Revision Under Black Money Act Invalid Where Disclosure Accepted After Due Inquiry; ITAT Ahmedabad Quashes Section 23 Proceedings
Sangeetha Prathap
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 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 an assessment has been completed after due inquiry and a voluntary disclosure under the one-time compliance window has been accepted, the revisionary authority cannot reopen the matter merely on a change of opinion.
The Bench comprising Dr. B.R.R. Kumar (Vice-President) and Siddhartha Nautiyal (Judicial Member) observed that minutes of trustees’ meetings recorded by third parties, in the absence of corroborative evidence such as bank credits or asset acquisition, cannot by themselves establish undisclosed foreign income or assets. The Tribunal noted that the assessees had consistently denied receiving any income or capital distributions prior to their voluntary disclosure and that no material evidence contradicting this position was brought on record.
The ruling arose from 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 disclosures relating to 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 neither determinable shares nor any role in decision-making or management of the trust.
Following the enactment of the Black Money Act, both assessees made voluntary disclosures under Section 59 on 29 September 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 stating that they had no prior knowledge of the trust during its operative period and had never actually received any income or capital distributions prior to the disclosure. After examining the material placed on record, the Assessing Officer passed an order under Section 10(3) on 2 May 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 trustees’ meeting minutes, and that these amounts were not fully disclosed under Section 59. Allegations were also made regarding non-disclosure of foreign bank accounts and indirect ownership of immovable properties in the United Kingdom through trust-owned companies, leading to a conclusion that beneficial interests of nearly ₹20 crore had escaped assessment.
Based on these allegations, the revisionary authority 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 statutory conditions for invoking Section 23—existence of an 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 defect.
The Tribunal further emphasized that once a disclosure under Section 59 of the Black Money Act has been accepted and tax and penalty have been paid, the same cannot be reopened indirectly unless there is clear and cogent evidence of undisclosed assets beyond what was declared. It was also noted that the assessees had continued to disclose their foreign interests in Schedule FA in subsequent years, which negated any allegation of suppression. Holding that the revisionary proceedings were founded on conjectures and third-party material unsupported by evidence of actual receipt, the ITAT quashed the revisionary orders passed under Section 23 and restored the original assessment orders accepting the assessees’ returns.
Cause Title: Chintan Navnitlal Parikh Versus Principal Director of Income-tax (Investigation)
Case No.: BMA No. 1/Ahd/2025
Coram: Dr. B.R.R. Kumar (Vice-President) and Siddhartha Nautiyal (Judicial Member)
