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ITAT Quashes ₹1.84 Crore Black Money Penalty Over Notice Error
A procedural mistake in a Section 10(1) notice led the ITAT to cancel a ₹1.84 crore penalty under the Black Money Act, reinforcing jurisdictional requirements.
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The Income Tax Appellate Tribunal (ITAT) in Delhi struck down a ₹1.84 crore penalty imposed under the Black Money Act on a Gurugram resident, ruling that the tax officer lacked jurisdiction because the notice omitted the correct assessment year.
Bhowmick, who works in Singapore and lives in DLF Magnolias, Gurugram, received $3,14,608.15 in March 2016 from redeeming a Bermuda-focused global investment fund. He had invested $300,000 from his Singapore salary in May 2015, according to The Economic Times. The Income Tax Department treated the redemption as unexplained black money for assessment year 2019-20, taxed its fair market value at 30% under Section 3(1) of the Black Money Act, and added a penalty of ₹1.84 crore.
The tax officer sent a notice under Section 10(1) on November 1, 2018. That notice listed only AY 2016-17 and AY 2017-18. It did not mention AY 2019-20, the year for which the tax officer later made the assessment, Bhowmick's lawyers and chartered accountant argued before the ITAT.
Bhowmick had stopped responding to show-cause notices after the Commissioner of Appeals turned down his appeal, the report said. He then filed an appeal before the ITAT Delhi, where judicial member Satbeer Singh Godara and accountant member Reenu Jauhri heard the case and delivered their judgment on August 11, 2026.
Before the ITAT, Bhowmick raised a jurisdictional objection. Because the Section 10(1) notice did not cover AY 2019-20, the assessing officer had no jurisdiction to frame an assessment for that year, his legal team argued.
The Income Tax Department countered that the omission was a mere error in mentioning and was protected by Section 81 of the Black Money Act, which can cure procedural defects. The department said the original notice had been issued by the competent officer to the correct taxpayer and concerned the same foreign asset. Bhowmick participated in subsequent proceedings and knew which foreign investment was under examination, so the incorrect reference was a procedural defect, not a jurisdictional failure, the department argued.