Black money provisions cannot be invoked for minor breach of law: Mumbai ITAT

Additional Commissioner of Income Tax vs Leena Gandhi Tiwari. [TS-5399-ITAT-2022(Mumbai)-O].

 

Short Overview of the case:

Facts:

 1. The AO had imposed penalty under Sec 43 of The Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015

 2. This penalty was imposed for not disclosing, in the income tax returns filed by the assessee under section 139 of the IT Act, a foreign bank account in which she was a signatory for her late mother, 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.

 3. The money held in the said account was eventually donated to a charity in deference to the wishes of the assessee’s late mother and 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.

Mumbai ITAT held as below:

 1. The well-intended harsh laws meant for checking the economic offenders, stashing their ill-gotten monies abroad, must not be invoked for punishing a venial breach of the law by a bonafide businessperson.

 2. Unless there are sufficient prima facie reasons to at least doubt bonafides well demonstrated by the assessee, an assessee cannot be visited with penal consequences.