Indian in Dubai? AED 5,025 UAE Account Deposit 🇦🇪 → ₹1.86 Lakh Penalty! 😱
🇦🇪 Indian in Dubai? Don’t ignore your UAE bank account when filing your Indian ITR! A recent Delhi ITAT case shows how an undisclosed UAE bank account with just AED 5,025 in deposits resulted in a ₹1.86 lakh penalty under the Black Money Act. ⚠️ The case is an important reminder for Indians living, working or doing business in Dubai/UAE to understand foreign-asset disclosure requirements in India.
M.F.Khan & Associates
8/17/20262 min read
Indian in Dubai? Don’t ignore your UAE bank account when filing your Indian ITR!
A recent Delhi ITAT case shows how an undisclosed UAE bank account with just AED 5,025 in deposits resulted in a ₹1.86 lakh penalty under the Black Money Act.
⚠️ The case is an important reminder for Indians living, working or doing business in Dubai/UAE to understand foreign-asset disclosure requirements in India.
Key Takeaways — ITAT Black Money Act Case
Penalty upheld: Delhi ITAT upheld a ₹1,86,810 penalty against Ashok Shankar under Section 41 of the Black Money Act, 2015.
Foreign bank account undisclosed: UAE authorities informed Indian tax authorities about Shankar’s Emirates NBD, Dubai bank account, opened on 18 January 2010.
Bank balance: The account had cash deposits of approximately AED 5,025.
UAE company interest: Shankar was identified as a director and shareholder of Santech International FZE, with paid-up capital of AED 3,000.
Non-disclosure in ITR: The foreign bank account and UAE company interest were not reported in the foreign-asset disclosures of his Indian tax returns.
Information received through treaty: The information was obtained from UAE authorities under the India-UAE tax treaty’s exchange-of-information provisions and reached the AO on 25 April 2019.
AY 2020-21 applicable: ITAT held that AY 2020-21 was relevant because the foreign asset came to the AO’s notice during FY 2019-20, irrespective of the earlier 2016 search.
Account closure not a defence: The fact that the Dubai bank account was closed on 6 April 2017 did not prevent proceedings under the Black Money Act.
“Forgotten account” explanation rejected: Shankar’s claim that he had forgotten about the account was not accepted.
Friend’s deposit explanation rejected: His claim that the AED 5,025 was deposited by a friend for a proposed Dubai business failed because he could not provide adequate documentary evidence.
Company ownership disputed but established: Corporate and UAE records supported his directorship and shareholding in Santech International FZE.
Important compliance lesson: Closure of a foreign bank account does not automatically eliminate Black Money Act exposure. Proper disclosure of foreign assets/interests in Indian tax returns is critical.
Overall message: The case highlights the increasing effectiveness of India-UAE exchange of information and the risks of non-disclosure of even relatively small foreign assets.
Dubai, India, UAE, Income Tax, ITR, CA in Kanpur
