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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 ..... re, 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). - Decided in favour of assessee. - ITA No. 6425/Del/2015 & ITA No. 6426/Del/2015 - - - Dated:- 28-2-2017 - N. K. Saini (Accountant Member) And Beena A. Pillai (Judicial Member) For the Appellant : Rupesh Jain, Adv. For the Respondent : A. K. Sharma, Sr. D.R. ORDER N. K. Saini (Accountant Member) These two appeals filed by the assessee are directed against separate orders each dated 22.9.2015 by the Ld.CIT(A)-30, New Delhi pertaining to the Assessment Year (A.Y.) 2006-07. Common issues are involved in both these appeals, which were heard together, so, these are disposed of by way of this consolidated order for the sake of convenience. 2. At the first instance we will take up the appeal in ITA 6426/Del/15 wherein the assessee had raised the following grounds of appeal. That the CIT(A) erred on facts and in law in confirming the penalty of ₹ 10,000/- levied by the assessing officer under section 271(1)(b) for alleged non compliance of notice dated 12.07.2013 issued under section 142(1) of the Income Tax Act,196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty u/s 271(1)(b) of the Act. 2.1. Being aggrieved the assessee carried the matter to the Ld.CIT(A) and furnished the written submissions vide letter dt. 18.9.2015 which has been incorporated by the Ld.CIT(A) at para 4.1 of the impugned order which is reproduced verbatim for the sake of ready reference hereunder. Arguments on Grounds of Appeal No. 1 and 2 1- 2.1 The appellant filed his return of income under section 139 of the Income tax Act, 1961 declaring income of ₹ 7,05,732/-. Subsequently, a search and seizure operation under section 132 of the Income tax Act, 1961 was carried out in the case of the appellant. The learned assessing officer issued notice dated 12.07.2013 under section 142(1) of the Income tax Act, 1961 requiring the appellant to furnish information/documents in respect of an alleged bank account maintained with HSBC, Geneva, Switzerland and in case if appellant is not able to obtain the same from bank, learned assessing officer asked to fill up the consent form for obtaining bank statement. (Pages 1 to 5 of the Paper book) 1 - 2.2 In response, the appellant vide reply dated 19/07/2013 in response to notice issued under section 142( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 dated 12/07/2013, the appellant vide reply dated 19/07/2013 submitted that he did not maintain any foreign 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. (Pages 4 to 6 of the Paper book) 1.2.7 It is pertinent to note that the said fact that the appellant has filed reply in response to notice issued under section 142(1) is also accepted by the learned assessing officer in the impugned order. However, the learned assessing officer imposed penalty under section 271(1) (b) only on the basis that the appellant in his replies filed in response to notice issued under section 142(1) of the Income tax Act, 1961 denied that he is not maintaining foreign bank account with HSBC, Geneva. (Pages 1 to 3 of the Paper book) 1.2.8 It is pertinent to note that the learned assessing officer erred in law in imposing penalty under section 271 (1) (b) of the Income tax Act, 1961, on the basis that in response to notice issued under section 142(1) of the Income tax Act, 1961, the appellant filed reply denying of having foreign bank account in HSBC as asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961, penalty under section 271 (1) (b) read with section 273B is not imposable. For the sake of convenience, relevant portion of section 273B of the Income tax Act, 1961 is reproduced as under: Penalty not to be imposed in certain cases. Notwithstanding anything contained in the provisions of [clause (b) of subsection (1) of} [section 271, section 271A. [section 271AA.) section 271B[,section 271BA, [section 271BB.} section 271C. [section 271CA.)section 271D, section 271E. [section 271 F. [section 271 FA.) section 271 FB. [section 271G.] {section 271 H. clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AAJ or [section 272B or [subsection (1) [or sub-section (1A)] of section 272BB or [sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273.no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. On analysis of the provisions of section 273B of the Income tax Act, 1961, it is quite evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities must be a legal satisfaction, which should be formed by an authority before a notice of imposing penalty proceedings is issued. The fact that a legal satisfaction 'reached should be clearly demonstrated by the authorities and such a demonstration is possible only when the satisfaction is shown to have been recorded in writing in any proceedings under the Income Tax Act, 1961. 3.4 It is pertinent to note that the order imposing penalty under section 271 of the Income tax Act, 1961 cannot be passed before passing assessment order as the learned assessing officer has to record satisfaction for imposing of penalty in such assessment order only and then issue notice under section 274 of the Income tax Act, 1961. As penalty proceedings under section 271 are required to be initiated during the course of an assessment, a satisfaction of such initiation must be mentioned in the body of the assessment order itself. 3.5 It is well settled law that power to impose penalty under section 271 depends upon the satisfaction of the Assessing Officer in the course of the assessment proceedings under provisions of the Income tax Act, 1961 and it cannot be exercised if he is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 144 of the Act, this means that subsequent compliance in the assessment proceedings was considered as good compliance and the defaults committed earlier were ignored by the AO. Therefore, no penalty could be levied for earlier defaults under section 271 (1)(b) of the Income Tax Act 1961, if any. In addition to above, the appellant relied upon the following case laws:- Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs Assistant Director of Income Tax (2008) 115 TTJ Delhi 419 Kamla Madan v Deputy Commissioner of Income tax [2014] ITA Nos.4691 to 4697/Del/2013 (ITAT - Delhi) l'v1ls Bluebell Infrastructure Private Limited v Assistant Commissioner of Income tax (2014) ITA Nos.4378 to 4382/Del/2013 (ITAT - Delhi) Ms. Natasha Garg v Assistant Commissioner of Income tax (2014) ITA Nos. 4834 to 4837/De1/2013 (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 J 146 Taxman 38 (Mag.) (ITAT - Jodhpur) 2.2. The Ld.CIT(A) however did not find merit in the submissions of the assessee and sustained the penalty levied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) The appellant's argument that there was a reasonable cause for not furnishing the consent form, as alleged Bank account in the HSBC does not belong to him and therefore, as per provision of 273B, penalty is not imposable. This argument of the appellant, is not acceptable as there was no reason for not giving consent form, in order to obtain the details of the HSBC account alleged to be in the name of the appellant. Rather, by not giving the consent form, which is a prerequisite for obtaining the details of the HSBC account, the HSBC will not provide the details of the bank account. (iv) The appellant has also taken the argument that the final assessment has been passed U/S 153A and not U/S 144 of the Act. The A.O. has raised the specific queries vide notice U/S 142(1) dated 12.7.2013, and same was not complied fully, since the appellant failed to give the consent form and therefore, there is a clear cut default committed by the appellant. The case laws relied upon by the appellant have also been carefully considered and are not applicable, as same are distinguishable to the facts of the appellant. The penalty u/s 271(1)(b) is attracted for each such default a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the authorities below and reiterated the observations made in their respective orders. 5. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case it is noticed that the A.O. issued a letter dt. 12.7.2013 to the assessee stating therein that as per the information available with the department, the assessee was having an account in HSBC Bank, Geneva, Switzerland with the profile name Partman Investments Holdings Code BUP 9072021170 and asked the assessee to furnish the following details. a) Account opening form in respect of foreign bank account mentioned at para 2. b) Complete bank statements, in original, in the foreign bank mentioned at (a) above, since beginning till date. c) Residential status as per the Act as on the date of opening of foreign bank account mentioned at (a) above and thereafter for all AYs till date. The A.O. also stated in the said letter as under. In case you do not have the bank account statement, please furnish duly filled up, signed and notarized consent letter so that we may help you obtain the account statement from the bank. Copy of the consent l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is wrt your notice dt. 30.9.2013 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 in pursuance to the above stated notices. In this regard the submissions are as under: The notice dt. 12 th July, 2013 was served on the assessee on 16.7.2013 wherein asked to submit the reply on or before 19.7.2013. The reply was submitted by us on 5.8.2013 on the same date by which it was required to be submitted. As the assessee has already submitted in the above referred reply that the foreign bank account as stated in your notice does not belong to the assessee, therefore the assessee can neither submit the documents required in connection with the account nor any consent letter can be given by the assessee for such account as the same is not belonging to him. In view of the above position, your good self may please appreciate that the assessee has duly complied with your notices and there is no case for initiation of penalty proceedings initiated u/s 271(1)(b) of the Act and accordingly the assessee requests your good self to please drop the same. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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