Many are knocking on the doors of tax authorities to cut through the confusion over a list of ambiguities in the mini-amnesty scheme for undisclosed foreign assets and income.

Will a taxpayer who is merely a signing authority for a foreign bank account but doesn’t own the funds get caught in the tax net after declaring as a signatory? How to segregate gifts and inheritances from other foreign assets which were acquired? Or, what if a foreign bank no longer has the statements of accounts which were opened years ago?

Questions like these and more are cropping up as the December 31 deadline nears for the Foreign Assets of Small Taxpayers-Disclosure Scheme, 2026 (FAST-DS), a one-time compliance initiative.The voluntary disclosure window, which opened on August 16, allows a person to regularise undeclared overseas stocks, properties, ESOPs, and earnings up to ₹1 crore without declaring sources of funds by paying a combined tax and penalty of 60%. Foreign assets up to ₹5 cr acquired with reported earnings can be legitimised with a ₹1 lakh fine.Despite the tax office responding to FAQs, taxpayers and professionals want the Central Board of Direct Taxes (CBDT) to clarify several unaddressed issues.

For instance, how to avoid tax and penalties on the quantum of bank deposits accumulated from the overseas earnings of a declarant when he was an NRI? Since NRIs’ foreign earnings aren’t taxed in India, deposits created from that income should not be taxed and penalised.Those who missed out on reporting, either due to ignorance or wrong advice, are anxious for answers. A declaration, once accepted, cannot be changed; the amount paid will not be refunded, and false information will invalidate the declaration. After December 31, persons who don’t declare under FAST-DS may face a higher financial burden if faced with proceedings under Black Money Act.

Ownership vs Authority

While a trust beneficiary or foreign account signatory has to report these facts under the ‘Foreign Assets’ (FA) Schedule in the I-T Return (ITR), it’s felt the same should not be extended to the scheme.

It’s suggested that the Board (or CBDT) confirm that an account over which the taxpayer holds only signing authority, with no financial interest, is not an undisclosed foreign asset for the purpose of the scheme, said a member of The Chamber of Tax Consultants, which is among the bodies to reach out to CBDT.Similarly, a beneficiary of a foreign trust has to report the information in the ITR. But some fear that disclosure under FAST-DS could bring them under the taxman’s lens even if the beneficiary owns no trust asset or hasn’t received funds from the trust.

“In cases where undisclosed foreign income is credited to a foreign bank account, it’s unclear whether the income or bank balance (asset) must be disclosed. An FAQ under the 2015 Scheme suggested that the asset has to be disclosed. FAST-DS doesn’t provide similar clarity. This is important as valuation of income and asset may differ. Another issue concerns foreign income on which Indian taxes have been paid but wasn’t disclosed in Schedule FA,” said Harshal Bhuta, co-founder and country co-head, international tax and FEMA, at Ascentium India.

Also, in cases where tax payer holds a foreign account jointly with a spouse and has contributed a part of the funds, there’s no mechanism for apportionment between joint holders.

An area of concern, says chartered accountant Ashish Karundia, relates to employees who inadvertently failed to report ESOPs in Schedule FA and subsequently didn’t offer dividend income to tax, despite having paid tax on shares as salary perquisites. “Such employees could face disproportionate and multiple layers of tax and compliance costs: withholding tax on dividends in overseas jurisdiction, a 60% levy in India for non-disclosure of dividend and a further ₹1 lakh for disclosure of underlying shares, irrespective of their value,” said Karundia.

Under the scheme, the fair market value of every asset is determined as on March 31, 2026, a clause that dampened enthusiasm for the scheme, thanks to the rupee’s slide against the dollar.

“Most are put off by the ₹1 crore limit, which today is a minuscule number. In the 2015 scheme, there was no limit. Many who are ready to pay and declare could not participate as the respective amounts breached ₹1 crore as per March 2026 value. Such a scheme should have higher limits of ₹100-200 crore to draw wider interest,” said Rajesh Shah, partner at Jayantilal Thakkar, a Mumbai-based CA firm.

Selling gold in 2026? Here’s how much tax you may have to pay on your profits!

Tax on Selling Gold in India (2026)

**Capital gains tax applies only when gold is sold.

*SGB tax exemption applies only if bought in the original issue and held till maturity.

₹1.25 lakh LTCG exemption applies only to equity, not gold or silver. Gold LTCG is taxed at 12.5% without indexation. SGB gains are tax-free only if held till 8-year maturity. 3% GST applies only to physical gold purchases.

₹1.64 lakh Foreign Tax Credit denied over late Form 67 filing. ITAT Bangalore comes to the taxpayer’s rescue.

An Indian taxpayer paid ₹1.79 lakh in US taxes on income of around ₹9 lakh and claimed ₹1.64 lakh as Foreign Tax Credit in India.

But there was a catch: Form 67 was filed late.

Here’s what happened.

The taxpayer had earned income in the USA and paid tax there. He also disclosed the foreign income in his Indian ITR and claimed credit u/s 90 read with the India USA DTAA.

However, CPC denied the credit during return processing because Form 67 was not filed within the prescribed timeline.

His subsequent appeal also failed.

What did ITAT Bangalore say?

The Tribunal held that merely filing Form 67 late should not automatically disentitle a taxpayer from claiming Foreign Tax Credit.

The taxpayer had disclosed the foreign income in India and furnished Form 67 along with supporting evidence of US taxes paid.

The issue was procedural compliance, not whether the foreign tax had actually been paid.

The legal principle

There is an important distinction between a substantive right and a procedural requirement.

Where foreign income is disclosed and tax is actually paid abroad, a procedural delay should not automatically defeat legitimate relief against double taxation.

The Tribunal relied on earlier judicial precedents and observed that the applicable rules did not expressly provide for automatic forfeiture of FTC due to late filing.

Did the taxpayer immediately get ₹1.64 lakh? Not yet.

ITAT Bangalore restored the matter to the Assessing Officer for fresh examination on merits.

The AO must verify the foreign tax credit claim and supporting documents before deciding the eligible amount.

The appeal was allowed for statistical purposes. The ruling protects the taxpayer’s right to have the claim examined, but does not guarantee the entire credit.

What should taxpayers do?

✅ Disclose foreign income correctly in the Indian ITR.
✅ Maintain evidence of foreign income and taxes paid.
✅ File Form 67 within the prescribed timeline.
✅ Reconcile the foreign tax credit claimed with supporting documents.

The ruling is a reminder that genuine tax relief should not be denied solely for a procedural lapse. But taxpayers should not treat judicial relief as a substitute for timely compliance.

Avoiding Income Tax Notices is always easier than dealing with them. However, if you receive a notice from the Income Tax Department (ITD), timely and correct action is critical. Learn more on how to handle the Notices such as Scrutiny, Discrepancy, Mistakes, Non-disclosure.

1. Possible Common Reasons for getting an IT Notice

1. Non-Filing of Income tax returns or filing after due date
2. Scrutiny at random
3. Discrepancy in your income tax returns
4. TDS Mismatch between ITR and 📜Form 168 of IT Act 2025 (Form 26AS of IT Act 1961)
5. Ignoring income received from the previous employer
6. Demanding a proof of documentation
7. High Value Transactions not matching with declared income (ITR vs AIS)
8. Transferring the asset in the name of spouse or children
9. High number of Gift Transactions
10. Non-Payment of Taxes
11. Income Tax Return not filed or filed after the due date
12. Set-off errors or loss claim discrepancies
13. Non-disclosure of Foreign Income and Foreign Assets
14. Investments in the name of family members
15. Crypto / VDA transactions not reported
16. Huge Cash Deposits

2. Various types of Important Notices and the reasons for Such

2.1. Notice under Section 142(1) – Inquiry before assessment:

Notice under Section 268(1) of IT Act 2025 (Section 142(1) of IT Act 1961) is usually served to call upon documents and details from the taxpayers.

1. This notice is basically sent after notice u/s 142(1) has already been sent. It means AO was not satisfied with the produced documents or may be AO has not received any documents
2. If assessee do not comply with the provisions of this section
   • It may result in Best Judgment Assessment u/s 271 of IT Act 2025 (u/s 144 of IT Act 1961), or
   • Penalised under Sec 271(1)(b) i.e. Rs10,000 for each failure
   • Prosecution under Sec 481 of IT Act 2025 (Sec 276D of IT Act 1961) which may extend upto 1 year with or without fine.

2.2. Notice under Section 143(2) – Scrutiny Notice

1. This notice is basically sent after notice u/s 142(1) has already been sent. It means AO was not satisfied with the produced documents or may be AO has not received any documents.
2. This notice can be served upto 6 months after completion of relevant assessment year.
3. The AO can reduce the income below the returned income and can assess the loss higher than the returned loss under Scrutiny Assessment as per Sec 270(3) of IT Act 2025 (Sec 143(3) of IT Act 1961).
4. The notice might ask you to produce documents in support of deductions, exemptions, allowances, reliefs other claim of loss you have made and provide proof of all sources of income.
5. Section 143(2) enables the Assessing Officer to make a regular assessment after a detailed inquiry.
6. If assessee do not comply with the provisions of this section:
   • It may result in Best Judgment Assessment u/s 144
   • Penalised under Sec 271(1)(b) i.e. Rs10,000 for each failure
   • Prosecution under Sec 276D which may extend upto 1 year with or without fine.

2.3. Notice under Section 143(1) – Letter of Intimation

Three types of notices can be sent under section 143(1)

1. Intimation where the notice is to be simply considered as final assessment of your returns since the AO has found the return filed by you to be matching with his computation under section 143(1).
2. A refund notice, where the officer’s computation shows amount excessively paid by the assessee.
3. Demand Notice where the officer’s computation shows shortfall in your tax payment. The notice will ask you to pay up the tax due within 30 days.
4. Time limit for the notice to be served is up to 1 year after completion of relevant assessment year.

2.4. Notice under Section 148 – Income escaping assessment

1. If AO has reasons to believe that any income chargeable to tax has escaped assessments, he may assess or reassess such income, which is chargeable to tax and has escaped assessment.
2. To initiate proceedings under Sec 279 of IT Act 2025 (Sec 147 of IT Act 1961), the AO is required to have a reason necessarily.
3. The onus of stating the reasons is on AO.

2.5. Notice under Section 156 – Notice of Demand

1. Where any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed, the AO shall serve upon the assessee a notice of demand, specifying the sum do payable.
2. The tax so demanded is payable, generally within 30 days of the service of notice of demand, which may be reduced by the AO with prior approval of JCIT.
3. In case of delay in payment of tax, the assessee shall be deemed to be in default and liable to pay simple interest u/s 411(2) of IT Act 2025 (u/s 220(2) of IT Act 1961) @ 1% for every month or part thereof from the end of the period allowed u/s 289 of IT Act 2025 (u/s 156 of IT Act 1961), further penalty u/s 412(1) of IT Act 2025 (u/s 221(1) of IT Act 1961) may be imposed.

2.6. Notice under Section 139(9) – Defective Return

1. What is a Defective Return? – A return shall be considered as a defective return unless it is accompanied by the required documents under the Act. e.g. Annexures, statements, proofs of tax, reports etc.
2. If the AO considers that the return filed by the assessee is defective, he may intimate the defect to the assessee and gave him an opportunity to rectify the defect within 15 days from the date of such intimation or within such extended period as may be allowed by the AO.
3. If the defect is not rectified within the aforesaid period, the return shall be considered as an invalid return and accordingly the assessee will be deemed to have furnished no return.

2.7. Notice under Section 245 – Set off of refunds against tax remaining payable

1. Where any refund is pending to the taxpayer and also any amount is payable by the taxpayer for previous years, the AO may adjust the amount to be refunded with the amount payable by the taxpayer. Basically, it can be related to the ‘inter adjustment of transactions’.
2. Notice under Section 438 of IT Act 2025 (Section 245 of IT Act 1961) is more of intimation letter and less of demand notice.
3. This communication is an intimation proposing the refund adjustments. It is not independent notice. If the taxpayer disagrees with the adjustment, they needs to disagree with the outstanding demand in Income tax portal

3. Documents needed in case of a defective Notice?

• Most corrective actions against a defective notice require revisiting the IT return completely.
• Hence, the tax preparer needs all the documents that are used in the original IT Return preparation to prepare a corrective IT Return.
• To make sure that the response to the defective notice is accepted, one must pay attention to the revision / correction carefully.

4. How to respond to a Defective Notice u/s 139(9)?

Follow the below steps to submit a response to the defective notice issued u/s 139(9)

1. Login to ITD e-Filing Portal
2. Go to Pending Actions >> E proceedings and click on ‘Response to Notice u/s 263(9) of IT Act 2025 (u/s 139(9) of IT Act 1961)’
3. Check the details like ITR, AY, e-Filing Acknowledgement Number, CPC Reference Number, Notice Date and Click the “Submit” button
4. All the identified defects from the filed ITR is displayed to the taxpayers. Choose YES/NO from the ‘Do you agree with defect?’ column.
5. If you Choose ‘YES’, Upload the new corrected XML, and Click ‘Submit’ button to submit.
6. If you Choose ‘NO’, Enter the response under the Assessee Remarks column and Submit.

Property related transactions can sometimes be complicated. Recording the same in your income tax return is equally important. But what if the Income Tax Department sends you a notice for unexplained cash receipts, believing that you have received a part of the payment for property sale in cash.

In one such case, the tax department relied on WhatsApp messages and Excel spreadsheets to reach the conclusion that the property had been sold for an amount higher than the one disclosed. The assessee finally won the case in Income Tax Appellate Tribunal (ITAT), Delhi.

What the case is about

The dispute concerned a man and his wife, who jointly owned a property in Delhi before selling

The Income Tax Department alleged that the buyers had paid an additional amount in cash beyond the sale consideration documented in the registered conveyance deed.

The assessing officer calculated the total transaction value at around Rs 3.30 crore, whereas the

registered sale deed recorded a consideration of Rs 1.60 crore. The department regarded the

difference of Rs 1.70 crore as cash received by the sellers but not disclosed in the documents. The case arose from a search conducted in 2021, involving a group of companies. According to the tax department, an Excel workbook titled “BOSS -DEC 18 onwards”, handwritten diary entries and other seized material pointed to cash payments allegedly made to the man in connection with a property in Delhi, jointly owned by him and his wife.

The department alleged that Rs 1.70 crore had been paid in cash by the group owner in connection with the property transaction to the husband and wife. Its case included entries for Rs 1.55 crore and a further Rs 15 lakh. It also relied on handwritten records and WhatsApp conversations involving several people.

The Assessing Officer (AO) also drew on WhatsApp conversations that mentioned payments of Rs 50 lakh, Rs 50 lakh, Rs 20 lakh, Rs 5 lakh and Rs 30 lakh.

These amounts added up to Rs 1.55 crore.

The AO treated the alleged amount as undisclosed cash receipts and made an addition under Section 69A read with Section 115BBE of the Income Tax Act. The Commissioner of Income Tax (Appeals) subsequently sustained an addition of Rs 1,16,25,000 out of the Rs 1.70 crore assessed, giving part relief.

However the man appealed in ITAT.

Why did the taxpayer win relief?

The man’s representative disputed the reliance on the seized material and argued that he had not been given a proper opportunity to cross-examine the people whose statements and communications were used against him.

He also challenged the legality of the proceedings under Section 153C, including the recording of a consolidated satisfaction note covering seven assessment years.

The taxpayer further argued that the alleged cash consideration related to a property sold through a registered conveyance deed dated October 31, 2019, falling in assessment year 2020-21, rather than the assessment year under appeal, 2019-20.

The tribunal found that the WhatsApp conversations relied upon by the tax authorities largely contained monetary figures but did not clearly establish what the payments were for or the purpose behind them.

“The WhatsApp chats and seized documents merely referred to certain figures and alleged transactions but did not conclusively establish that the assessee had received unaccounted cash,” CA Avinash Kumar Rao, Partner at Mohindra & Associates told ET.

CA Suresh Surana said the assessing officer had also not adequately examined the people connected with the alleged payments. The taxpayer was not given a proper opportunity to cross-examine them.

The tribunal also noted that the Income Tax Department had not summoned a man despite relying substantially on his statement and documents recovered from him to support its allegations.The tribunal observed that if the department intended to rely on the chats and related material as evidence of cash consideration, “it was essential for the assessing officer to have examined these persons on oath and also give the assessee an opportunity to cross-examine these persons.”

It explained that WhatsApp messages and supporting documents needed to be properly tested rather than treated as conclusive proof. As the order put it, “the inferences drawn cannot be considered to be conclusively based on relevant and admissible evidence, but become more of suspicious circumstance” if the necessary examination and opportunity to challenge the evidence are missing.The Income Tax Department had also relied on a common satisfaction note covering seven assessment years.However, it had not identified relevant incriminating material for every assessment year included in the note.

Surana explains that the ITAT held that the department was required to demonstrate a clear link between the material seized during the search and the income relating to each individual assessment year before initiating proceedings under Section 153C.

On these grounds, the tribunal allowed both the quantum appeal and the consequential penalty appeal.

Its final direction was explicit: “The impugned assessment and penalty stands quashed.”

The order was pronounced on September 9, 2026.

It’s important to note that the decision turned on the evidentiary shortcomings and legal defects identified by the tribunal; it should not be read as a finding that the alleged cash payments definitely did not occur.

The decision reiterates a fundamental principle of tax law: even strong suspicion cannot take the place of conclusive evidence. The Income Tax Department can examine WhatsApp conversations, Excel spreadsheets and handwritten records, but simply finding such material does not automatically prove that a taxpayer earned undisclosed income.

CA Avinash Kumar Rao advises taxpayers facing allegations based on third-party statements or conversations to obtain copies of the material cited against them and assess its context and relevance. They should also ask for an opportunity to cross-examine the individuals concerned. Such requests are preferably made in writing while the assessment proceedings are underway.

The ruling also underlines that procedural safeguards prescribed under the Income-tax Act must be followed rather than treated as formal requirements that can be overlooked.