of Man policy it proceeded on the assessee's claim that his brother-in-law bought the policy and paid every premium and that the assessee's wife was the inducted beneficiary, held that on that footing the assessee cannot be held beneficial owner or beneficiary, and deleted that penalty subject to verification by the Assessing Officer of who purchased the policy and who paid the premiums. On the UAE policy it held that a policy which had lapsed before the penalty provisions came into operation from assessment year 2016-17 could not attract them.
• 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.
• 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.
• JCIT v Vikash Marda ITATHelps taxpayerNo later treatment found
  They have issued notices under the Black Money Act for 2014-15 and 2015-16. Can the Act reach those years at all?
  No. The Kolkata Bench held that the first previous year under the Act is financial year 2015-16, so the first assessment year it can reach is 2016-17, and assessments framed for 2014-15 and 2015-16 were without jurisdiction. The batch is nine Revenue appeals covering both the assessments made under s.10(3) and the deletion of penalties levied under ss.41 and 43, and all nine were dismissed. On the asset, a fund in the United States built out of salary earned there while the assessee was a tax resident of the United States, and taxed there, was held not to fall within the definition of undisclosed asset under the Act.
• 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.
• Addl. CIT v Krishna Das Agarwal ITATCuts both waysNo later treatment found
  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.
• 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.

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.