2019 (9) TMI 602 - AT - Income Tax

Penalty u/s 271(1)(b) - violation of notice u/s 142(1) - invalid proceedings under section 143(3) r.w.s. 153C - HELD THAT - If the document itself does not indicate which bank it pertains to, then where is the question of assessee signing any consent letter form for any bank account with HSBC Geneva? The information of one foreign account maintained by the assessee, i.e., HSBC London has been duly provided for which she has already signed consent letter form. - Thus, what is transpired from the assessment order, it cannot be emphatically said that assessee has failed to comply either with the terms of notice or has failed to file any documents required in the said notice. Here, nowhere from the assessment order it is discernable that any incriminating document pertaining to alleged bank account or anything indirectly linking the said bank account of the assessee has been found. - So once there is no document found during the course of search nor there is any specific information that assessee has bank account with HSBC Geneva, then it is very difficult to rope in the assessee for hold guilty of any kind of non-compliance. In this case we are quite persuaded by the plea that penalty in the case of the assessee should not be levied as assessee had a reasonable and bonafide belief in terms of section 273B, that there had been no violation of notice u/s 142(1) for non-compliance, as assessee kept on reiterating before the authorities below that the document does not contain her signature nor mentions any name of the bank, and for this reason, she was legally advised that she is not competent to sign the consent letter. We are in tandem with such a contention that if any person is acting upon a legal advice, then he/she believes in such advice that there is no violation of law. Such an act definitely falls in the realm of reasonable and bona fide belief, as any prudent or reasonable person gets persuaded by the legal advice, in a judicial or quasi judicial proceedings or any action which may have any civil consequence. If assessee had not signed the consent waiver form, based on legal advice then she did had a bonafide belief. Since, this aspect has not been seen by the Assessing Officer, therefore, we are of the opinion that, Assessing Officer may verify, whether assessee during the course of any proceedings has taken this plea or else assessee may point out to Assessing Officer that such a belief was also based on legal advice. To allay any doubts arising from the contents of query asked by the Assessing Officer vide notice u/s 142(1), that the assessee was having the bank account in HSBC Geneva, we are of the opinion that Assessing Officer may verify from the assessment records as to; firstly, whether there was any specific information based on documents available to him where name of bank account mentioned was of HSBC Bank Geneva for which consent waiver form was insisted to be signed by the assessee; and secondly, whether any such specific document was confronted to the assessee at any stage, before requiring the assessee to sign the consent waiver form. AO will then decide accordingly. Appeals of the assessee are treated allowed for statistical purposes.

Issues Involved:
1. Jurisdiction and legality of the penalty order under section 271(1)(b) of the Income Tax Act, 1961.
2. Compliance with notice issued under section 142(1) of the Act.
3. Competence to sign the consent form.
4. Absence of addition in the assessment order under section 153(C)/143(3) of the Act.
5. Reasonable cause for not furnishing the consent form under section 271(1)(b) read with section 273B of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction and Legality of the Penalty Order:
The assessee contended that the penalty order dated 09.01.2015 under section 271(1)(b) was without jurisdiction, illegal, and bad in law. The Tribunal noted that the penalty was levied for non-compliance with a notice under section 142(1) dated 05.08.2013, specifically for not signing a consent waiver form for a bank account alleged to be held in HSBC Geneva. The Tribunal found that the assessment proceedings were initiated under section 153C, which requires a direct link to the material found during the search. Since no concrete information or material was found during the search indicating the assessee held a bank account in HSBC Geneva, the Tribunal held that the penalty order lacked jurisdiction and was not legally sustainable.

2. Compliance with Notice Issued under Section 142(1):
The assessee argued that she had duly responded to and complied with the notice issued under section 142(1). The Tribunal observed that the assessee had consistently denied maintaining any foreign bank account with HSBC Geneva and had provided all necessary information and documents requested by the Assessing Officer. The Tribunal noted that the assessee had also signed a consent form for an HSBC London account, which she admitted to maintaining. The Tribunal concluded that the assessee had complied with the notice to the best of her ability and knowledge, and non-signing of the consent form for HSBC Geneva could not be considered non-compliance.

3. Competence to Sign the Consent Form:
The assessee contended that she was not competent to sign the consent form for the alleged HSBC Geneva account as she did not maintain any such account. The Tribunal found that the assessee had repeatedly stated, both in writing and during her statements recorded under oath, that she did not have any account with HSBC Geneva and was not competent to sign the consent form. The Tribunal held that the assessee's refusal to sign the consent form was based on a reasonable and bona fide belief, supported by legal advice, and could not be construed as non-cooperation.

4. Absence of Addition in the Assessment Order:
The assessee pointed out that no addition had been made in the assessment order passed under section 153(C)/143(3), where the Assessing Officer acknowledged that no information was available regarding the alleged foreign bank account. The Tribunal noted that the Assessing Officer had accepted the assessee's return of income without making any additions, indicating that there was no concrete evidence of the alleged foreign bank account. The Tribunal concluded that in the absence of any addition or concrete evidence, the penalty for non-compliance could not be justified.

5. Reasonable Cause for Not Furnishing the Consent Form:
The assessee argued that there was a reasonable cause for not furnishing the consent form, as she did not maintain the alleged foreign bank account and was legally advised not to sign the form. The Tribunal agreed with the assessee's contention, noting that she had acted on legal advice and had a bona fide belief that she was not competent to sign the consent form. The Tribunal held that the assessee's actions fell within the realm of reasonable and bona fide belief under section 273B, which provides for non-levy of penalty if there is a reasonable cause for non-compliance.

Conclusion:
The Tribunal concluded that the penalty under section 271(1)(b) was not justified as the assessee had complied with the notice under section 142(1) to the best of her ability, had a reasonable cause for not signing the consent form, and no concrete evidence or addition was made in the assessment order. The appeals were allowed for statistical purposes, with directions for the Assessing Officer to verify specific information and documents related to the alleged bank account, if available.

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