IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR. JUSTICE AMIT RAWAL MONDAY, 25TH DAY OF MAY 2020 / 4TH JYAISHTA, 1942 WP(C).No.10200 OF 2020(Y) PETITIONER/S: THOMAS MATHEW RESIDING AT VILLA NO.16, 33/29-N, PROMENADE, PAVOOR ROAD, PADIVATTOM, KOCHI-682024. BY ADV. SRI.ABRAHAM JOSEPH MARKOS RESPONDENT/S: 1 INCOME TAX OFFICER, NON CORP WARD 1(5), KOCHI-682018. 2 COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI- 682018. 3 UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, NEW DELHI-110001. OTHER PRESENT: SRI JOSEPH MARKOS, SR ADV FOR P , SRI P. VIJAYA KUMAR ASGI, SRI CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.05.2020, COURT ON SAME DAY DELIVERED FOLLOWING: WP(C).No.10200 OF 2020(Y) 2 JUDGMENT Petitioner in instant case sought indulgence of this Court under Article 226 of Constitution of India challenging order Ext.P8 dated 17.3.2020 of Income Tax Officer, Non-Co- operative Ward -1(5) Cochin whereby penalty of Rs.10 lakhs for assessment year 2016-17 has been imposed and further called upon to deposit same within period of 30 days. 2. According to petitioner, he was Non Resident Indian employed abroad as Bank Professional and investments made by petitioner from such income, was not liable to any tax in India. After having attained retirement, he returned to India and filed his income tax return for assessment year 2016-17 declaring total income of Rs.46,81,590/-. In meanwhile, Government of India introduced Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 (hereinafter referred to as 'Black Money Act'). Petitioner was under bonafide belief that disclosure under Schedule FA was to be made only from assessment year 2017-18, subsequently was advised even for assessment year 2016-17 to disclose details of foreign assets owned to be WP(C).No.10200 OF 2020(Y) 3 included in Schedule FA. Accordingly, petitioner filed revised return on 30-8.2018, but since period prescribed for filing revised return under Section 139(5) of Income Tax Act expired, aforementioned return was filed physically, evident from acknowledgment Ext.P3. 3. Sri.Abraham Markose, Learned Senior Counsel submits that petitioner was surprised to receive notice dated 17.9.2018 under Section 43 of Black Money Act, whereby Officer concerned contemplated to impose penalty for failure to furnish return of income and information. aforementioned notice was duly replied giving extensive details with further request to drop aforementioned penalty proceedings. Petitioner appeared and filed detailed objection on 11.3.2016 as per Ext.P6. During aforementioned hearing reliance was also laid to Central Board of Direct Tax circular No.13 dated 6.7.2016, particularly Question and Answer No.17 evident from Ext.P7. He further submitted that petitioner was astounded to receive impugned order Ext.P8 reflecting imposition of penalty of Rs.10 lakhs but urged though appeal under Section 15 of Black Money Act lies WP(C).No.10200 OF 2020(Y) 4 before Appellate authority, being creature under statute but filing of same would be futile exercise, for, as per question No.18 penalty can be only imposed only if Schedule FA is not filed. It is settled law that High Court is not bound by Circular, being only directive in nature. 4. Rule making authority cannot override or go beyond provisions of Act or spirit of law. preamble of Black Money Act aims at only to curb menace of black money. It was next contended that exclusive order under Section 43 of Act ibid cannot be imposed without there being assessment on revised returns. It is no case of any nondisclosure of assets or accumulation of any black money, therefore, alleged reasoning regarding nondisclosure is without any foundation or basis. Section 43 of Black Money Act can only apply to assets which are in nature of black money or assets for which there is no explanation as to source. Mere nondisclosure of same in Schedule FA would not make any asset or income illegally acquired as black money. 5. charging Section 3 deals with any income from WP(C).No.10200 OF 2020(Y) 5 any source outside India, which is undisclosed in return of income or value of any undisclosed assets located outside India. IT returns and Schedule FA only requires disclosure. Clause 13 and Question No.17 of Circular 15 reported on 6.7.2016 ibid conforms that report in Schedule FA would not bring to tax to such undeclared assets, whereas in instant case, assets have acquired out of non-taxable income earned by assessee, while he was non-Resident and thus non- reporting of such non-taxable assets cannot attract penalty as contemplated under section 43 of Act. Clarification given in Paragraph 18 of circular ibid is vague and not in accordance with provisions of Act or Income tax Act. Rule making authority cannot for sake of repetition override or go beyond provisions of Act or spirit of law. 6. Petitioner was under bonafide belief that disclosure of Schedule FA was only necessary for assessment year 2017-2018, whereas Act was only introduced in assessment year 2016-17. Petitioner filed revised return rectifying defects during assessment year 2016-17, but almost 1 and months after filing of revised returns. WP(C).No.10200 OF 2020(Y) 6 Thereafter, petitioner was served with notice dated 17.9.2018. It is settled law that where assessee had not committed intentional error by bonafide or inadvertent, in other words, there was no willful intention, thus, penalty cannot be imposed. 7. I have heard learned Counsel for parties and appraised paper book and as well provisions of law, referred to above. I am of view there is no force or merit in submission. 8. aforementioned Black Money Act came into force in year 2016, whereas charging Section 3, which is extracted herein below came into force after April, 2016 specifying charging of tax on every assessee for every assessment year, post 1st April 2016. Section 3 Charge of tax (1) There shall be charged on every assessee for every assessment year commencing on or after 1st day of April, 2016 subject to provisions of this Act, tax in respect of his total undisclosed foreign income and asset of previous year at rate of thirty per cent of such undisclosed income and asset. Provided that undisclosed asset located outside India shall be charged to tax on its value in previous year in which such asset comes to notice of Assessing Officer. WP(C).No.10200 OF 2020(Y) 7 (2) For purpose of this section value of undisclosed asset means fair market value of asset (including financial interest in any entity) determined in such manner as may be prescribed. 9. As per Section 11 (2) undisclosed asset located outside India means asset (including financial interest in any entity) located outside India, held by assessee in his name or in respect of which is beneficial owner, and has no explanation about source of investment in such asset or explanation given to him is in opinion of Assessing Officer unsatisfactorily. 10. assessment proceedings are provided under Section 10 of Act. procedure for assessment has been prescribed under Sections 10, 11 and 12 of Act and remedy of appeal before Commissioner of Appeal is under Section 15 and procedure to be followed in appeal is under Section 16 and powers of Commissioner is under section 17. 11. As per Section 18, appeal to appellate Tribunal would lie against order passed under Section 15. provisions of appeal would also applicable in any proceedings initiated under Section 43 of Act, which is reproduced below, WP(C).No.10200 OF 2020(Y) 8 which empowers tax officer to initiate proceedings of imposition of penalty on account of failure to furnish any incorrect particulars about asset including financial interest in any entity located outside India. Section 43 Penalty for failure to furnish in return of income, information or furnish inaccurate particulars about asset (including financial interest I any entity) located outside India. - If any person, being resident other than not ordinarily resident in India within meaning of clause (6) of section 6 of Income Tax Act, who has furnished return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as beneficial owner or otherwise, or in respect of which he was beneficiary, or relating to any income from source located outside India, at any time during such previous year, Assessing Officer may direct that such person shall pay, by way of penalty, sum of ten lakh rupees: Provided that this section shall not apply in respect of asset, being one or more bank accounts having aggregate balance which does not exceed value equivalent to five hundred thousand rupees at any time during previous year Explanation value equivalent in rupees shall be determined in manner provided in Explanation to section 42. WP(C).No.10200 OF 2020(Y) 9 This clause relates to penalty for failure to furnish in return of income, information or furnish inaccurate particulars about asset (including financial interest in any entity) located outside India. This Clause seeks to provide that if any person being resident other than not ordinarily resident in India within meaning of clause (6) of section 6 of Income-tax Act, who has furnished return of income for any previous year under sub-section (1) or sub section (4) or sub-section (5) of section 139 of he said Act, fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset (including financial interest in any entity) located outside India, held by him as beneficial owner or otherwise, or in respect of which he was beneficiary, or relating to any income from source located outside India, at any time during such previous year, Assessing Officer may direct that such person shall pay penalty of ten lakh rupees. said clause further provides that no penalty shall be levied in respect of asset, being one or more bank accounts having aggregate balance which does not exceed value equivalent to five hundred thousand rupees at any time during previous year. 12. No doubt Circular has no binding force and therefore, challenge to circular cannot be ground to negate plea of petitioner. But fact remains that whether impugned order reflects adherence to provisions of circular of 2015 ibid or in terms of WP(C).No.10200 OF 2020(Y) 10 provisions of Black Money Act, this Court under Article 226 of Constitution of India cannot exercise role of appellate authority defined under Black Money Act to deal with controversy if brought into motion. Petitioner is well within right to assail aforementioned order, as impugned order is dated 17.3.2020 and limitation in instant case expired during lock down but as per Government directive and judgment of Full Bench of this Court limitation prescribed already stood extended. Petitioner if so advised shall be at liberty to assail aforementioned order. Any observation hereinabove would not prejudice right of petitioner in case remedy is availed. In view of what has been noticed, this writ petition sans merit and accordingly, dismissed. Sd/- AMIT RAWAL JUDGE Jm/ WP(C).No.10200 OF 2020(Y) APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF ACKNOWLEDGMENT FOR INCOME TAX RETURN FILED FOR AY 2016-17. EXHIBIT P2 TRUE COPY OF BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015. EXHIBIT P3 TRUE COPY OF RETURN AND ACKNOWLEDGEMENT OF POSTAL RECEIPT. EXHIBIT P4 TRUE COPY OF NOTICE DATED 17.9.2018 ISSUED UNDER SECTION 43 OF BLACK MONEY ACT. EXHIBIT P5 TRUE COPY OF REPLY DATED 17.9.2019 FILED BY PETITIONER. EXHIBIT P6 TRUE COPY OF REPRESENTATION DATED 11.3.2020. EXHIBIT P7 TRUE COPY OF CBDT CIRCULAR NO.13 OF 2015 DATED 6.7.2015. EXHIBIT P8 TRUE COPY OF ORDER DATED 17.3.2020. Thomas Mathew v. Income-tax Officer, Non Corp Ward 1(5), Kochi / Commissioner of Income-tax, Kochi / Union of India, New Delhi