Revision Under Black Money Act Invalid Where Assessment Completed After Due Inquiry, Disclosure Accepted: ITAT

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has set aside revisionary proceedings initiated under Section 23 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, holding that once a beneficiary has made a valid disclosure of foreign assets under the one-time compliance window and the assessment has been completed after due inquiry, the Principal Director of Income-tax (Investigation) cannot reopen the matter merely on a change of opinion. The bench of Dr. B.R.R. Kumar, (Vice-President) and Siddhartha Nautiyal (Judicial Member) has observed that minutes of trustees’ meetings recorded by third parties, without corroborative evidence of actual receipt by the assessees, could not by themselves establish undisclosed foreign income or assets. The assessees had consistently denied receiving any such distributions prior to their voluntary disclosure, and no evidence of corresponding bank credits or asset acquisition was brought on record. The ruling came in a batch of appeals filed by Chintan Navnitlal Parikh and Shefali Chintan Parikh for Assessment Year 2021–22, challenging orders passed by the Principal Director of Income-tax (Investigation), Ahmedabad, revising an earlier assessment that had accepted their explanations regarding foreign trust assets. The assessees were beneficiaries of a discretionary offshore trust known as “Nutshel Trust”, settled in Jersey in 1990 by their late father, an Indian resident. The trust was managed by an independent trusteeship company, and the beneficiaries had no determinable share or decision-making powers. Following the enactment of the Black Money Act, both assessees made voluntary disclosures under Section 59 of the Act on September 29, 2015, declaring their assumed one-third beneficial interest in the trust corpus. The fair market value of the disclosed assets was computed at approximately ₹8.55 crore per beneficiary, on which tax and penalty aggregating to over ₹5.13 crore were duly paid. The disclosures were examined and accepted by the Income Tax Department, and acknowledgements under Forms 6 and 7 were issued. Subsequently, proceedings under Section 10 of the Black Money Act were initiated for AY 2021–22. During these proceedings, the assessees furnished detailed explanations, contending that they had no prior knowledge of the trust during its operative period and had never actually received any income or capital distributions before the disclosure. After examining the material on record, the Assessing Officer passed an order under Section 10(3) on May 2, 2022, accepting the returns and explanations furnished by the assessees. Nearly three years later, the Principal Director of Income-tax (Investigation) issued show cause notices under Section 23, alleging that the assessees had received income and capital distributions from the trust between 1990 and 2006, as reflected in the trustees’ meeting minutes, and that these amounts were not fully disclosed under Section 59. The revisionary authority also alleged non-disclosure of certain foreign bank accounts and indirect ownership of immovable properties in the UK through trust-owned companies, contending that beneficial interests amounting to nearly ₹20 crore had escaped assessment. Based on these allegations, the PDIT (Inv.) held that the original assessment order was erroneous and prejudicial to the interests of the Revenue. The ITAT rejected the revisionary action, holding that the twin conditions for invoking Section 23—error and prejudice to the Revenue—were not satisfied. The Tribunal noted that the Assessing Officer had conducted detailed inquiries during the original assessment proceedings and had consciously accepted the explanations offered by the assessees. The revisionary authority, the Bench observed, merely sought to substitute its own view for that of the Assessing Officer without demonstrating any lack of inquiry or jurisdictional error. The ITAT also emphasized that once a disclosure under Section 59 of the Black Money Act has been accepted by the Department and tax and penalty have been paid, the same cannot be reopened indirectly unless there is clear evidence of undisclosed assets beyond what was declared. The Bench observed that the assessees had continued to disclose their foreign interests in Schedule FA in subsequent years, negating any allegation of suppression. The Tribunal quashed the revisionary orders passed under Section 23 and restored the original assessment orders accepting the assessees’ returns. Case Details Case Title: Chintan Navnitlal Parikh Versus Principal Director of Income-tax (Investigation) Case No.: BMA No. 1/Ahd/2025 Date: 19.01.2026 Counsel For Appellant: Tushar Hemani, Sr. Advocate Counsel For Respondent: Alpesh Parmar, CIT (DR) Click Here To Read Order Read More: Union Budget 2026-27: Meet Officials Behind Sitharaman’s Budget Preparations

Revision Under Black Money Act Invalid Where Assessment Completed After Due Inquiry, Disclosure Accepted: ITAT

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Revision Under Black Money Act Invalid Where Assessment Completed After Due Inquiry, Disclosure Accepted: ITAT

Membership Required

Latest articles

Supreme Court Rules Rooh Afza as ‘Fruit Drink’; Marketing Labels Not Decisive for Tax Classification

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