The Classic Partners LLP

Assessment Under the Black Money Act

End-to-end representation in assessment proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Our Chartered Accountants advise residents holding undisclosed foreign assets, reply to notices under Sections 8 and 10, prepare reconciliations, and defend assessment orders levying tax at 30% along with steep penalties.

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What is Assessment Under the Black Money Act?

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the "BMA") is a special statute targeting undisclosed foreign income and undisclosed foreign assets of persons resident in India. The BMA operates independently of the Income Tax Act, 1961, with its own charging section (Section 3), assessment machinery, penalty regime, and prosecution provisions.

Assessment under Section 10 of the BMA is the formal proceeding by which the Assessing Officer determines the undisclosed foreign income and the value of undisclosed foreign assets of an assessee, computes tax at the flat 30% rate (without surcharge or cess), and imposes penalties — typically 3 times the tax under Section 41 — in addition to potential prosecution under Sections 50 to 58.

Common Triggers for BMA Assessment

Information received under the FATCA / CRS / AEOI information exchange framework from foreign tax authorities.
Disclosures from Panama Papers, Pandora Papers, Paradise Papers, or other leaked datasets.
Search and seizure proceedings under Section 132 of the Income Tax Act revealing foreign assets.
Information from Enforcement Directorate (ED) under PMLA or FEMA proceedings.
Non-disclosure of foreign assets / income in Schedule FA / Schedule FSI of the Income Tax return.
Information from international cooperation under DTAA / TIEA exchanges.

Our BMA Assessment Defence Services

Notice Review

Detailed analysis of Section 8 / 10 notice — period, allegations, jurisdiction, and limitation.

Residency & Scope

Verification of residential status and applicability of BMA — non-residents fall outside the BMA.

Source Documentation

Compilation of source-of-funds documentation for foreign assets and remittances.

Reply & Submissions

Written replies with legal grounds, factual reconciliations, and case-law support.

Hearing Representation

Personal hearing representation before the Assessing Officer and Joint / Additional CIT.

Appeal Continuity

Appeals before CIT(A), ITAT (BMA bench), High Court, and Supreme Court where required.

Key Provisions of the Black Money Act

Section 3: Charge of tax — 30% flat rate on undisclosed foreign income and value of undisclosed foreign assets, with no surcharge or cess and no deduction of expenses.
Section 4: Scope of total undisclosed foreign income and asset — covers income and assets of residents.
Section 8: Notice requiring production of accounts and documents.
Section 10: Assessment by the Assessing Officer after enquiry and hearing.
Section 11: Time limit for completion of assessment (2 years from the end of the FY in which notice was issued, subject to exceptions).
Section 41: Penalty for undisclosed foreign income / asset — 3 times the tax computed under Section 3.
Sections 50–58: Prosecution provisions, with imprisonment up to 7 years.

Why BMA Assessment is Different from Income Tax Assessment

The 30% tax is on the entire value of the foreign asset, not just the income — for assets, the previous year's market value is taxed.
No deductions / exemptions / set-off / carry-forward are available.
The penalty of 3 times the tax is in addition to the tax, taking total exposure to 120% of asset value.
Prosecution is more readily attracted and carries longer imprisonment than under the Income Tax Act.
The limitation under Section 11 starts from the FY of notice — practically allowing reopening of very old foreign assets.
Voluntary disclosure under earlier compliance windows (closed) is no longer available — the only path now is to defend or settle.

Why Choose The Classic Partners

Deep BMA defence experience — covering FATCA / CRS data, leaked-dataset notices, and search-driven cases.
Integrated team — CAs, residency analysts, and senior counsel for litigation.
Discreet engagement — confidential handling of sensitive disclosures and reconciliations.
Continuity to assessment of other person and technical defences where appropriate.

Frequently Asked Questions

Does the Black Money Act apply to non-residents?

No. The BMA applies only to persons who are resident in India under Section 6 of the Income Tax Act (other than not-ordinarily-resident, subject to a separate analysis). Non-residents and their foreign income / assets fall outside the BMA. Residential status verification is therefore a critical first step in any BMA notice.

What is taxed under the BMA — the income or the asset?

Both. Undisclosed foreign income is taxed at 30%. For undisclosed foreign assets, the previous year's fair market value is treated as taxable income and taxed at 30%. This means the entire value of a foreign asset can be taxed, not just the income from it.

What is the time limit for BMA assessment?

Section 11 of the BMA prescribes a time limit of 2 years from the end of the financial year in which the notice was issued, subject to exclusions for stayed proceedings and certain other situations. Importantly, the BMA does not prescribe an outer limit on how far back a foreign asset can be reached.

What is the penalty in addition to tax?

Section 41 imposes a penalty of three times the tax computed under Section 3. With a 30% tax and a 90% penalty, the combined exposure is 120% of the foreign asset value or undisclosed foreign income. Additional penalties under Section 43 (for non-disclosure in return) and prosecution under Sections 50 to 58 are separate.

Is there an appellate remedy against BMA assessment?

Yes. Appeals lie to the Commissioner (Appeals) under Section 15, and then to the Income Tax Appellate Tribunal (BMA bench) under Section 18, and further to the High Court and Supreme Court on substantial questions of law.

Can disclosure now reduce exposure?

The one-time compliance window under Chapter VI of the BMA (June–September 2015) is closed. Today, any disclosure is voluntary outside that scheme and does not reduce the 30% tax or 3-times penalty. However, in a live notice scenario, proper documentation, cooperation, and well-grounded defence can materially affect quantum and may help avoid prosecution.

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