Non disclosure of Foreign assets or exempt income in ITR
- There are various Incomes which are exempted from the levy of income tax in the hands of the person who is receiving the amount. Not disclosing the exempt Income in ITR is not the correct manner to file an Income Tax Return and this may have some consequences. These Incomes are required to be disclosed in Schedule EI in the Income Tax Return (ITR).
- Mere non-disclosure of exempt income in ITR wouldn't amount to escaped income - (ACIT v. Swastic Safe Deposit and Investments Ltd. -  118 taxmann.com 94 (SC))
- The assessee, out of ignorance or inadvertence has omitted to mention the details of exempt income in the relevant ‘Schedule EI’. So, the ignorance of the assessee or inadvertent mistake committed by the assessee should not come in his way in claiming exemption, which is otherwise allowable under the Act.(Goodwill Management Pvt. Ltd. Vs DCIT (ITAT Bangalore) Appeal Number : ITA No. 670/Bang/2020)
- 4. Mere non-disclosure of a foreign asset in the income tax return, by itself, is not a valid reason for a penalty under the Black Money Act, if the source of investment is well explained by the assessee.Unless there are sufficient prima facie reasons to at least doubt the bonafides well demonstrated by the assessee, an assessee cannot be visited with penal consequences. The bona fide actions of the taxpayers must, therefore, be excluded from the application of provisions of such stringent legislation as the BMA.Additional Commissioner of Income Tax Central Range 1, Mumbai Versus Leena Gandhi Tiwari (29 March, 2022)
- AO’s order imposing penalty under sec. 270A is appealable before CIT(A):Section 246A(1)(q) specifically includes “an order imposing a penalty under chapter XXI”. Chapter XXI of the Income Tax Act, 1961 covers Sections 270 to 275. Thus, Section 270A dealing with underreporting and misreporting of income is duly covered.Therefore, the appeal against an order imposing penalty under section 270A, as passed by the AO, is appealable before the Commissioner (Appeals).
- No concealment penalty even for not disclosing income in ITR if shown in balance sheet - Assessee, in the instant case, has not concealed the income deliberately (particularly in the light of the fact that advances have been shown in the balance sheet filed even along with the original return) and therefore, is not liable for imposition of penalty under Section 271(1)(c) of the IT Act. PCIT Vs Trisha Krishnan (Supreme Court),01/04/2019
- As far as imposition of penalty under the IT Act is concerned, there is a legal presumption against Assessee and it is for the Assessee to prima facie show bonafides in that regard. The moment the Assessee shows the same, the onus shifts to the Revenue to establish that the concealment was deliberate and willful.
- 8. Penalty will not be imposed merely because it was lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judiciously and on consideration of all the relevant circumstances.