Background of the Case

The Respondent, an individual, filed her return of income for Assessment Year 2018-19 declaring total income of Rs.3,40,540. The case was later reopened under Section 147 of the Income Tax Act, 1961 on the ground that the Respondent had received an immovable property valued at Rs.3,03,43,440 through a registered gift deed, which, according to the Appellant, did not fall within the definition of “specified relatives” under Section 56(2) of the Act.

During reassessment proceedings, the Respondent initially offered the value of the property to tax as “income from other sources” but subsequently filed a revised computation contending that the property was received pursuant to a family settlement and was therefore not taxable. The Assessing Officer rejected the claim and made an addition of Rs.3,03,43,440 under Section 56(2)(vii)(b) of the Act.

On appeal, the First Appellate Authority accepted the Respondent’s contention and held the transaction to be a genuine family settlement. Aggrieved by this finding, the Appellant preferred the present appeal before the ITAT.

Arguments by the Appellant (Revenue)

The Appellant challenged the order of the First Appellate Authority by contending that the alleged family settlement was a concocted story created only to bypass the provisions of Section 56(2) of the Act. According to the Appellant, since the donor did not fall within the statutory definition of “relative,” the value of the property was rightly taxable as income from other sources. The Appellant further argued that the registered gift deed clearly evidenced a transfer without consideration and, therefore, squarely attracted the deeming provisions of Section 56(2)(vii)(b) of the Act.

Respondent’s Response (Assessee)

The Respondent submitted that the immovable property was not received as a gratuitous gift but pursuant to a bona fide family settlement. It was contended that the property was transferred by her brother-in-law, Dr. Ravi Aggarwal, son of late Shri A.D. Aggarwal, in fulfillment of the dying wish of his father, who intended that a portion of his property should devolve upon the family of his brother, late Shri Sahdev Prasad Aggarwal, the father-in-law of the Respondent.

The Respondent further argued that the family settlement was entered into to recognize antecedent rights and interests of family members and that the registered gift deed was merely a formal document executed to perfect legal title. It was also submitted that the earlier declaration of the amount as income was made under erroneous professional advice, which was later rectified during the assessment proceedings.

Court Findings and Decision

The Delhi Bench of the ITAT upheld the order of the First Appellate Authority and dismissed the appeal filed by the Appellant. The Tribunal observed that although the Respondent initially offered the value of the property to tax, she had subsequently revised her claim during assessment proceedings, which was duly considered by the First Appellate Authority. The Appellant had not challenged the discretion exercised by the First Appellate Authority in admitting the revised claim.

The Tribunal further noted that the family settlement was duly explained before the Assessing Officer, but no adverse comment was made on its genuineness. The execution of the gift deed was held to be a mere formality to effectuate the family settlement and could not be treated as an independent taxable transfer.

The Tribunal also held that, in substance, the property was received from family members constituting a Hindu Undivided Family, and therefore, even otherwise, the deeming provisions of Section 56(2) were not attracted. Accordingly, it was concluded that no addition could be made in the hands of the Respondent.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

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As the world becomes more interconnected, it’s increasingly common for Indian residents to have financial interests abroad—whether it’s a bank account in the UK, inherited property in Canada, or mutual fund investments in the US.

But with this global exposure comes a critical tax responsibility that’s often overlooked: reporting foreign assets in your Indian Income Tax Return (ITR).

Unfortunately, many Indian taxpayers—knowingly or unknowingly—make costly mistakes in this area. In this blog, we’ll unpack what foreign asset reporting entails, highlight the most common errors, and show you how to stay compliant (and penalty-free).

WHAT IS FOREIGN ASSET REPORTING IN INDIA?

Under the Income Tax Act, 1961, Indian residents are mandated to disclose all foreign assets and foreign income when filing their ITR—specifically under Schedule FA (Foreign Assets).

You must report:

• Foreign bank accounts (even if dormant)
• Shares and securities held overseas
• Foreign real estate
• Trusts or entities where you are a beneficiary
• Any other foreign financial interest

Important: Only Residents and Ordinarily Residents (ROR) are required to report foreign assets. Non-Resident Indians (NRIs) and Resident but Not Ordinarily Residents (RNORs) are typically exempt.

TOP 5 FOREIGN ASSET REPORTING MISTAKES INDIAN RESIDENTS MAKE

1. Ignoring Dormant or Low-Balance Accounts

Think your foreign bank account doesn’t need to be reported because it’s inactive or has just INR 50? Think again.

The law requires you to disclose all foreign accounts, regardless of the balance or activity status. Even if it’s a joint account with a relative or was used years ago, it must be declared.

2. Failing to Report Inherited Foreign Assets

A common myth:

“I inherited that house in Canada—I didn’t buy it, so I don’t needto report it.”
Wrong.

If the foreign asset is still in your name, it must be reported under Schedule FA—regardless of how you acquired it.

3. Thinking Only Foreign Income Needs Disclosure

Many Indian taxpayers mistakenly believe they only need to report foreign income, not the assets themselves. This is a costly misunderstanding.

Asset disclosure and income reporting are two separate obligations. Even if you’ve paid taxes abroad, the asset itself still needs to be disclosed in India.

4. Relying on Inexperienced Tax Preparers

Foreign asset reporting is complex. Unfortunately, many local CAs or tax preparers lack experience with international tax laws.

If your advisor tells you, “You don’t need to disclose unless you’re earning big money abroad,” it’s a red flag. Always consult a specialist with international tax expertise.

5. Skipping Schedule FA Altogether

This one’s more common than you’d think. Even diligent taxpayers sometimes file their ITR but miss out Schedule FA entirely.

This is a serious compliance failure. The Income Tax Department may treat it as non-filing or misreporting, which can lead to

• Penalties of ₹10 lakh or more
• Prosecution in extreme cases

The Black Money Act: Why This Isn’t Just a Small Mistake

In 2015, the Indian government introduced the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act—commonly called the Black Money Act.

Key highlights:

• A flat 30% tax on undisclosed foreign income/assets
• No deductions or set-offs allowed
• Penalties and prosecution (up to 10 years) for willful default
• Authorities can reopen past assessments

This law is a serious attempt to clamp down on undisclosed foreign wealth—and it’s working.

How to Get Compliant (Before It’s Too Late)

If you’ve missed disclosures in the past, don’t panic—but do act now:

1. Collect all documents related to foreign assets, even dormant ones
2. Consult a qualified CA or tax advisor who understands foreign asset reporting
3. File a revised return or use the Updated Return (u/s 139(8A)) provision if applicable
4. Consider voluntary disclosure options (if available)

Delaying further can expose you to severe penalties and legal action.

Final Thoughts: Don’t Let Silence Cost You

Holding foreign assets isn’t the problem—not reporting them is.

With global data-sharing agreements like FATCA (with the US) and CRS (Common Reporting Standard), Indian tax authorities are getting automatic updates on your foreign holdings. Sooner or later, undeclared assets will come to light.

Whether it’s an old account, a small investment, or inherited property—disclose it.
Stay compliant. Stay stress-free.

Need Help?

FOREIGN ASSET REPORTING

If you’re unsure about your foreign asset obligations, don’t rely on guesswork. Speak to a tax advisor with cross-border experience and ensure you’re fully protected.

Because when it comes to foreign assets, silence is not golden—it’s expensive.

The post FOREIGN ASSET REPORTING: THE COSTLY MISTAKES MANY INDIAN RESIDENTS MAKE appeared first on Tax Unplug.

Revenue vs. Himanshu Gupta [Black Money Appeal No. 15 of 2023]

Background of the Case

The appellant, Mr. Himanshu Gupta, who was subject to a search and seizure operation by the Income Tax Department on 28 November 2017, targeting the Vrindawan Group entities and individuals connected to it. During the search, it was found that Mr. Gupta held a 5% shareholding in a Hong Kong-based company called Innovation Worldwide Ltd. (IWL), an investment allegedly made many years ago. The Department noted that this investment was not disclosed in the Income Tax Return (ITR) for Assessment Year (AY) 2016–17, leading to the claim that it was an undisclosed foreign asset under the Black Money Act (BMA).

Additionally, the Assessing Officer discovered a debit note issued by IWL for USD 200,000 to a third party, which was also treated as an undisclosed foreign asset and added as income for AY 2019–20. The appellant contested these findings, arguing that the investment was disclosed in earlier years and that the debit note did not represent an asset owned by him.

Arguments by the Appellant

The appellant submitted that the investment in IWL was made much earlier, specifically during AY 2007–08, and the funds used for this investment were remitted abroad under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), which was a legitimate method of transferring funds outside India. At that time, the appellant had disclosed the investment in the ITR filed for AY 2007–08, including a note mentioning this foreign investment. Furthermore, the appellant contended that subsequent ITRs filed, even after notices under Section 153A of the Income Tax Act, also contained disclosures about this foreign company. Regarding the debit note of USD 200,000, the appellant argued that this did not represent any claim of ownership or a receivable from any party and therefore could not be classified as an undisclosed asset.

The appellant emphasized that mere issuance of a debit note without corresponding evidence of entitlement or control did not amount to undisclosed income or assets.

Respondent’s Response

The Income Tax Department rejected the appellant’s contentions by asserting that since the shareholding in IWL was not reflected in the ITR filed for AY 2016–17, it constituted an undisclosed foreign asset subject to taxation under the BMA. The Department pointed out that the appellant failed to correctly report the foreign asset in the relevant schedules of the later years’ returns, which was deemed to be concealment. On the matter of the debit note for USD 200,000, the Revenue considered it as a foreign asset that should have been disclosed and taxed accordingly.

The department relied on the technical non-reporting of the foreign shareholding and the alleged existence of the debit note as clear evidence of concealment and suppression of material facts, thus warranting additions to the appellant’s taxable income.

Court Findings and Decision

The ITAT New Delhi accepted the appellant’s submissions, noting that the investment in IWL was disclosed in AY 2007–08 through appropriate notes in the ITR, even though the Schedule FA (Foreign Assets) was not applicable then. The CIT(A) observed that since the appellant had made the disclosure in the earliest year when the investment was made, it could not be considered as concealed. Furthermore, the prosecution complaint filed under the BMA was dismissed by the Tis Hazari Court due to lack of evidence for willful concealment or suppression, which strengthened the appellant’s case. The ITAT upheld the CIT(A)’s decision, emphasizing that mere non-filing of schedules in subsequent years, when the schedule did not exist or was not mandatory, did not amount to concealment.

The Tribunal also ruled that the Revenue had failed to establish any ownership or claim on the debit note of USD 200,000, so it could not be taxed as undisclosed income. Thus, the ITAT dismissed the Revenue’s appeal, effectively confirming that the appellant was not liable for the additions made under the Black Money Act or the Income Tax Act on these grounds.

To download official order, Click Here

Black Money Act-ITAT Himanshu Gupta Case 2023

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post ITAT Quashes Addition under Black Money Act: Prior Disclosure in ITR Validates No Concealment despite Omission of Schedule FA appeared first on Tax Unplug.

Revenue vs. M/s.Vetrivel Minerals (VV Minerals) [WA (MD) No.119 to 123 of 2022]

Background of the Case

The case arose from a series of writ appeals filed by the Assistant Commissioner of Income Tax, challenging a common order passed by a Single Judge of the Madras High Court. The dispute stemmed from income tax assessments conducted against M/s. Vetrivel Minerals (VV Minerals) and M/s. Vijay Cements following search operations carried out in October 2018. The Income Tax Department had issued notices under Sections 153A and 143(2) of the Income Tax Act, 1961, and subsequently passed assessment orders in June 2021, making substantial additions to the income of the firms. The respondent filed writ petitions before the High Court, alleging violations of natural justice, including non-furnishing of crucial documents (such as 101 panchnamas) and reliance on statements recorded without allowing cross-examination. The Single Judge allowed the writ petitions, quashing the assessment orders and directing fresh assessments with specific procedural safeguards.

Arguments by the Appellant (Income Tax Department)

The Revenue, represented by its standing counsel, contended that the writ petitions should not have been entertained due to the availability of an alternative remedy under Section 246A of the Income Tax Act, which permits appeals before the Commissioner (Appeals). Relying on the Supreme Court’s decision in Commissioner of Income Tax v. Chhabil Dass Agarwal, the Revenue argued that High Courts should not interfere in tax matters when statutory appellate mechanisms exist. The Department also defended the validity of the assessment proceedings, asserting that all necessary documents had been made available to the respondent and that the principles of natural justice were substantially complied with. Additionally, the Revenue challenged the Single Judge’s finding that electronic evidence had to comply strictly with Section 65B of the Indian Evidence Act, contending that income tax proceedings are not bound by such technical rules of evidence.

Respondent’s Response (Respondent)

The respondent supported the Single Judge’s order, emphasizing that the assessment orders were passed in violation of natural justice. They highlighted that key documents, including panchnamas and statements of third parties, were not provided, depriving them of a fair opportunity to defend themselves. The respondent also argued that electronic evidence relied upon by the Department was inadmissible without certification under Section 65B of the Evidence Act. They maintained that the case fell within the exceptions outlined in Chhabil Dass Agarwal, warranting judicial intervention under Article 226 of the Constitution. The respondents further contended that the Single Judge’s directions for a fresh assessment were necessary to ensure a fair and transparent process.

Court Findings and Decision

The Division Bench of Madras High Court set aside the Single Judge’s order, ruling that the respondent should have exhausted the statutory appellate remedy before approaching the High Court. The Bench reaffirmed the principle laid down in Chhabil Dass Agarwal and earlier precedents, stressing that writ jurisdiction should not be invoked when an effective alternative remedy exists. While acknowledging the exceptions to this rule, such as cases involving blatant violations of natural justice, the Court held that the respondent had not demonstrated sufficient grounds to bypass the appeal process.

On the issue of electronic evidence, the Bench clarified that income tax authorities are not strictly bound by Section 65B of the Evidence Act, as assessment proceedings are quasi-judicial in nature and not governed by formal rules of evidence. However, the Court directed the Department to furnish copies of all 101 panchnamas to the respondent within three weeks, enabling them to pursue their appeals effectively. The respondent were granted four weeks thereafter to file appeals before the Commissioner (Appeals), with all legal and factual issues left open for adjudication, except the applicability of Section 65B.

In conclusion, the writ appeals were allowed, and the assessment orders were restored, subject to the respondent’ right to challenge them in appellate proceedings.

To download official order, Click Here

Section 65B Certificate in Income Tax

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Section 65B Certificate Not Mandatory in Income Tax Assessment Proceedings appeared first on Tax Unplug.

Revenue vs. Agfa India Pvt. Ltd. [Income Tax Appeal No. 1857 of 2018]

Background of the Case

This case pertains to the reassessment proceedings initiated by the Revenue for the Assessment Year 2007–08. Agfa India Pvt. Ltd., the respondent had originally filed its return of income for the said year, which was duly assessed under Section 143(3) of the Income Tax Act, 1961. Subsequently, the Assessing Officer issued a notice under Section 148 to reopen the assessment, relying on certain findings made by the Transfer Pricing Officer (TPO) in the respondent’s case for the Assessment Year 2008–09. The TPO had made transfer pricing adjustments in the subsequent year, which, according to the AO, indicated that income might have escaped assessment in the earlier year as well. Based on this reasoning, the AO sought approval and reopened the assessment under Section 147, culminating in an addition being made to the respondent’s income.

Arguments by the Appellant

The appellant, Revenue argued that the reassessment was valid since the AO had “reason to believe” that income chargeable to tax had escaped assessment, triggered by the adjustment made by the TPO in the next assessment year. The department maintained that this constituted fresh tangible material, justifying the reopening under Section 147. It was contended that the AO acted upon credible inputs received through the TPO’s order for AY 2008–09 and that proper sanction for issuing notice under Section 148 had been obtained from the competent authority. The department insisted that the reassessment was neither arbitrary nor mechanical, and that the AO had relied upon relevant information that became available after the original assessment was completed.

Respondent’s Response

In response, the respondent argued that the reassessment was not based on any new material specific to the Assessment Year 2007–08, but merely on findings from a later year, which could not be retroactively applied to reopen a concluded assessment. It was submitted that the AO had not conducted any independent examination of the facts or transactions for AY 2007–08, and the satisfaction recorded under Section 147 was not based on his own judgment, but rather on borrowed conclusions from the TPO and higher officials. The respondent highlighted that the reassessment proceedings were vitiated by lack of application of mind and failure to identify any concrete basis for escapement of income in the year under review. Thus, the reopening of assessment was alleged to be without jurisdiction.

Court Findings and Decision

The Bombay High Court, after examining the records, upheld the findings of the Income Tax Appellate Tribunal and dismissed the appeal filed by the Revenue. The Court observed that the Assessing Officer had failed to form an independent belief that income had escaped assessment in AY 2007–08. The belief was solely based on the TPO’s adjustment in AY 2008–09 and certain communications received from the higher authorities, which could not be construed as fresh tangible material relevant to AY 2007–08.

The Court reiterated that the “reason to believe” under Section 147 must be of the Assessing Officer alone and must be based on material specific to the assessment year sought to be reopened. The absence of such material and the lack of independent application of mind rendered the reassessment invalid. Accordingly, the Court held that the initiation of proceedings under Section 147 was without jurisdiction and dismissed the Revenue’s appeal.

To download official order, Click Here

Bombay HC upholds ITAT order

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The post Bombay High Court Upholds ITAT Order: Invalid Reassessment Due to Lack of Independent Application of Mind appeared first on Tax Unplug.

Nayanaben Hasmukhbhai Patel & Ors. vs. Revenue [Special Civil Application No.14635 of 2024]

Background of the Case

A search and seizure operation conducted by the Income Tax Department at the premises of petitioner no. 3, Anandkumar Hasmukhbhai Patel. During the proceedings, jewellery worth Rs. 77.82 lakh was discovered, of which Rs. 42.86 lakh was accepted under CBDT Instruction No.1916 as belonging to his family members and not seized. However, the remaining jewellery worth Rs. 34.96 lakh along with Rs. 7 lakh in cash was seized under Section 132 of the Income Tax Act. Subsequently, the jewellery was subjected to scrutiny during the assessment for AY 2014–15. Though a partial relief of ₹15 lakh was granted, the Assessing Officer added Rs. 19.96 lakh to the taxable income of petitioner no. 3.

This addition was later deleted in full by the CIT(A) on 02.04.2019, a decision that reached finality as no appeal was filed by the department. Despite this, the Income Tax Department did not release the entire seized jewellery, prompting the petitioners to approach the Gujarat High Court under Article 226 of the Constitution.

Arguments by the Appellant

The appellant argued that once the addition had been deleted by the CIT(A), and the penalty amount under Section 271(1)(c) had been duly paid, there remained no outstanding tax liability for AY 2014–15. They contended that the Department’s continued retention of jewellery worth Rs. 16.33 lakh, especially after releasing a portion worth Rs. 18.63 lakh to petitioner no.1, was unjustified. It was also emphasized that the jewellery in question was not owned by petitioner no.3, but by his wife and mother, as evidenced by a joint affidavit submitted on 07.11.2024.

The petitioners invoked Section 132B of the Income Tax Act, asserting that the seized assets could only be retained against liabilities pertaining to the relevant assessment year, and not for future demands. Relying on both statutory provisions and precedents, they pleaded for the immediate release of the remaining seized jewellery and sought interest compensation for the undue retention.

Respondent’s Response

The respondent, Revenue argued that a substantial outstanding demand of Rs. 3.36 crore existed against petitioner no.3 for subsequent assessment years, and that the remaining jewellery was being rightfully retained to safeguard recovery of these dues. The Department took the stand that despite the relief granted for AY 2014–15, the assets were lawfully being adjusted against the petitioner’s overall liability. Thus, they sought validation of the order dated 12.11.2024, through which the partial release of jewellery had been made, while the remainder was retained as security for future recoveries.

Court Findings and Decision

The Gujarat High Court held that the Income Tax Department could not retain jewellery seized for one assessment year against liabilities arising from other assessment years, especially when the assessment in question had concluded without any outstanding demand. The Court noted that the CIT(A)’s order had attained finality and that there was no pending liability for AY 2014–15. Furthermore, the department’s reliance on general instructions could not override the specific statutory limitations of Section 132B as it stood at the relevant time. The Court directed the respondents to release the remaining jewellery and dismissed the justification for withholding the same against unrelated tax dues.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Gujarat High Court Directs Release of Seized Jewellery; Disallows Adjustment Against Unrelated Tax Liabilities of Other Assessment Years appeared first on Tax Unplug.

Shree Sarkhej Kelwani Mandal vs. Revenue [Special Civil Application No. 6003 of 2021]

Background of the Case

The appellant had filed its return for the Assessment Year 2018-19, declaring nil income while claiming exemption based on its charitable activities. Along with the return, the trust submitted an audit report in Form 10B, as required under Section 12A(b) of the Act. However, due to an inadvertent error by the Chartered Accountant, certain financial figures were incorrectly reported in the audit report. A revised audit report was filed, correcting the discrepancies. Despite this, the Income Tax Department processed the original return under Section 143(1) and issued an intimation order, denying the exemption.

Subsequently, the case was selected for scrutiny assessment, and a notice under Section 143(2) was issued. The appellant responded by explaining the reasons for the revised audit report. However, the Assessing Officer issued a show-cause notice on 27th February 2021, proposing an addition of Rs. 4.75 crore by denying exemption benefits. The appellant sought an adjournment to file a detailed response, requesting time until 11th March 2021. However, the Assessing Officer ignored this request and passed the final assessment order on 4th March 2021, confirming the proposed addition. Aggrieved by this violation of natural justice, the appellant approached the Gujarat High Court.

Arguments by the Appellant

The appellant vehemently argued that the denial of exemption and the hasty passing of the assessment order were arbitrary and illegal. The AO violated principles of natural justice by refusing to grant reasonable time to respond to the SCN. The appellant argued that the revised audit report had already rectified the initial clerical errors, and the Department’s refusal to consider it was contrary to the scheme of the Income Tax Act. It was also submitted that the penalty order passed during the pendency of the High Court’s stay demonstrated willful disregard for judicial authority, amounting to contempt of court.

Furthermore, the appellant also highlighted systemic failures in the Income Tax Department, including defective software that failed to reflect adjournment requests and non-compliance with court orders.

Respondent’s Response

The respondent, Revenue initially defended the assessment order, asserting that the appellant had failed to comply with procedural requirements under the Income Tax Act. It was argued that the revised audit report was filed belatedly, and hence, the denial of exemption was justified.

The Department acknowledged lapses in its handling of the case. It admitted that the Assessing Officer had overlooked the adjournment request due to technical glitches in the e-filing portal, which failed to synchronize the request with the case records. The Department also tendered an unconditional apology for the penalty order passed in violation of the High Court’s stay, stating that it was an unintentional oversight.

Court Findings and Decision

The Gujarat High Court, held that the assessment order was passed in blatant violation of natural justice, as the appellant was denied a reasonable opportunity to present its case. The judges observed that three days’ time to respond to a complex tax demand was grossly inadequate, and the Assessing Officer’s refusal to grant an adjournment was arbitrary. Regarding the penalty order, the court strongly condemned the Department for flouting the interim stay, terming it a serious contempt of judicial authority. The penalty order was quashed outright, and the court directed the Department to ensure strict compliance with judicial orders in the future.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Gujarat High Court Quashes Reassessment Order Passed in Blatant Violation of Natural Justice: Assessee Denied Reasonable Opportunity to Present Case appeared first on Tax Unplug.

Prasad Nimmagadda vs. Revenue [Black Money Appeal No. 2 of 2024]

Background of the Case

The appellant, Prasad Nimmagadda filed his ITR but failed to disclose certain foreign assets for the Assessment Year 2017-18. The appellant not disclosed assets included investments in foreign entities and residential properties. The Assessing Officer levied a penalty of Rs. 10 lakh under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA Act) for this non-disclosure, which was later upheld by the Commissioner of Income Tax (Appeals). The appellant approached the ITAT Hyderabad, seeking relief on the grounds that the omission was inadvertent and not deliberate.

Arguments by the Appellant

The appellant, contended that the failure to disclose foreign assets in the ITR for AY 2017-18 was an unintentional oversight. He argued that the investments in question had been consistently reported in previous and subsequent years, demonstrating that there was no attempt to conceal information. Additionally, he emphasized that the sources of these investments had been fully explained and accepted by the tax authorities during assessment proceedings, confirming that there was no undisclosed income involved. The appellant further submitted that the stringent provisions of the BMA Act should not be applied mechanically, especially in cases where the taxpayer has acted in good faith and rectified the omission voluntarily.

Respondent’s Response

The respondent, Revenue defended the imposition of the penalty, asserting that Section 43 of the BMA Act mandates strict consequences for non-disclosure of foreign assets, irrespective of the taxpayer’s intent. The respondent argued that the appellant failed to report these assets in the designated Schedule FA of the ITR constituted a clear violation of statutory obligations. The respondent maintained that the Assessing Officer had the discretion to impose penalties in such cases and that the appellant had not provided sufficient evidence to prove that the omission was beyond his control. They emphasized that the BMA Act was enacted to combat black money and that leniency in its application could undermine its effectiveness.

Court Findings and Decision

The ITAT Hyderabad ruled in favor of the appellant, setting aside the penalty. The Tribunal observed that the non-disclosure was a bona fide error, given that the same assets had been consistently reported in other assessment years. It noted that the AO had accepted the legitimacy of the investments during the assessment proceedings, indicating that there was no attempt to evade taxes. The ITAT referenced its earlier decision in Ocean Diving Centre Ltd., where it was held that penalties under the BMA Act should not be levied for inadvertent omissions.

The Tribunal also relied on the Telangana High Court’s judgment in Mylan Laboratories, which underscored the importance of judicial discipline and the need to avoid mechanical application of penalties in cases involving technical breaches.

ITAT Black Money Penalty

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post ITAT Sets Aside Penalty in Black Money Case: Non-Disclosure Was Inadvertent and the Technical Lapses Shouldn’t Attract Harsh Penalties appeared first on Tax Unplug.

Paying income tax is a crucial responsibility for every taxpayer in India. Whether you are paying Self-Assessed Tax (due at the time of filing ITR if additional tax is payable) or Advance Tax (paid in instalments during the financial year), the process can be completed online easily. This guide provides detailed, step-by-step instructions to help you navigate the online tax payment system.​

Understanding Self-Assessment Tax and Advance Tax

Self-Assessment Tax: This is the tax you pay when filing your Income Tax Return (ITR) if the total tax liability exceeds the sum of taxes already paid through Tax Deducted at Source (TDS) and advance tax. It covers any remaining tax payable for the financial year.​

Advance Tax: Also known as “pay-as-you-earn” tax, advance tax is paid during the financial year in instalments, based on your estimated income. If your total tax liability exceeds 10,000 in a financial year, you’re required to pay advance tax.​

However, a resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from a business or profession is not liable to pay advance tax.

Prerequisites for Online Tax Payment

Before proceeding, ensure you have:

• A valid Permanent Account Number (PAN) of the person for which you are paying Income Tax.
• Access to net banking or other online payment methods.​
• Accurate calculation of the tax amount to be paid.​

Step-by-Step Guide to Paying Taxes Online

1. Visit the official e-Filing portal: https://www.incometax.gov.in/iec/foportal/

2. On the homepage, locate the ‘Quick Links’ section

3. Navigate to the ‘e-Pay Tax’ Section

4. Enter the PAN of the person for which you are paying Income Tax and Mobile Number for OTP verification and click ‘Continue’.

5. Enter the 6-digit OTP received on mobile number to verify.

6. Select the Tax Payment Type ‘Income Tax’ and click ‘Proceed’.

7. Now, If You are paying “Self-Assessment Tax”, select the relevant Assessment Year (e.g., A.Y. 2025-26 for income earned in F.Y. 2024-25) and choose ‘Self-Assessment Tax (300)’.​

8. For Advance Tax, select the relevant Assessment Year and choose ‘Advance Tax (100)’.​ (e.g., If you are paying advance tax for F.Y. 2025-26, select A.Y. as 2026-27)

9. Enter the amount under the relevant column. (e.g. If you are paying ‘Tax’ than enter the same in Tax Column). Late fee under 234F can be paid through ‘Others’ section.​

10. After filing payable amount under appropriate column, click ‘Continue’.

11. On the next window, you have to choose the payment method. Select your preferred payment option and click ‘Continue’.

12. Review all entered details for accuracy and click on ‘Pay Now’. If details are incorrect, you can edit the details by clicking on ‘Edit’.

13. Agree to the terms and conditions and click ‘Submit to Bank’ to proceed.

14. You’ll be redirected to your chosen bank’s portal.​ Log in and authorize the payment.

15. Upon successful transaction, you will be redirected back to Income tax portal and a challan counterfoil with the Challan Identification Number (CIN) will be generated.

16.Download and Save the Challan Receipt for your records.

17. The format of the challan receipt is as follows:

Important Points to Remember

• Timely Payment: Ensure advance tax instalments are paid by their respective due dates to avoid interest penalties under Sections 234B and 234C of the Income Tax Act.​
• Accurate Calculation: Use the Income Tax Department’s tax calculator or consult a tax professional like ‘Taxunplug’ to determine the correct tax amount.​
• Record Keeping: Maintain copies of all challans and receipts as proof of payment.​

Important Deadlines for Advance Tax Payments

FAQs on Income Tax Payment (How to Pay Self-Assessed Tax )

Q. What is Self-Assessed Tax and Advance Tax?

Self-Assessment Tax is paid at the time of filing your Income Tax Return (ITR) if an additional tax liability is identified. Applicable when TDS/TCS or advance tax paid is less than the actual tax liability.

Q. Can we verify tax payment in AIS, TIS & Form 26AS?

Yes You can verify your payment of income tax in AIS & TIS by visiting at AIS portal or at TDS portal to check the same in 26AS.

Q. Can I pay advance tax in one instalment?

Yes, but paying in instalments avoids interest penalties.

Q. What if I miss an advance tax deadline?

You can pay later, but interest will apply.

Q. How long does it take for tax credit to reflect in Form 26AS?

Usually it will take 3 to 4 working days.

Paying Self-Assessed Tax or Advance Tax online is quick and hassle-free if you follow the correct steps. Always verify payments in Form 26AS and keep challan receipts safely for future reference. If you need further assistance, consider consulting a tax professional like Taxunplug by dropping your Name, Email and Phone No. Our team of experts will take care of all the sticky things and helps to take timely action, and ensure compliance to avoid legal complications.

How to Pay Self-Assessed Tax and Advance Income Tax Online

The information provided in above blog is for general informational only and should not be considered as legal or tax advice. Request you to please follow latest updated in reference to above details. We advise to consult with a qualified tax professional such as “Taxunplug” for all your tax needs.

The post How to Pay Self-Assessed Tax and Advance Income Tax Online in India – A Step-by-Step Guide appeared first on Tax Unplug.

Shantilal Bachubhai Rita vs. Revenue [Income Tax Appeal No. 2356 of 2024]

Background of the Case

The appellant, Shantilal Bachubhai Rita filed his ITR for the AY 2017-18, declaring a total income of Rs. 3,66,480. The appellant earned income from salary, business, and other sources, including interest income. During scrutiny, the AO observed that while the appellant reported interest income of Rs. 20,39,731, and claimed a deduction of Rs. 1,20,39,731 under Section 57(iii) of the Income Tax Act, 1961, for interest expenses, resulting in nil income under “Income from Other Sources.” The AO disallowed the entire deduction, arguing that the expenditure lacked nexus with the interest income. The disallowance was upheld by the Commissioner of Income Tax (Appeals), prompting the appellant to appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai.

Arguments by the Appellant

The appellant contended that the borrowed funds were exclusively used to lend money to a company where he served as a director, and the interest paid on these borrowings was directly linked to the interest income earned. He provided detailed computations showing that the interest expense was proportionately allocated to interest-bearing loans advanced to the company. The appellant emphasized that the AO and CIT(A) ignored this precedent and failed to substantiate their claim that the arrangement was a “colorable device.”

The appellant also relied on a prior ITAT order in his own case for AY 2020-21 (ITA No. 3406/Mum/2024), where a similar disallowance was deleted. The Tribunal in that case held that the interest expenditure was incurred wholly and exclusively for earning interest income, satisfying Section 57(iii).

Respondent’s Response

The respondent, defended the disallowance, arguing that the appellant loan transactions lacked commercial purpose. Further the revenue submitted that the borrowed funds were diverted to a related company merely to claim deductions, not for genuine business needs. The Revenue also highlighted discrepancies in the appellant loan utilization, noting that 28.3% of borrowed funds were diverted to non-interest-bearing investments, undermining the exclusivity requirement under Section 57(iii). The Revenue contended that the CIT(A) correctly dismissed the claim as a tax-avoidance strategy.

Court Findings and Decision

The ITAT Mumbai ruled in favor of the appellant, and held that the borrowed funds were directly deployed for interest-earning loans, and the appellant had voluntarily disallowed Rs. 23,34,069 (proportionate to non-interest-bearing loans). Relying on the co-ordinate bench’s decision in the appellant own case, the Tribunal held that the interest expenditure met the Section 57(iii) criteria of being “wholly and exclusively” for earning interest income. The ITAT deleted the addition of Rs. 1,20,39,731, observing that the AO and CIT(A) failed to rebut the appellant evidence or justify departing from the precedent.

ITAT Mumbai Allows Deduction u/s 57(iii)

To download official order, Click Here

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