• No penalty u/s 43 of BM Act can be imposed for non-disclosure of foreign asset (foreign bank account) in ITR, where-

• The amount was not assessee’s unexplained investment as, though held in her name, they represented her deceased mother’s tax paid monies held by assessee in fiduciary capacity and hence it was not ‘undisclosed foreign asset’ as defined in section 2(11) of the BM Act;

• The assessee’s bona fide conduct in not using any of that money for herself as she was a fiduciary and had donated it to a reputed global charity as per the wishes of her deceased mother.

• Tax officer’s stand is that de hors the non-taxability of the amount in the hands of the assessee and de hors the bona fide conduct of the assessee, as long as the assessee is a signatory of the undisclosed foreign bank account, and the legal owner as such, the penalty must be imposed. This stand of department cannot be accepted.

• Undoubtedly, the Assessing Officer has discretion in the matter, this discretion is to be exercised having regard to the facts of each case in a fair, objective and judicious manner and without losing sight of the bigger picture

• The bona fides actions of the taxpayers must, therefore, be excluded from Penalty

[2022] 136 taxmann.com 409 (Mumbai – Trib.) Leena Gandhi Tiwari