Failure by Dept to Consider Assesee’s Email: Delhi HC quashes Penalty Order under BMA [Read Order]

The Delhi High Court has quashed the penalty order under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA) since the department failed to consider the assessee’s email.

Prateek Chitkara, the petitioner/assessee has challenged the penalty order dated March 29, 2023, passed by the department under Section 41 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The petitioner/assessee filed an appeal against the quantum levy, which is pending before the Commissioner of Income Tax (Appeals).

The record shows that before the penalty order was passed, a show cause notice dated March 2, 2023, was issued under Section 41 of the B.M. Act. As per Section 41 of the Act, the AO may direct that in a case where Assessment is done under Section 10, the assessee shall pay a penalty of 3 times the tax i.e. 90%. There is a flat rate of the penalty prescribed under this Act, unlike the minimum or maximum limits of the penalty prescribed under the Income Tax Act. There is no concept of waiver of penalty on account of reasonable cause as available under Income Tax Act. The assessee filed a reply on March 9, 2023, albeit via email.

The assessee contended that Section 46(4)(b) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 requires that the penalty order should have been passed by the officer who is in the rank of Assistant Commissioner, Deputy Commissioner, Assistant Director, or Deputy Director with the approval of the Joint Commissioner or the Joint Director.

The two-judge bench comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has observed that Section 46(4)b) of the B.M. Act was not articulated in the reply filed by the petitioner/assessee on 09.03.2023.

The Court set aside the impugned penalty order, with a direction to the concerned authority to conduct a de novo exercise.  

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