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ABOUT THE AUTHORS
I-5
Dr. RAJ K. AGARWAL
Dr. RAKESH GUPTA
Dr. RAJ K. AGARWAL
Dr. RAKESH GUPTA
PREFACE
After having authored two books earlier on the topic “Law relating to Income Tax Search & Seizure” and “Taxation of Real Estate Developers and Joint Development Arrangement” between landowners and real estate developers and complex income tax issues emerging therefrom, we are pleased to present our third book discussing the law and critical tax issues relating to Black Money Act, 2015. Black Money Act, 2015 has been enacted by the legislature providing stringent provisions regarding undisclosed foreign income & assets possessed by the person being Ordinarily Resident in India. It was intended to curb and penalize the practice of keeping assets and deposits outside the country in illegal manner. The provisions regarding taxation, penalty and prosecution relating to undisclosed foreign income & assets were earlier administered by the Income-tax Act, 1961. Though the obligation for declaring foreign income & assets and paying taxes thereon by filing income tax return is still within the purview of the Income-tax Act, 1961 but the assessment and penal provisions have now been provided separately by enacting Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. As per this Act, there is no time barring limit for making assessment and re-assessment of undisclosed foreign income and assets. Moreover, undisclosed foreign assets under this Act are required to be assessed at the present market value and not at the historical cost.
The provisions of this Act are very significant for the persons being Resident in India and the persons who convert from Non-Resident to Ordinarily Resident in India as per the Income Tax Act, provided they have any foreign income and/or assets. Under this Act, there is obligation for declaring all the foreign assets kept overseas in the income tax return filed every year.
I-7
As this is new law, there is little judicial precedence and interpretation available relating to various issues emerging out of the provisions of this Act and the law is in the evolving stage. We have tried to comprehend the possible critical issues emerging out of various provisions of this Act and have rendered our considered opinion on such issues. In due course of time, more clarity on the interpretation of various provisions of this Act will emerge from the decisions by Hon’ble Courts. There may be some more issues or difference of opinion regarding the interpretation of various provisions of this Act. We welcome and invite suggestions from the esteemed readers which would be very useful for sharing the knowledge and further value enhancement of this book.
Dr. RAJ K. AGARWAL Dr. RAKESH GUPTA
I-8
I-9 About the authors I-5 Preface I-7 1 INTRODUCTION BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX ACT, 2015 1.0 1 1.1 1 1.2 3 1.3 4 1.4 4 1.5 7 1.6 7 1.7 8 i 8 ii 8 iii 9 iv 9 1.8 9 1.9 11 CONTENTS
CHARGE, SCOPE & COMPUTATION OF TOTAL UNDISCLOSED FOREIGN INCOME & ASSET (SECTIONS 3, 4 & 5)
I-10 2 APPLICABILITY & DEFINITIONS (SECTIONS 1 & 2) 2.1 15 2.2 15 2.3 15 2.4 17 2.5 17 i 18 ii 18 iii) 19 iv 19 v 20 2.6 11 20 i 20 ii 20 iii 20 iv 21 v 24 vi 24 2.7 12 25 2.8 13 26 2.9 15 26
3
3.1 27
I-11 3.2 27 3.3 27 i 27 ii 28 iii 29 iv 29 v 30 vi 30 vii 33 viii 34 ix 34 3.4 35 3.5 35 3.6 36 3.7 37 3.8 38 3.9 39 3.10 40 i 40 ii 41 iii i.e. 42 iv 46 v 48 vi 49
I-12 vii 50 viii - 52 ixi.e., 53 x 53 xi 55 xii 55 xiii 56 xiv qua 56 xv 57
I-13 xvi 57 xvii 58 xviii 59 xix 59 xx a ii b 60 xxi 61 xxii ii b61 xxiii 62
I-14 xxiv 11 62 xxv 63 4 TAX AUTHORITIES (SECTIONS 6 TO 9) 4.1 64 4.2 65 4.3 66 4.4 68 i - 68 ii 68 iii 68 iv 69 v 69 5 ASSESSMENT (SECTIONS 10 TO 14) 5.1 70 5.2 72 5.3 74
I-15 5.4 76 5.5 77 i77 ii 78 iii 78 iv 79 v 79 vi 79 vii 80 viia - 81 viii 82 ix 82 x 83
I-16 xi 83 xii 84 xiii - 84 xiv - 84 xv 84 xvi 85 xvii 87 xviii 88 xix 88
I-17 6 APPEAL & REVISION (SECTIONS 15 TO 29) 6.1 89 6.2 97 6.3 100 6.4 101 i 101 ii 101 iii102 iv qua 102 v 103 vi 104 7 RECOVERY OF TAX & INTEREST (SECTIONS 30 TO 40) 7.1 105 7.2 111 7.3 114 7.4 114 i 114
Charge, Scope & Computation of Total Undisclosed Foreign Income & Asset (Sections 3, 4 & 5)
3.1 TEXT OF SECTION 3
Charge of tax
3. 1 There shall be charged on every assessee for every assessment year commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent of such undisclosed income and asset:
Provided that an undisclosed asset located outside India shall be charged to tax on its value in the previous year in which such asset comes to the notice of the Assessing Officer.
2 For the purposes of this section, “value of an undisclosed asset” means the fair market value of an asset including financial interest in any entity determined in such manner as may be prescribed.
3.2 NOTES ON CLAUSES
Clause 3
3.3 SALIENT FEATURES OF SECTION 3
(
i) Applicable to whom?
a person, –– being a resident in India within the meaning of section 6 of the Income-tax Act, 1961 in the previous year; or
being a non-resident or not ordinarily resident in India within the meaning of clause of section 6 of the Income-tax Act, 1961 in the previous year, who was resident in India either in the previous year to which the income referred to in section 4 relates; or in the
-
CHAPTER 3 27
previous year in which the undisclosed asset located outside India was acquired.
‘Assessee’ means a person being a resident other than non-ordinarily resident in India within the meaning of clause of section 6 of the Income Tax Act by whom tax in respect of undisclosed foreign income and assets, or any other sum of money, is payable under this Act and includes every person who is deemed to be an assessee in default under this Act.
Para 3.3 28
alia, i.e.
inter
i.e.
(ii) Purpose of amendment in the definition of ‘Assessee’
(iii) Applicable from which Assessment year?
(iv) “Total Undisclosed Foreign Income and Assets of the Previous Year”
29 Para 3.3
i.e.
-
(
v) Undisclosed foreign income- Meaning thereof
(
vi) ‘Undisclosed asset located outside India’- Meaning thereof
Para 3.3 30 a b c a b
a b -
a
31 Para 3.3
b i in transitu
b a
Para 3.3 32 ii in transitu c d e i ii f g h i j k l m ex delicto
33 Para 3.3 c d e (vii) “Of the Previous Year”-
(viii) Value of undisclosed foreign asset
“Rule 3(1)( ) of BMA provides that for the purposes of chargeability of tax under section 3(2), the fair market value of an account with a bank shall be, ( ) the sum of all the deposits made in the account with the bank since the date of opening of the account; or ( ) where a declaration of such account has been made under Chapter VI and the value of the account as computed under sub-clause ( ) has been charged to tax and penalty under that Chapter, the sum of all the deposits made in the account with the bank since the date of such declaration subject to the proviso that ‘where any deposit is made from the proceeds of any withdrawal from the account, such deposit shall not be taken into consideration while computing the value of the account’. Whether rule 3(1)( ) is on the statute or not, this is the right way, even from a common-sense perspective discussed earlier. It is not the case that it is because of rule 3(1) ( ) that a bank account is being treated as an asset under section 2( ). Rule or no rule, the position would be the same. [Para 94]”
(ix) Applicable Tax Rate
Para 3.3 34
Rashesh
132
193
141
-
Manhar Bhansali v. Addl. CIT [2021]
taxmann.com 20/[2022]
ITD
(Mum.
Trib.)
3.4 TEXT OF SECTION 4
Scope of total undisclosed foreign income and asset
4. 1 Subject to the provisions of this Act, the total undisclosed foreign income and asset of any previous year of an assessee shall be,— the income from a source located outside India, which has not been disclosed in the return of income furnished within the time specified in to sub-section 1 or under sub-section 4 or sub-section 5 of section 139 of the Income-tax Act; the income, from a source located outside India, in respect of which a return is required to be furnished under section 139 of the Income-tax Act but no return of income has been furnished within the time specified in to sub-section 1 or under sub-section 4 or sub-section 5 of section 139 of the said Act; and the value of an undisclosed asset located outside India.
2 Notwithstanding anything contained in sub-section 1 , any variation made in the income from a source outside India in the assessment or reassessment of the total income of any previous year, of the assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C or section 57 to section 59 or section 92C of the said Act, shall not be included in the total undisclosed foreign income.
3 The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act.
3.5 NOTES ON CLAUSES
Clause 4—
35 Para 3.5
3.6 SALIENT FEATURES OF SECTION 4
Explanation 2
Para 3.6 36 ab c
a a b
bc d
AUTHOR : RAJ K. AGARWAL, RAKESH GUPTA
PUBLISHER : TAXMANN
DATE OF PUBLICATION : MAY 2023
EDITION : 2nd Edition
ISBN NO : 9789357780278
NO. OF PAGES : 316
BINDING TYPE : PAPERBACK
