2019 (8) TMI 1443 - AT - Income Tax

Penalty levied u/s 272A(2)(c) - assessment of assessee was reopened on the basis of information received by Government of India from French Government under Double Taxation Avoidance Agreement in exercise of its sovereign power that some Indian nationals and residents including assessee had Foreign bank account with HSBC Bank, Geneva, Switzerland, which were undisclosed to the Indian Tax Department - HELD THAT - In the present case, though, the AO was allegedly having information in the form of a Base Note wherein various details of account holder were provided. The assessee in reply to the notice u/s 133(6) specifically denied ownership or any relation of any bank account. The assessee in his reply categorically stated neither he owned bank account nor he has owned any relationship with the alleged bank account in HSBC Bank, Geneva. AO without rebutting his reply that there was any material before him to prove the contrary, has held that assessee has not complied with notice u/s 133(6) by not signing the consent waiver form. Once assessee has duly complied with all the notices sent by the AO, he cannot take the view that assessee failed to produce the required document. We have also noted that on the basis of same information the case of assessee was reopened under section 147 by issuing notice u/s 148 dated 12.03.2014. The assessee before the CIT(A) specifically contended that the re-opening proceeding was dropped by the Assessing Officer. In our view once the assessee denied the ownership of the bank account in response to the notice under section 133(6), the Assessing Officer cannot take the plea that assessee failed to comply with the condition of aforesaid notice. Hence, we are of the view that levy of penalty by Assessing Officer under section 272A(2)(c) was not justified. Therefore, we direct the Assessing Officer to delete the entire penalty. - Decided in favour of assessee.

Summary

Issues Involved:
1. Penalty under section 272A(2)(c) of the Income Tax Act for non-compliance with notice under section 133(6).
2. Reliance on unauthenticated documents (Base Note).
3. Establishing genuineness of information based on personal details.
4. Consideration of submissions, statements, and affidavits by the appellant.
5. Submission of 'Consent Waiver Form' and implications.
6. Reasonable cause under Section 273B.
7. Reassessment proceedings under Section 147.
8. Application of mind and reliance on inadmissible evidence.

Issue-wise Detailed Analysis:

1. Penalty under section 272A(2)(c):
The appeal challenges the confirmation of a penalty of ?36,400 levied for non-compliance with a notice under section 133(6). The tribunal noted that the appellant had denied ownership of the bank account in question and had responded to the notice, thus there was no basis for treating the reply as non-compliance.

2. Reliance on unauthenticated documents (Base Note):
The appellant argued that the document referred to as the Base Note was not authenticated or certified by any credible statutory authority. The tribunal observed that the assessing officer relied on this Base Note to reopen the assessment, which contained personal details of the appellant.

3. Establishing genuineness of information:
The tribunal noted that the assessing officer concluded the bank account belonged to the appellant based on the personal details matching those in the Base Note. However, the appellant denied ownership of the account.

4. Consideration of submissions, statements, and affidavits:
The appellant contended that his submissions, statements, and affidavits, which substantiated his non-ownership of the bank account, were not considered. The tribunal found that the appellant had consistently denied the ownership of the account and had complied with the notices.

5. Submission of 'Consent Waiver Form':
The appellant argued that submitting the Consent Waiver Form would have amounted to making a false statement about the bank account. The tribunal agreed that there was no obligation for the appellant to sign the form if he denied ownership of the account.

6. Reasonable cause under Section 273B:
The tribunal observed that the learned Commissioner (Appeals) erred in concluding that no reasonable cause was shown by the appellant. The appellant's consistent denial and compliance with notices indicated a reasonable cause.

7. Reassessment proceedings under Section 147:
The appellant highlighted that the reassessment proceedings initiated based on the alleged bank account were dropped. The tribunal noted that this fact supported the appellant's case.

8. Application of mind and reliance on inadmissible evidence:
The tribunal found that the impugned order was passed without due application of mind and relied on inadmissible evidence. The appellant had shown sufficient cause, and the penalty under section 272A(2)(c) was not justified.

Conclusion:
The tribunal allowed the appeal, directing the deletion of the entire penalty, as the appellant had complied with the notices and consistently denied ownership of the bank account. The decision emphasized the need for proper authentication of documents and reasonable cause for non-compliance. The order was pronounced on 30/08/2019.