Rs 2.25-crore notice under Black Money Act to Delhi couple over Singapore, British Virgin Islands assets: ITAT Delhi gave full relief to taxpayer, know why

The Income Tax Department issued tax notices regarding black money to Mr and Mrs Tiwari, a couple from Pitampura, Delhi, on the suspicion that they held shares of foreign companies registered in the British Virgin Islands and Singapore as well as foreign bank accounts. The Tiwaris chose to contest this black money tax notice and after nearly four years, they finally won the case in the Income Tax Appellate Tribunal (ITAT) Delhi H Bench.

Advocate Ved Jain and Chartered Accountant Ayush Garg represented the Tiwaris in ITAT Delhi. Judicial Member Vimal Kumar and Accountant member S. Rifaur Rahman of ITAT Delhi heard their case and ruled on August 6, 2026.

Why did the Tiwaris receive a black money tax notice?

The Tiwaris held 25,000 shares each of SHSA (a company registered in British Virgin Island) at ‘no par value’, meaning these shares did not require any upfront investment.


SHSA had a bank account with BNP Paribas but since the company was not operational and did not generate any business, the bank closed the account on a suo-moto basis on April 30, 2014. Following that, the British Virgin Island authorities also struck off the company’s name on May 1, 2015.

Also read: Karol Bagh man had foreign bank accounts, FD in Singapore, no ITR disclosure; income tax dept sent black money notice, but ITAT Delhi cancelled the notice for this reason

Now, Mr Tiwari was a shareholder in another foreign company called SSMPL which was incorporated in Singapore on December 19, 2014. He held 1.5 lakh shares in this company and also its Singapore bank account and thus disclosed it in his income tax return (ITR) for AY 2016-17.

However, the Income Tax Department, relying on undisclosed sources, came to the conclusion that both Mr Tiwari and his wife had concealed details about their foreign bank accounts and companies and sent them a black money tax notice.

Ultimately, the income tax assessing officer (AO) made a total addition of Rs 2.25 crore to the Tiwari couple’s income, making them liable to pay tax on this supposed black money.

Feeling aggrieved, the Tiwaris filed an appeal with the Commissioner of Appeals (CIT A). They provided evidence that the said foreign bank balances were actually loans given to them by Mr V.L. Sharma and Sandip Brahmdev Sharma.

CIT (A) analysed the evidence and was satisfied with this explanation and so, deleted the additions of income in foreign bank accounts but sustained the credit of USD 16,283 commission income in SHSA (i.e. 50% of $32,565.19 equivalent to Indian Rs 10.59 lakh).

The Tiwaris in turn filed an appeal in ITAT Delhi urging that the USD 16,283 commission income in SHSA should be deleted from their income.

On August 6, 2026 Tiwaris won the case in ITAT Delhi.

Summary of the judgement

Chartered Accountant Suresh Surana said to ET Wealth Online: In this case, Mr Tiwari and his wife held 25,000 “No Par Value” shares each in SHSA (British Virgin Island), while he also held shares in SSMPL (Singapore). The bank account of SHSA had been closed in April 2014 and the company was struck off in May 2015. The interest in SSMPL had also been disclosed in the relevant income-tax returns (ITR).

However, the Income Tax Assessing Officer (AO) treated credits appearing in the bank accounts of these foreign companies as undisclosed foreign income/assets of the Tiwari duo.

A substantial part of these credits represented loans received from V.L. Sharma and Sandip Brahmdev Sharma. During appellate proceedings, the Tiwari duo produced additional evidence, including the lenders’ income tax returns and bank statements.

In the remand proceedings, the AO himself accepted that the lenders had sufficient financial capacity to advance the loans. On this basis, the CIT(A) deleted the major additions, which was challenged by the Income Tax Department before the ITAT Delhi.

The ITAT Delhi upheld the relief granted by the CIT(A) and observed that once the lenders’ financial capacity and the underlying liabilities were established through documentary evidence, the amounts received by the foreign companies could not be treated as undisclosed income of the individual taxpayers.

Surana says: “The ITAT Delhi also noted that SHSA had ceased to exist well before the relevant assessment year, while the interest in SSMPL had been disclosed in the returns.”

The Tiwaris also succeeded in their case regarding the commission receipt of USD 32,565 credited to SHSA. The Income Tax Department had considered only this credit while overlooking debit entries of approximately USD 46,354 appearing in the same bank statement.

On considering both receipts and expenditure, the ITAT Delhi found that the transaction had actually resulted in a loss rather than positive income. The remaining addition was therefore deleted.

Why did the Tiwari couple win the black money tax case?

Surana says that the Tiwaris won the case because the ITAT held that an addition under the BMA cannot be sustained merely on the basis of gross credits appearing in the bank account of a foreign company. The true nature and source of the transactions must be examined.

Surana says: “In this case, the loans were supported by evidence and the lenders’ financial capacity was accepted by the Income Tax Assessing Officer (AO) himself. Further, income could not fairly be determined by considering credits while ignoring corresponding debits reflected in the same records.”

Accordingly, the Income Tax Department’s appeals were dismissed, the Tiwari duo’s cross-objections were allowed, and the consequential penalty was also deleted.

The ITAT Delhi did not decide the Tiwaris’ additional jurisdictional objections concerning the Section 10(1) notice, as they had already succeeded on the merits.