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TMI Blog2017 (2) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... without appreciating that the appellant had duly responded to and complied with the notice issued under section 142(1) of the Act. 1.2 That the Commissioner of Income Tax (Appeals) erred on facts and in law in holding that the appellant failed to file copy of a bank statement not belonging to the assessee and to furnish a signed consent form in respect of that account which the assessee was not bound to furnish as no provision of law required that. 1.3 Without prejudice, that the CIT(A) failed to appreciate that penalty under section 271 (1)(b) r.w.s.273B of the Act was even otherwise not leviable since there existed 'reasonable cause' for not furnishing the 'consent-form' sought by the assessing office. The appellant craves leave to add to, alter, amend or vary from the above grounds of appeal before or at the time of hearing." 2. The facts of the case in brief are that the income tax department was having an information that the assessee was having an account with HSBC Bank, Geneva, Switzerland under profile name Partman Investments Holdings & Code BUP 9072021170 which was not disclosed by the assessee at the time of filing of the return. The Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn bank account with HSBC, Geneva and the same was clarified earlier during the search proceedings and further through various letters/replies filed before the assessing officer. (Page 6 of the Paper book) 1.2.3 The learned assessing officer issued show cause notice dated 31/07/2013 under section 271(l)(b) read with section 274 of the Income tax Act, 1961 fixing the case for 08/08/2013 to show cause why an order imposing a penalty under section 271 (l)(b) of the Income tax Act, 1961 which was duly complied by the appellant. (Pages 7 to 9 of the Paper book) 1.2.4 However, the learned assessing officer imposed penalty under section 271(1)(b) of the Income tax Act, 1961 vide order dated 18/10/2013 as the appellant company denied that he is not maintaining any foreign account with HSBC, Geneva as alleged by the learned assessing officer by considering such reply filed by the appellant in response to notice as equivalent to non - compliance of notice issued under section 142(1) of the Income tax Act, 1961 for the purpose of imposing penalty under section 271(1)(b) of the Income tax Act, 1961 without appreciating that the appellant had duly complied with the notice issued under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pertinent to note that as per the provisions of section 271(1) (b) of the Income tax Act. 1961 penalty may be imposed on the assessee for non - compliance of notice issued under section 142 (1) or 143(2) of the Income tax Act. 1961. For the sake of convenience relevant portion of section 271 (1) (b) of the Income tax Act. 1961 is reproduced as under: "271.(1) - If the [Assessing] Officer or the [***] [Commissioner (Appeals)] [or the [Principal Commissioner or] Commissioner] in the course of any proceedings under this Act. is satisfied that any person- (b) has [* * *] failed to comply with a notice [under sub-section (2) of section 115 WD or under sub-section (2) of section 115WE or] under sub-section (1) of section 142 or sub-section (2) of section 143 [or fails to comply with a direction issued under sub-section (2A) of section 142},". 1.2.10 On analysis of the provisions of section 271(1) (b) of the Income tax Act, 1961, penalty under such section may be imposed when the assessee has not complied with the notice issued under section 142(1) or 143(2) or fails to comply with the directions issued under section 142(2A) of the Income tax Act. 1961. It is pertinent to note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, there existed a reasonable cause for non - compliance by the appellant in filing of documents i.e. bank statement of foreign account asked by the learned assessing officer vide notice dated 12/07/2013 issued under section 142(1) of the Income tax Act, 1961. So, the learned assessing officer erred in law in imposing penalty under section 271 (l)(b) of the Income tax Act, 1961 ignoring the provisions of section 273 B of the Income tax Act, 1961. Hence penalty of Rs. 10,000/- imposed under section 271 (1) (b) of the Income tax Act, 1961 is bad in law and liable to be cancelled. " In addition to the above, the appellant relied upon the following case laws:- * Balram Kumar Mahendra v Income-tax Officer [2012] 21 taxmann.com 222 (ITAT-Delhi) * Woodward Governors India Private Limited v Commissioner of Incometax [2001] 118 Taxman 433 (HC - DELHI) (II)) Arguments on Grounds of Appeal No. 3 3.1 The learned assessing officer has completed the assessment under section 153A of the Income tax Act, 1961 on 27/02/2015 in the case of the appellant. However, the learned assessing officer passed penalty order under section 271 (1)(b) read with section 274 of the Income tax Act, 1961 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings are concluded. It is also settled in law that satisfaction as envisaged in section 271 should be discernible from the assessment order itself. In addition to above, the appellant relied upon the following case laws:- * Commissioner of Income-tax v Rampur Engineering Co. Limited (2009) 309 ITR 143 (HC - Delhi) * Commissioner of Income-tax v Ram Commercial Enterprises Limited (2002) 246 ITR 548 (HC - Delhi) * Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust v Assistant Director of Income tax (2008) 115 TTJ 419 (ITAT - Delhi) * Assistant Commissioner of Income tax v K K Mansinghka (ITA No. 9207/Bom./1990) (ITAT - Mumbai) * Parmeshwari Textiles v income-tax officer(2005) 146 Taxman 38 (Mag.) (ITAT- Jodhpur) (III)) Arguments on Grounds of Appeal No. 4 4.1 It is pertinent to note that the learned assessing officer has completed the assessment proceedings under section I53A of the Income tax Act, 1961 vide order dated 27/02/2015 and not under section 144 of the Income tax Act, 1961. (Pages 10 to 24 of the Paper book) 4.2 It is also pertinent to note that the all the required details was filed by the appellant before the learned assessing officer during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant are discussed as under.- (i) The appellant has stated that this HSBC account does not belong to him and therefore, the appellant can neither submit the documents required in connection with the bank account nor any consent form. For the sake of arguments for a moment, if the appellant is not having bank account in the HSBC, then the consent form sought by the A.O. should have been filed by the appellant, so that the A.O. can obtain the details of this alleged bank account from the HSBC. For further clarification, the section 142(1)(iii) is reproduced as under.- "Inquiry before assessment. 142(1) For the purpose of making an assessment under this Act, the Assessing Officer. may serve on any person who has made a return under section 115WD or section 139 or in whose case the time allowed under sub-section(l) of section 139 for furnishing the return has expired a notice requiring him, on a date to be there in specified, ... (i) '" . (ii) . (iii) to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault under consideration, no compliance was made and the A.O. has taken adverse view in the assessment order passed U/S 153A on 27.02.2015, and addition of Rs. 69,07,414/-has been made by considering undisclosed deposits in the alleged HSBC account, in the hands of the appellant. From the above, it is clear that the appellant failed to furnish the specific information/details for the alleged bank account in the name of the appellant, i.e. consent form, without any reasonable cause. Therefore, there is a noncompliance of the notice U/S 142(1) dated 12.7.2013. In view of the above, I do not find any infirmity in the Penalty imposed U/S 271 (1)(b) and same is hereby confirmed." 3. Now the assessee is in appeal before us. 4. The Ld.Counsel for the assessee reiterated the submissions made before the lower authorities and further submitted that the assessee had duly complied with the notices issued by the A.O. by stating in his reply dated 19.7.2013 that the bank account did not belong to him. Our attention was drawn to page no.7 of the assessee's paper book which is a copy of the aforesaid reply. It was further submitted that the assessee also replied in response to notice dt. 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment you are having an account in HSBC bank, Geneva, Switzerland having client profile name Portman Investments Holdings Ltd. (profile Code 9072021170 and the assessee has been asked to provide information/details/documents in relation to the aforesaid. In this regard, it is stated that the assessee is not maintaining any foreign bank account and this position was already clarified during the search proceedings at the time of recording of statement by the assessee and later on also to the investigation team vide letter dt. 9.1.2012 and thereafter to your honour vide letter dt. 30.11.2012." 5.2. Thereafter the A.O. again asked the assessee vide letter dt. 31.07.2013 to furnish the details and also asked to show cause as to why penalty of Rs. 10,000/- should not be imposed u/s 271(1)(b) of the Act. The assessee again vide letter dt. 7th August, 2013 (a copy of which is placed at page 10 of assessee's paper book) submitted as under:- "This is w.r.t. your notice dt. 31.7.2013 u/s 271(1)(b) of the Act requiring therein to show cause why the penalty should not be levied under the above section as the assessee has not furnished reply on or before 19.7.2013. In this regard my submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not give the consent form for obtaining the bank statement. In our opinion, when nothing was brought on record to substantiate that the alleged bank account actually belonged to the assessee, there was no possibility of furnishing the consent form, particularly when the assessee time and again denied that the alleged bank account belonged to him. Therefore, we are of the confirmed view that the sustenance of penalty u/s 271(1)(b) of the Act by the Ld.CIT(A) was not justified, particularly when the assessee complied with the notice/letters issued by the A.O. and it was not possible for him to give the consent form for obtaining the bank statement, as the same did not belong to him. We, therefore, considering the totality of the facts, delete the penalty u/s 271(1)(b) of the Act levied by the AO and sustained by the Ld.CIT(A). 7. The facts in ITA 6425/Del/2015 are similar to the facts involved in ITA no.6426/Del/2015 (supra) the only difference is in the dates of the letters/notices dated 12.8.2014 and 30.6.2014 which were alleged to have not been complied with by the assessee. Therefore our findings given in former part of this order shall apply mutates mutandis. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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