2022 (3) TMI 675 - HC - Income Tax

Imposition of penalty u/s 271(1)(b) - non-compliance of the notice issued under Section 142(1) - HELD THAT - A perusal of the paper book reveals that the ITAT in the impugned orders has followed the decision of this Court in the case of Mr. Sanjay Dalmia 2018 (3) TMI 1411 - DELHI HIGH COURT wherein penalty u/s 271(l)(b) of the Act was upheld for all the seven years arising out of the same search, relating to the same bank account and for the same reason of not filing the consent letter. This Court is of the view that the protective assessment against the Appellant-assessee was deleted by the CIT(A) as the additions had been made both on protective and substantive basis in the hands of her husband with regard to the same Swiss Bank account as he was account holder No.1. This Court is further of the view that the judgment passed by the Supreme Court in Selvi Ors 2010 (5) TMI 907 - SUPREME COURT has no application to the facts of the present case as the same has only upheld the principle of right of silence and, that too, in the context of criminal proceedings. Though there are certain observations with regard to the non-penal proceedings, yet the same is not the ratio of the said judgment. This Court is of the opinion that if the assessee really had no connection with the Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice under Section 142(1) of the Act and filled the consent form. Moreover, it cannot be that penalty is upheld with regard to the attorney holder (Mr. Sanjay Dalmia) of the Swiss bank account and not with regard to the account holder no.2 (Appellant-assessee) qua the same bank account. No question of law arises of consideration and the penalty imposed upon the Appellant cannot be held to be erroneous and unwarranted. Accordingly, the present appeals are dismissed.

Issues:
1. Challenge to ITAT orders upholding penalty under Section 271(1)(b) of the Income Tax Act for non-compliance with notice under Section 142(1).
2. Dispute over the requirement of filling a consent form for obtaining information from Swiss Bank.
3. Allegation of violation of Article 21 of the Constitution of India.
4. Comparison with previous cases regarding penalty imposition.
5. Interpretation of the judgment in Selvi & Ors. vs. State of Karnataka.
6. Consideration of protective assessment deletion by CIT(A).
7. Applicability of the principle of 'right of silence' in non-penal proceedings.
8. Evaluation of the connection of the appellant with Swiss Bank accounts in penalty imposition.

Analysis:
1. The appeals challenged ITAT orders upholding penalty under Section 271(1)(b) for non-compliance with a notice under Section 142(1) of the Income Tax Act. The ITAT upheld the penalty concerning the appellant-assessee's alleged Swiss Bank account, despite the appellant's denial of involvement with the account.

2. The dispute arose regarding the requirement for the appellant to fill a consent form to obtain information from the Swiss Bank. The appellant argued against the necessity of the form, claiming no involvement or connection with the bank accounts.

3. The appellant contended that requesting a consent letter violated Article 21 of the Constitution of India, emphasizing lack of involvement in the transactions related to the Swiss Bank accounts.

4. The judgment compared the current case with past instances, such as Mr. Sanjay Dalmia's case, where penalties were upheld for non-filing of consent letters related to the same bank account, establishing a precedent for penalty imposition.

5. Reference was made to the judgment in Selvi & Ors. vs. State of Karnataka, highlighting the appellant's reliance on the right of silence principle. However, the court found this principle inapplicable to the present case, emphasizing the context of criminal proceedings.

6. The CIT(A) had deleted the protective assessment against the appellant, considering the substantive additions made in her husband's case concerning the same Swiss Bank account.

7. The court discussed the principle of 'right of silence' in non-penal proceedings, concluding that compliance with the notice under Section 142(1) and filling the consent form did not prejudice the appellant if she had no connection with the Swiss Bank accounts.

8. Ultimately, the court dismissed the appeals, stating no error or unwarranted penalty imposition, emphasizing that lack of connection with the Swiss Bank accounts did not invalidate the penalty.

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