Bona fide mistake by elderly taxpayer in using simplified ITR form exempts them from Black Money Act non-disclosure penalties.

By | June 19, 2026
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Bona fide mistake by elderly taxpayer in using simplified ITR form exempts them from Black Money Act non-disclosure penalties.

Issue

Whether a harsh penalty under Section 43 of the Black Money Act, 2015 can be sustained for the non-disclosure of foreign bank accounts against an 80-year-old taxpayer who mistakenly used ITR-1 (Sahaj), paid full taxes on the foreign interest, and had no note or column in that specific form alerting him to his reporting ineligibility.

Facts

  • Background of the Taxpayer: The assessee is an 80-year-old individual who lived and worked in the UK from 1966 to 1994 before returning to reside permanently in India.

  • Legitimate Foreign Assets: He maintained bank deposits in the UK and Germany funded entirely by his past overseas salary. He consistently declared the interest earned from these accounts in his Indian tax returns and paid the applicable income taxes.

  • The Filing Error: For the Assessment Year 2019-20, the assessee filed his tax return using the simplified ITR-1 (Sahaj) form. This specific form lacked a dedicated Foreign Assets (FA) schedule, and the form itself carried no introductory warning stating that residents owning foreign bank accounts were legally barred from using it.

  • Penalty Actions: Because the foreign bank accounts were not reported under the statutory disclosure framework, the Assessing Officer treated the omission as a strict compliance breach and levied a penalty under Section 43 of the Black Money Act.

Decision

  • Absence of Concealed/Black Money: Held in favour of assessee. The assets in question were transparent, legitimately earned during his decades of overseas employment, and completely free of any association with laundered or concealed income.

  • Bona Fide Technical Mistake: Held in favour of assessee. An octogenarian taxpayer cannot be expected to navigate intricate technicalities when the government-prescribed ITR-1 form lacked the necessary disclosure columns or explanatory warnings. His belief that paying full tax on the interest income fulfilled his compliance duties was entirely bona fide. Consequently, the penalty under the Black Money Act was ordered to be completely deleted.

Key Takeaways

  • Form Design Deficiencies Protect Taxpayers: If a simplified tax form provided by the IT department lacks the structural mechanism to report an asset, and does not clearly state its own usage restrictions, the revenue cannot penalize a taxpayer for a technical filing error.

  • No Intent, No Penalty: The Black Money Act is intended to punish systemic tax evasion and hidden wealth. When a taxpayer transparently pays income tax on the revenue generated by an asset, a technical omission in asset scheduling does not warrant severe penal prosecution.

IN THE ITAT JAIPUR BENCH ‘B’
Shiva Shankar Mathur
v.
DDIT/ADIT (Inv.)*
Sanjay Garg, Judicial Member
and Ratnesh Nandan Sahay, Accountant Member
BMA No. 02 (JPR) of 2025
[Assessment Year: 2019-20]
MAY  26, 2026
Rohan Sogani, CA for the Appellant. Gaurav Awasthi, JCIT for the Respondent.
ORDER
Sanjay Garg, Judicial Member.- The present appeal has been preferred by the assessee against theorder of Ld. Commissioner of Income Tax, (Appeals),(hereinafter referred to as “Ld. CIT(A)”)dated 20.03.2025passed u/s 43of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as “BMA Act”).
2. The assessee in this appeal is aggrieved by the action of Ld. CIT(A) in confirming the penalty levied by the Assessing Officer (in short, “the AO”) u/s 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to as “BMA Act”) for non-disclosure of the Foreign Asset in the return of income.
3. At the outset, the learned Counsel for the assessee has submitted that the assessee is an 80 years old person; that had he worked in UK from 1966 to 1994 and thereafter shifted to India. That the assessee had deposits in bank accounts in UK and Germany made out of the income earned during his stay and work in these countries; that the assessee earns interest income thereupon. After 1994, the assessee has been residing in India and has become tax resident of India. The assessee has been duly disclosing the interest income earned on the said deposits lying in the Foreign Banks and duly paying the due taxes in India. As the assessee was advised, a person who has income from other sources only and no business or professional income, is supposed to file his return of income in ITR Form 1 (Sahaj). This is a simplified form for the persons who have not to claim any business deductions, exemptions etc. In the ITR Form 1, for the assessment year under consideration, (A.Y. 2019-20), there was no mention that the said Form No.1 was not applicable to the persons who have Foreign Assets or deposits in Foreign Banks. Even there was no column in the ITR 1 under which the assessee was supposed to declare the said deposits in the Foreign Bank. That this ITR Form 1 was later on amended. The assessee in this respect produced on file the ITR Form 1 (Sahaj) for Assessment Year 2025-26, wherein, it has been specifically mentioned that this Form is not for an individual who has assets including financial interest in any entity located outside India; however, there is no such mention in the ITR Form 1 for Assessment Year 2019-20. The learned counsel for the assessee has submitted that the assessee was not aware that the assessee has to fill some other ITR form having column about the Foreign Deposit/Assets and that there was no intentional non-compliance of any provisions of the BMA Act.
4. We have considered the rival submissions. Though, as per the Section 6 of the BMA Act, the assessee was supposed to declare the Foreign Assets in his return of income, the nondisclosure of which invites penalty u/s 43 of the Act, however, it is to be noted that the ‘Black Money Act’ was introduced in the statute to curb the practice of concealment of offshore income and assets created out of the Black Money in Foreign Countries, and that is why, an assessee who is resident of India has been directed to disclose his Foreign Assets in the return of income, and a failure to which, invites penalty u/s 43 of the Act. In the case, in hand, the Foreign Assets of the assessee are not out of any black money transferred from India or out of any concealed income earned in Foreign Country. The assessee had bank deposits in his Foreign Country, upon which the assessee is earning interest income and the interest income is duly disclosed by the assessee in his returns of income and due tax are duly paid upon the said interest income. The assessee was of bona fide belief that there was no other requirement for the assessee to disclose his Foreign Assets and there was even no column or note in the prescribed form requiring the assessee to disclose said Foreign Asset/Deposits. Though, apparently it appears a violation of provision of Section 43 of Black Money Act, however, the above facts and circumstances of the case would show that it is not the case of a person who has earned any black money in offshore Country or who has concealed his Foreign Assets deliberately to avoid tax liability in India. It is a case of bona fide mistake on the part of an old aged person, who was not aware of technicalities of the BMA Act and even there was no note or separate column in the prescribed ITR Form 1 for mentioning such foreign assets. The said form was, admittedly, amended later on to insert such note. Therefore, the overall facts and circumstances of the case, suggest that it is not a fit case for levying any such penalty against the assessee under the Black Money Act. Considering the peculiar facts and circumstances of the case, the impugned penalty is order to be deleted. However, the observations made above in the case of the assessee will not be having any binding precedent as the same are given in the peculiar facts and circumstances of the case of the assessee.
5. With the above observations, the impugned penalty is order to be deleted.
6. In the result, the appeal of the stands allowed