2018 (10) TMI 1989 - AT - Income Tax

Levy of penalty u/s. 272A(1)(c) - no compliance by the assessee to file details in response to summons u/s 131 issued by the AO - assessee failed to file the specific details like Consent Waiver Form - whether non-signing of said Consent Waiver Form constitutes a default so as to attract penalty u/s 272A(1)(c)? - whether there was any default on the part of the assessee to comply with the requirements of summons u/s 131 of the Act so as to justify imposition of penalty in terms of Sec. 272A(1)(c)? - HELD THAT - As in the instant case, it is not the case of the Assessing Officer that the said Consent Waiver Form was in possession of the assessee. A bare reading of the summons show that a proforma of Consent Waiver Form was enclosed requiring the assessee to sign it, notarise it and thereafter submit it back. Therefore, it cannot be said that there was any default on the part of the assessee to submit a document which was already in his possession, as is the wont of the provision contained in clause (c) of Sec. 131(1) of the Act. What AO seeks to do in the present case is to compel the assessee to execute a document, as rightly put by the learned representative for the assessee before us, and not a case where a document already in possession of the assessee is being asked to be produced - We find that the instant default is not of the type understood by a conjoint reading of clause (c) of Sec. 131(1) of the Act with clause (c) of Sec. 272A(1) of the Act. No merit in the levy of penalty u/s 272A(1)(c) of the Act, which is hereby ordered to be deleted. Decided in favour of assessee.

Summary

Issues Involved:
1. Levy of penalty under Section 272A(1)(c) of the Income Tax Act, 1961.
2. Non-submission of a duly filled and notarized Consent Waiver Form related to HSBC, Geneva bank account.
3. Whether the failure to submit the Consent Waiver Form constitutes a default under Section 131(1)(c) of the Act.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 272A(1)(c) of the Income Tax Act, 1961:
The primary issue in these appeals is the levy of penalty under Section 272A(1)(c) of the Act. The penalty was imposed due to the assessee's failure to submit a duly filled and notarized Consent Waiver Form concerning a bank account held with HSBC, Geneva. The penalty order noted that this non-compliance hindered the proceedings to establish the ownership of the funds in the said bank account. The CIT(A) upheld the penalty, leading to the present appeals.

2. Non-submission of a Duly Filled and Notarized Consent Waiver Form:
The summons issued under Section 131 of the Act required the assessees to submit a Consent Waiver Form related to the HSBC, Geneva bank account. The assessees appeared and their statements were recorded, but they did not submit the Consent Waiver Form, asserting that they had no interest in the said account. The Addl. CIT, Central Range-2, Mumbai, viewed this as non-cooperation and imposed a penalty of Rs.10,000/- under Section 272A(1)(c) of the Act.

3. Whether the Failure to Submit the Consent Waiver Form Constitutes a Default under Section 131(1)(c) of the Act:
The critical legal question is whether the non-submission of the Consent Waiver Form falls within the scope of Section 131(1)(c) of the Act, which pertains to the production of books of account and other documents. The Tribunal noted that Section 131(1)(c) empowers authorities to compel the production of documents already in possession of the assessee. However, in this case, the Consent Waiver Form was not an existing document in the assessee's possession but a form that the assessee was required to execute and notarize. Therefore, the Tribunal concluded that the failure to submit the Consent Waiver Form does not constitute non-production of documents as envisaged under Section 131(1)(c).

Conclusion:
The Tribunal found no merit in the levy of penalty under Section 272A(1)(c) of the Act, as the default in question did not fall within the scope of the relevant provisions. Consequently, the penalty was ordered to be deleted. The decision was limited to the tenability of the penalty and did not address the merits of the ownership of the bank account, which would be determined in the relevant quantum proceedings. The Tribunal allowed the appeal of the assessee, Jay Ketan Parikh, and dismissed the other appeals as infructuous. The decision was applied mutatis mutandis to the appeals of the other assessees, resulting in the allowance of certain appeals and dismissal of others as infructuous.