ACIT v. Leena Gandhi Tiwari

Case snapshot

Sections / provisions: 43

Questions before the Court / Tribunal

• Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015. S. 43 : Penalty for failure to furnish return of income an information, or furnish inaccurate particulars about an asset (including interest in any entity) located outside India- Foreign Bank Account-Signatory for late Mother-Amount was donated to the Charity-Not beneficial owner-Mere no disclosure is not valid ground for levy of penalty-Deletion of penalty was affirmed. [S. 10(3), Income-tax Act, 1961, 132(4) 139, 153A] The assessee was signatory in a foreign the Bank Account held by the mother . Amount in the said bank account was belong to mother. The Assessing Officer levied the penalty u/s. 43A of the BMA for not disclosing the bank account in return of income. CIT(A) deleted the penalty . On appeal by the revenue the Tribunal held that, the amount held in bank account was not taxed in the hands of…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

1. This appeal, filed by the Assessing Officer, challenges the correctness of the order dated 17th December 2021 passed by the learned Commissioner (Appeals) in the matter of penalty under section 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 (hereinafter referred to as ‘ the BMA‟) for the assessment year 2017-18.

2. Grievance of the Assessing Officer, in substance and as a whole , is that the learned Commissioner (Appeals) erred in deleting the impugned penalty which was imposed on the taxpayer for not disclosing, in the income tax returns filed by the assessee under section 139, a foreign bank account in which she was a signatory for her late mother and held it in the fiduciary capacity as much , even though the money held therein did not belong to, and were not beneficially owned by, the taxpayer and that position is accepted by the authorities and has attained finality as such. The short case of the Assessing Officer is that dehors the nontaxability of the amount in the hands of the assessee and dehors the bonafide conduct of the assessee, as long as the assessee is a signatory of the undisclosed foreign bank account, and the legal owner as such, the penalty under section 43 of the BMA must be imposed. There is no dispute that the money held in the said ac count was event ually donated to a charity of global repute i.e. n amely Médecins Sans Frontières UK, in deference to the wishes of the assessee‟s late mother, that it was brought to tax in the hands of the late mother‟s legal representative, and that, at no stage, assessee used the said money in any manner whatsoever.

3. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee before us is one of the prominent businesspersons in India , chairperson of a well known pharmaceutical compan y, and she was one of the signatories to a foreign bank account, which she had not undisclosed to the Indian tax authorities until she filed her income tax returns under section 153A on 21 st April 2018. This ba nk contained a balance of UK £ 2,34,710 which was eventually donated, much before the Indian tax authorities even came to know about it, to a Noble Peace Prize awarded to charity by the name of Médecins Sans Frontières (MSF) on 9 th February 2017 - in deference to the wishes of her late mother Dr Pramila Gandhi.

On 6th July 2017, an intelligence input was re ceived by the income tax investigation wing at Mumbai, which indicated that the assessee is a signatory to a foreign bank account which may not have been disclosed to the Indian tax authorities. It is in this backdrop a search and seizure operation was carried out from 15th September 2017 to 21 st September which covered the assessee as also the other connected persons. During the course of these proceedings, the matter regarding this bank account was also probed further. Prashant Kumar Tiwari, assessee‟s husband and who was handling this account, accepted that there was a bank account with Kleinwort Benson, Guernsey .

It was also accepted that he, along with the assessee, were signatories to this account but this account actually belonged to Dr Pramila Gandhi, assessee‟s mother who passed away on 13 th August 2016. It was further submitted that in due deference to the wishes of Mrs Pramila Gandhi, the entire amount lying in the said acc ount was donated , on 9 th February 2017, to a French charity by the name of Médecins Sans Frontières. As regards the origin of funds, the explanation was as follows. On 14th January 1986, Shri Arvind V Gandhi (AVG, in short) , father of the assessee before us, had an untimely death at a rather young age of 55.

Appellant / petitioner / assessee submissions

The judgment does not separately label this side’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

It was also explained that the money has come from a legitimate source and the bank account, right from t he time she became a signatory of the same, was not at all touched , and eventually, everything in the said account was donated as per the wishes of the actual owner of the account in whose hands it is assessed to tax under the BMA anyway. It was then subm itted that everything was duly disclosed under section 132(4) of t he Income Tax Act , 1961, and, therefore, the provisions of the BMA have no application in the matter. It was then submitted that the BMA does not have any retr ospective application, as it would be violative of the provisions of Article 20(1) of the Constit ution of India.

T he Assessing Officer thus proceeded with the imposition of penalty under section 43. Aggrieved, assessee carried the matter in appeal before the CIT(A) who deleted the penalty, after noting that “the appellant is not found to be engaged in managing the account under dispute” as it is owned up by her husband , on the short ground that since “ her (the assessee’s) husband has been imposed the penalty for non -disclosure of this account whi ch has been confirmed by the CIT(A) ”, “it is held that no penalty is levia ble under section 43 of the BMIT Act in the hands of the assessee ”. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us.

4. We have heard the learned Departmental Representative, perused the material on record, as also the case record s, and duly considered facts of the case in the light of the applicable legal position. We have noted that the notice of hearing was duly served upon t he assessee but rather than appearing before us, she has forwarded the said notice, vide her letter dated 3rd March 2022, to the Assessing Officer with a request to withdra w the appeal before us. Be that as it may, we are satisfied that the adjudication on this appeal requires us to primarily deal with a couple of short points of law and an objective perception about what constitutes bonafide conduct of the assessee , within a narrow compass of the undisputed facts, and that it is a fit case for disposal on the basis of material on record and ex-parte qua the assessee.

The position s o far as undisclosed foreign income is concerned, the position is quite different inasmuch the definition of undisclosed foreign income is concerned, it is mat erially different- as provided under section 4(1)(a) and (b) of the BM A, but then right no w we are not concerned with that aspe ct of the matter . Th e observations that we make in this order here, therefore, may not have any bearings, in view of the peculiarities of that definition of the „undisclosed foreign income, particula rly with reference to „filing‟ of the return within the statutory time frame provided under the ITA and for a variety of reasons that we need not elaborate at this stage.

Viewed thus, when it comes to examining any failure on the part of the assessee in n ot disclosing a foreign bank account for the assessment year 2017 -18, i.e. the assessm ent year before us, it can indeed be said that what is to be seen is the return filed under section 153A and it is t hat return which, to b orrow the words of Hon‟ble jurisd ictional High Court, is to be “construed as one filed under section 13 9(1) of the Act and the provisions of the said Act (Income Tax Act, 1961) will apply to the same accordingl y”. Essentially, therefore, it can indeed be said that non-disclosure of the fo reign asset in the original return filed under sectio n 139, even if that be so, cannot be put aga inst the assessee, p articularly when the s aid disclosure was admittedly made i n the return filed under s ection 153A.

As regards such a non-disclosure for the earlier assessment years, which is what the learned Assessing Officer has harped upon vehemently in the impugned order, those were the assessment years that pertain to the period prior to the BMA comi ng into force, and, nothing, therefore, turns on those lapses, even if any, so far as the application of the provisions of Section 43 of the BMA is conce rned. We have also taken note of the fact that the learned Assessing Officer‟ has defended the imposition of penalty under section 43 of

Operative decision and relief

11. In the result, the appeal is dismissed. Pronounced in the open court today on the 29th day of March 2022.

Ratio and legal principle

The narrow proposition associated with ACIT v. Leena Gandhi Tiwari concerns black money (undisclosed foreign income & assets) and imposition of tax act, 2015. s. 43 : penalty for failure to furnish return of income an information, or furnish inaccurate particulars about an asset (including interest in any entity) located outside india- foreign bank account-signatory for late mother-amount was donated to the charity-not beneficial owner-mere no disclosure is not valid ground for levy of penalty-deletion of penalty was affirmed. [s. 10(3), income-tax act, 1961, 132(4) 139, 153a] the assessee was signatory in a foreign the bank account held by the mother . amount in the said bank account was belong to mother. the assessing officer levied the penalty u/s. 43a of the bma for not disclosing the bank account in return of income. cit(a) deleted the penalty . on appeal by the revenue the tribunal held that, the amount held in bank account was not taxed in the hands of… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in BMA No. 1/Mum/22.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Dismissed” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015. S. 43 : Penalty for failure to furnish return of income an information, or furnish inaccurate particulars about an asset (including interest in any entity) located outside India- Foreign Bank Account-Signatory for late Mother-Amount was donated to the Charity-Not beneficial owner-Mere no disclosure is not valid ground for levy of penalty-Deletion of penalty was affirmed. [S. 10(3), Income-tax Act, 1961, 132(4) 139, 153A] The assessee was signatory in a foreign the Bank Account held by the mother . Amount in the said bank account was belong to mother. The Assessing Officer levied the penalty u/s. 43A of the BMA for not disclosing the bank account in return of income. CIT(A) deleted the penalty . On appeal by the revenue the Tribunal held that, the amount held in bank account was not taxed in the hands of… Its practical value lies in the way the ITAT Mumbai connected the governing provisions—43—to the procedural posture and evidence before it.

The authority level is ITAT / Tribunal. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of 43 and the decision date 2022-03-29; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is ACIT v. Leena Gandhi Tiwari, the proceeding is BMA No. 1/Mum/22, and the decision is dated 2022-03-29. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Pramod Kumar (Vice President), and Rahul Chaudhury (Judicial Member). A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with 43. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Dismissed. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is RECTIFICATION_HIGH_COURT_APPEAL_SLP_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• 43 — apply the exact version considered in the judgment.

Case network

• ITO 32(2)(3) VS MAYUR R KAMDAR — ITAT Mumbai · Dismissed
• Palmon Impex Pvt. Ltd. v. ITO — ITAT Mumbai · Dismissed
• JCIT v. Aries Agro Ltd. — ITAT Mumbai · Dismissed
• ACIT v. Ranu Vohra — ITAT Mumbai · Dismissed

Related Finin2min resources

• Case Law Hub
• Search all 592 judgments
• Explore Penalty, Prosecution & Enforcement

Full judgment and source control

Read / download packaged judgment record

Source class: OFFICIAL_PRIMARY_SEARCH_PENDING · Repository status: PUBLISH_READY