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December 2023

Pains of Harsh Penalties for Bonafide Mistakes

By Dr CA Mayur B. Nayak, Editor
Reading Time 8 mins
“It is the power of punishment alone, when exercised impartially in proportion to the guilt, and irrespective of whether the person punished is the King’s son or an enemy, that protects this world and the next.” – Kautilya
 
In a recent decision, the division bench of the Mumbai ITAT, in the case of Shobha Harish Thawani,1 confirmed the levy of penalty under Section 43 of The Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015 (BMA) for non-disclosure of foreign assets in ‘Schedule FA’ of the Income-tax Return (ITR). In this particular case, the assessee had made a joint investment (with her husband) in an overseas Fund, having a 40 per cent share, but failed to disclose the said foreign asset in Schedule FA of ITR filed for A.Ys. 2016–17 and 2018–19. The assessee explained the source of the investments and offered the income thereon to tax in the ITRs. The Assessing Officer (AO) did not accept the assessee’s plea of bonafide error in disclosing such investment and levied a penalty of R10 lakh for each of the A.Ys. under Section 43 of the BMA for furnishing inaccurate particulars of investments outside India.
1   [TS-554-ITAT-2023(Mum)] dated 9th August, 2023
 

The

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