Article
Feb 7, 2026
One Wrong Account Number: A ₹10 Lakh Penalty Risk Decoded (2026)
For NRIs and returning Indians,
foreign asset disclosure in India isn’t just about paying the right tax. It’s about reporting every detail with absolute accuracy.A recent case involving a UK bank account shows how a single mistake, an incorrect account number, led to penalty proceedings of ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.
What Went Wrong in the Case
The taxpayer held a valid bank account in the United Kingdom and disclosed it in Schedule FA while filing her Indian Income Tax Return.
However:
The account number reported did not match the bank’s records
The mismatch was treated as a non-disclosed foreign account
Penalty proceedings of ₹10 lakh were initiated
Under Indian law, non-disclosure of a foreign asset attracts a flat penalty of ₹10 lakh per asset, irrespective of the account balance or income involved.
The Reporting Error
The issue arose because of how the bank account was structured:
One primary GBP account
EUR and USD sub-accounts under the same banking relationship
An incorrect account number entered in Schedule FA
Nil-balance sub-accounts not reported
Schedule FA requires exact details, so the inconsistency drew scrutiny.
Why Such Errors Get Flagged
Foreign asset reporting is compliance-led, not tax-led.
Tax authorities typically verify:
Accuracy of account numbers and identifiers
Consistency across Schedule FA, Schedule FSI, and Schedule TR
Clear linkage between foreign assets, income, and foreign taxes paid
Even without tax evasion, a mismatch can look like non-disclosure and trigger heavy penalties.
What ITAT Mumbai Observed
The Income Tax Appellate Tribunal (ITAT), Mumbai noted that:
The issue looked like a reporting mistake, not an attempt to hide assets
The connection between the main account and the sub-accounts was not clearly explained
The tax authorities needed confirmation from the bank about the account structure
Because of this, the case was sent back for fresh verification based on proper bank documents.
Key Takeaways for NRIs
Getting the details right is just as important as making the disclosure
Even a small error, such as one wrong digit, can lead to a dispute
Nil or dormant foreign accounts should still be reported
Foreign asset reporting leaves very little room for approximation.
Where Most Errors Occur in the ITR
Issues commonly arise across three schedules:
Schedule FA
Foreign bank accounts, peak balance, country, account status
Schedule FSI
Foreign income and correct country or source mapping
Schedule TR
Foreign tax paid and proper linkage to income reported in Schedule FSI
Inconsistencies across these schedules often lead to notices and follow-up.
What NRIs Should Keep Ready
To reduce compliance risk, it is important to maintain:
Statements for all foreign accounts, including nil or dormant ones
A bank email or letter explaining the main and sub-account structure
A simple reconciliation linking Schedule FA, FSI, and TR
This documentation can significantly reduce disputes and speed up resolution if scrutiny arises.
A Simple Next Step
If you hold overseas bank accounts, investments, or income, a basic compliance review can prevent avoidable issues. The objective is not just disclosure, but accurate and consistent disclosure.
At Pivot Money, we help NRIs and global Indian families organize cross-border financial information so filings remain clear, consistent, and well-documented.
Read More:
https://www.pivotmoney.app/