BMA s.41

BMA s.41 — the law in short

What the courts have decided on section BMA s.41, 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.
• Prateek Chitkara v Union of India High CourtCuts both waysNo later treatment found
  There is a look-out circular against me while my Black Money Act appeal is pending. Can I get it lifted, and does the appeal need money deposited first?
  The look-out circular was not quashed but was converted into an intimation of arrival and departure under clause 6(I) of the Office Memorandum dated 22 February 2021, on conditions including security over property, the Court holding that this was not a case detrimental to the economic interest of the country as there was no allegation of siphoning of public funds and no criminal proceedings had been initiated despite the demand. On the appeal, the Court recorded that no amount had been deposited under Rule 6(4) of the Black Money Rules, which requires the tax with penalty and interest on the liability not objected to by the assessee to be paid before an appeal under s.15(1) is admitted.
• Krishna Das Agrawal v Income Tax Department High CourtHelps departmentNo later treatment found
  My Black Money Act appeal is pending and part of the demand is stayed. Can I stop the penalty proceedings until the appeal is decided?
  No. The Rajasthan High Court declined to stay penalty proceedings under the Black Money Act while the appeal against the assessment was pending before the appellate authority. The pendency of an appeal does not by itself suspend penalty proceedings, the authority has to complete them within the period fixed by s.47, and any penalty order can itself be appealed. Liberty was reserved to move against coercive steps taken after the penalty order.
• Shantanu Bhowmick v DDIT (Inv) ITATHelps taxpayerNo later treatment found
  The department cannot produce the s.10(1) notice for the year it assessed. Is that cured by s.81?
  No. Where the Revenue could not produce any notice under s.10(1) for the assessment year in question, the Tribunal held that the absence of a valid notice for the relevant year is not a curable defect under s.81 of the Black Money Act. Both the assessment under s.10 and the consequent penalty order of Rs 1,84,11,360 were quashed.
• Elangovan Malarmangai v JCIT ITATCuts both waysNo later treatment found
  The assessment under the Black Money Act has been quashed. Does the s.41 penalty go with it, and does the s.43 penalty go too?
  The s.41 penalty goes; the s.43 penalty does not. Because s.41 is a penalty on undisclosed foreign income and assets assessed under s.10, once the Tribunal deleted the additions on a legal ground the s.41 penalty of Rs 18,09,74,151 became infructuous and was directed to be deleted. The Rs 10,00,000 penalty under s.43 was separately upheld in the same order, because it turns on what was or was not put in the return and not on the assessment.
• Shiv Kumar Nayyar v Addl. CIT ITATHelps taxpayerNo later treatment found
  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.
• 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.
• 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".

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.