No prosecution under BMA for non-disclosure of assets (except immovable property) up to 20 Lakhs

No prosecution under Black Money Act for omission to disclose assets (other than immovable property) of value up to Rs. 20 Lakhs – CBDT Instruction

Central Board of Direct Taxes (CBDT) had issued an Instruction vide F. No.285/46/2021/IT (lnv.V)/645 dated 15.03.2022 clarifying  that  prosecution under section 49 and/or 50 of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act,2015 (“BMA, 2015”) shall not be initiated in cases where penalty under section 42 and/or 43 of the BMA, 2015 is not imposed or imposable, in relation to assets covered under the proviso to aforesaid sections i.e. an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to Rs. 5 lakh at any time during the previous year.

The said instruction was aimed to protect individuals holding foreign accounts with minor balances that might not have been reported due to oversight or ignorance, by providing that non-disclosure of such accounts will not attract penalty or prosecution.

The Finance (No.2) Act. 2024 has substituted the proviso to section 42 and 43 of the BMA, 2015 w.e.f 01.10.2024 to provide that this section shall not apply in respect of an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed twenty lakh rupees.

The said amendment has expanded the scope of assets (not limited to bank accounts), which are not amenable to penalty provisions under section 42 and/or 43 of the BMA, 2015. However, the existing Instruction dated 15.03.2022 continues to provides protection from prosecution proceedings only in respect of foreign bank accounts.

In view of the above amendment, the CBDT, in order to provide relief from institution of prosecution proceedings under section 49 and/or 50 of BMA, 2015, in respect of asset(s) covered under the proviso to penalty provisions under section 42 and 43 of BMA. 2015, has amended the Instruction dated 15.03.2022.

Accordingly, in exercise of powers under section 84 of the BMA, 2015 read with section 119 of the Income Tax Act, 1961 (the Act) the CBDT has amended Instruction dated 15.03.2022 to direct that prosecution proceedings under section 49 and/or 50 of BMA, 2015, would not be initiated in cases where penally under section 42 and/or 43 of the BMA, 2015 is not imposed or imposable in relation to assets covered under the proviso to aforesaid sections i.e an asset or assets (other than immovable property) where the aggregate value of such asset or assets does not exceed a value equivalent to Rs.20 lakh at any time during the relevant previous year.

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