January 20, 2026 : 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 is completed after due inquiry and a voluntary disclosure under the one-time compliance window is accepted, the revisionary authority cannot reopen the matter merely because it holds a different view.
A Bench comprising Dr. B.R.R. Kumar, Vice-President, and Siddhartha Nautiyal, Judicial Member, held that minutes of trustees’ meetings prepared by third parties, without corroborative evidence such as bank credits or proof of asset acquisition, are insufficient to establish undisclosed foreign income or assets. The Tribunal noted that the assessees had consistently denied receiving any income or capital distributions prior to their disclosure and that the Revenue failed to place any material evidence to contradict this position.
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, which revised an earlier assessment that had accepted their disclosures relating to foreign trust assets.
The assessees are 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 administered by an independent trusteeship company. As beneficiaries, they had no determinable shares and exercised no control over the trust’s management or decision-making.
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. Tax and penalty aggregating to over ₹5.13 crore were duly paid, and the disclosures were examined and accepted by the Income Tax Department, with acknowledgements issued under Forms 6 and 7.
Subsequently, proceedings under Section 10 of the Act were initiated for AY 2021–22. During these proceedings, the assessees explained that they had no prior knowledge of the trust during its operative period and had not received any income or capital distributions before making the disclosure. After examining the material on record, the Assessing Officer passed an order under Section 10(3) on 2 May 2022, accepting the returns and explanations.
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, based on trustees’ meeting minutes, and that these amounts were not fully disclosed under Section 59. The notices also alleged non-disclosure of foreign bank accounts and indirect ownership of immovable properties in the United Kingdom through trust-owned companies, concluding that beneficial interests of nearly ₹20 crore had escaped assessment.
The ITAT rejected the revisionary action, holding that the twin statutory requirements for invoking Section 23, namely the existence of an error and prejudice to the interests of the Revenue, were not satisfied. The Tribunal observed that the Assessing Officer had conducted detailed inquiries during the original assessment and had consciously accepted the assessees’ explanations. The revisionary authority, the Bench said, merely attempted to substitute its own opinion 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 has been accepted and tax and penalty have been paid, it cannot be reopened indirectly unless there is clear and cogent evidence of undisclosed assets beyond what was declared. It also noted that the assessees had continued to disclose their foreign interests in Schedule FA in subsequent years, which undermined allegations of suppression. Finding that the revisionary proceedings were founded on conjecture and unsupported third-party material, the ITAT quashed the 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 (along with BMA No. 2/Ahd/2025)
Coram: Dr. B.R.R. Kumar (Vice-President) and Siddhartha Nautiyal (Judicial Member)
