Bermuda Fund, ₹1.8 crore penalty: How a ‘crucial mistake’ helped Gurugram man beat Income Tax Dept in black money case

A resident of DLF Mangolias, Gurugram, Haryana, received $3.14 lakh ($314,000) as the redemption of a Bermuda-focused global investment fund. He maintained that the $300,000 that he had initially invested in this Bermuda fund came entirely from his Singapore salary. But this did not stop Income Tax officials from charging him under the Black Money Act. Things took a dramatic turn when a crucial mistake led to the Gurugram resident winning the case before the Income Tax Appellate Tribunal (ITAT).

The case concerns Bhowmick, a resident of Gurugram's DLF Magnolias who works in Singapore.

According to The Economic Times , Bhowmick invested about $300,000 in a Bermuda-focused global investment fund while in Singapore on May 19, 2015.

He cashed it out on March 16, 2016 and received $ 3.14 lakh (3,14,608.15) upon redemption.

This Bermuda investment fund redemption created troubles for him back in India. The Income Tax Department considered this to be black money.

Bhowmick reportedly explained to the Income Tax Department that the $300,000 money he initially invested in this Bermuda fund came entirely from his Singapore salary and that no Indian funds were involved. But the tax officer wasn’t convinced.

Bhowmick also tried to use the revised India-Singapore Double Tax Avoidance Treaty (DTAA) to support his case. But the tax officer dismissed this argument too, Economic Times reported.

Tax officers reportedly claimed that Bhowmick’s case does not come under the India-Singapore DTAA as the Bermuda-focused fund’s company was registered as a public limited company in India, and for FY 2015-16, Bhowmick was not a resident of Singapore.

After this set-back, Bhowmick stopped responding to the show-cause notices sent by the tax officer, the report added.

The officer waited for a while and later classified Bhowmick’s investment as unexplained. They taxed its fair market value of over ₹ 2 crore at 30 percent under Section 3(1) of Black Money Act for AY 2019-20.

A penalty of ₹ 1.84 crore was also imposed under the same Act, the report added.

The Commissioner of Appeals also turned down Bhowmick’s appeal. Following this, Bhowmick filed an appeal before the Income Tax Appellate Tribunal (ITAT) Delhi to challenge the black money tax demand and penalty on his income .

Judicial member Satbeer Singh Godara and Accountant member Reenu Jauhri of ITAT Delhi heard Bhowmick's case and gave their judgement on August 11, 2026.

An expert explained to ET Wealth Online that the principal issue in this case before ITAT Delhi was whether an assessment for AY 2019-20 could be sustained when no valid notice under Section 10(1) of the Black Money Act had been issued for that assessment year.