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TMI Blog2018 (12) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 3920 to 3926/Del/2015 - - - Dated:- 31-10-2018 - Shri Kuldip Singh, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Vinod Kumar Bindal, CA Ms. Sweety Kothari, CA Ms. Rinky Sharma, ATP For the Revenue : Shri S. S. Rana, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the seven appeals filed by the assessee , Mrs. Jayanti Dalamia , against the order of the ld Commissioner of Income tax ( Appeals) -29, New Delhi [ the Ld CIT (A)] dated 05.05.2015 for the Assessment Year 2006-07 to 2012-13 wherein penalty levied by the Deputy Commissioner of Income tax , Central Circle-26, New Delhi [ The d AO ] under section 271(1)(b) of The Income Tax Act [The Act] of ₹ 10,000/ for all these years for not submitting consent letter‟ for verification of alleged foreign swiss bank accounts are confirmed. 2. Though the learned AO has passed the penalty order under section 271 (1) (b) of the income tax act, 1961 for all these years separately, however, the learned CIT appeal has passed the common order for all these years. The facts and circumstances of the case for all these years are similar and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that in case the assessee does not have any bank account statement, She may furnish duly filled up, signed an notarized consent letter‟ so that the office of the learned assessing officer can help her obtain the account statement from the bank. The assessee was directed to furnish the above information and the consent letter‟ on or before 22/7/2013. Along with the letter, the assessing officer also attached a proforma copy of the consent letter to be submitted by the assessee. AO mentioned that this letter is notice u/s 142(1) of the act. The learned assessing officer further informed the assessee that in case of non-compliance, penalty provisions would be initiated. 6. The assessee did not comply on the appointed date and instead on 23/7/2013 assessee submitted that she does not have such bank account and there is no question of submitting any consent letter. Further, she did not file the consent letter on that date or at any time thereafter. 7. Therefore the learned assessing officer noted the noncompliance and hence, initiated the penalty proceedings under section 271 (1) (b) of the act and issued show cause notice on 26/9/2013 fixing the date of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Avoidance Agreement that certain Indian passport holders have opened and had maintained bank accounts with Hong Kong and Shanghai banking Corp ( HSBC) in Switzerland. The information received was covered under the confidentiality clause of the Double Taxation Avoidance Agreement and its contents could not be disclosed by the income tax department without express consent of the country, which had shared the information. Based on these information investigations were initiated by the income tax department in July 2011. Some persons appeared before the tax authorities and have admitted that they have had bank account with HSBC and paid the due tax on the maximum amount deposited/outstanding in those accounts. In several cases, search were conducted and the person searched also admitted to have opened account overseas and not disclosed for tax purposes in India. However, during the investigation, several persons have denied outrightly having opened any such bank accounts overseas while some persons have admitted opening the account, but denied having any transactions. In cases, where the details of the transaction in the accounts were not available, or where persons have denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance to tax investigation and, therefore, as the appellant has failed to sign the consent form and having no reasonable cause to do so has violated the said provision. He further held that it is immaterial whether the assessee has opened any bank account and indulged in undisclosed transaction, that is a fact to be verified and investigated, but refusal of the appellant to sign the consent document is a deliberate refusal to join the investigation, for which liability to penal consequences arises at this very stage itself. Consequently, he confirmed the penalty levied by the learned assessing officer for all these years. Therefore, assessee is aggrieved with the order of the learned commissioner appeals has preferred appeals before us for all these seven assessment years. 9. The hearings in the case of the appeals were fixed firstly, on 18/9/2018 on which date the adjournment was sought and granted. The case was fixed for hearing on 25/9/2018. On that date, also assessee filed a paper book and additional grounds and further sought adjournment of hearing. The case of the assessee was adjourned and finally heard on 27/ 9/ 2018. 10. All the additional grounds are in fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not signing the consent form by the assessee. iv. Show cause notice has been issued for initiation of the penalty and not for the levy of the penalty. He referred to notice dated 26/9/2013 and read the subject title which in subject line shows that show cause notice for initiation of penalty proceedings. He further stated that non-compliance has been stated in para number 4 of the above notice where it is mentioned that on verification of the office records, it was noticed that there has been no compliance with the terms of the notice issued under section 142 (1) of The Income Tax Act dated 18/7/2013 up to 22/7/2013 as assessee has not submitted the foreign bank account statement nor filed a duly signed consent letter. He further submitted that there is no evidence available whether any satisfaction was recorded by AO before issue of notice under section 271 (1) (b) of the Act or not. He submitted that according to the provisions of section 274 under which the notice is required to be issued, only table is mentioned by hand, and no satisfaction was recorded. He further referred to para number 5 of the notice stating that it was without satisfaction by the assessing officer about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31/3/2014 and therefore the penalty should have been levied on or before 30/9/2014. In this present case, the penalty has been levied on 12/1/2015 and therefore the penalty proceedings are time barred. ix. He further submitted that during the assessment proceedings, the learned assessing officer himself was not sure whether the addition is required to be made in the hands of the assessee or not. He further referred to the assessment order passed in the case of the assessee when the addition has been made in the hence of the assessee on protective basis. x. He further submitted that the three persons are involved in this case along with the assessee. The husband of the assessee as well as the elder brother of the husband of the assessee are also involved. None of the 3 persons were called for and examine during the course of the assessment proceedings. He further submitted that the page number 14, alleged statement where the name of the Sanjay Dalmia in CHOTUMAN21 and that document itself shows that there is a missing manner of the signature. Therefore, it was not sure whether the account belongs to the assessee or not even as per the understanding of the learned assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ignored by the assessing officer and therefore the penalty under section 271 (1) (b) could not be levied by the assessing officer. He submitted that assessment in the present case has also been made under section 143 (3) and not under section 144 of the act. Therefore, the subsequent compliance has been made by the assessee are accepted by the learned AO and, therefore, there is no default. 12. Based on the above argument, He submitted that the penalty levied by the learned assessing officer and confirmed by the learned commissioner of income tax appeal for all the 7 years deserves to be deleted. 13. The learned departmental representative vehemently submitted and supported the orders of the lower authorities. He stated that i. Issue is squarely covered in favour of the revenue by the decision of the coordinate bench in case of Mr. Manish Periwal V DCIT (ITA number 5157-5162/Del/2014). He further stated that the issue is also squarely covered in case of relative of the assessee in the same search, same bank account and same issue in case of Mr. Sanjay Dalmia vs the CIT [ ITA number 3795 3801/Del/2014] which has been upheld by the honourable Delhi High Court and the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 12/1/2015 , i.e. before the assessment is completed so it is within the time allowed by the act under section 275 (1) of the act. iv. He further referred to the page number 232 of the paper book which contains the statement recorded of the assessee on 5/12/2014, where the documents seized during the course of search were shown to the assessee. Therefore, it cannot be stated that the documents were shown to the assessee in the assessment proceedings only. He submitted that the assessee was aware about the issue for which the search took place and for the purpose of the issue of notice under section 271 (1) (b) of the act. Therefore, now the assessee cannot say that she was not aware of the information, as it was not provided to the assessee. It was within the knowledge of the assessee even at the time of the search. He further submitted that in other two persons Shri Sanjay Dalamia and Shri Anurag Dalamia , the issue has reached at the ITAT and supreme court stage and therefore, assessee cannot feign ignorance . v. He further stated that it is also the claim of the learned authorised representative that 4 days time was provided to the assessee. He stated that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion furnished by the assessee is also not bona fide because assessee does not want to cooperate with the assessing officer to reach at the truth. viii. He submitted that whole process was for the benefit of the assessee. Name of the assessee has cropped up in information received from a foreign country and therefore it was necessary to clear the name of the assessee whether such information is correct or not. In this whole process of the Income tax Department, assessee was not supporting / cooperating the AO. He submitted that assessee has not even said a single word about the difficulty faced by the assessee is signing the consent form. T is simply a blunt denial to cooperate. Therefore, there is no reasonable cause for non compliance. ix. He further submitted that the next ground of the learned authorised representative is that no penalty can be levied where there is no addition in the course of assessment proceedings. He submitted that this plea of the learned authorised representative is incorrect and there is a protective addition in the hands of the assessee and there is an income. It is not a case of Nil addition. x. He also submitted that it is incomprehensible th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided to send the copies of the documents such as account opening form, copy of passbook, transaction details, instructions from account holders and alert received by them to the respective account holders in respect of all the Indian account holders maintaining accounts with them, either as the account holder or as beneficiary. Therefore, assessee being one of the alleged account holders in HSBC bank might have received all the relevant details as stated above. Therefore, the learned assessing officer requested the assessee to furnish certain details. In Para Number 4 of the letter, the assessing officer further stated that in case the assessee does not have the bank account statement, then to furnish duly filled up signed, notarized consent letter so that the assessing officer can help the assessee to obtain the account statement from that particular bank. Along with the letter, the learned assessing officer further submitted the copy of the consent letter for the signature of the assessee. The learned assessing officer further directed the assessee to attend the office on 22/7/2013 at 11.30 a.m. along with the above-mentioned information. The learned AO further stated that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the bank account and also the consent letter. Therefore in para number 5 of that notice the assessing officer noted the satisfaction that assessee has failed to comply with the terms of notice under section 142 (1) of the income tax act and therefore the assessee was issued a show cause why a penalty of ₹ 10,000 should not be imposed upon her under section 271 (1) (b) of the income tax act for failure to comply with the terms of the notice issued under section 142 (1) of the act. The notice fixed the date of hearing on 30/9/2013 on which date the assessee filed a letter wherein it has been stated that assessee has already complied with the notice dated 18 July 2013 for which the reply has already been submitted on 23 July 2013. The assessee also stated that there being a complete compliance of the said notice there is no reason for issue of any notice under section 271 (1) (b) of the income tax Act. The learned assessing officer not satisfied with the reply filed by the assessee dated 23/7/2013 as well as the explanation submitted by the assessee in hearing on 30/9/2013, levied a penalty under that section of ₹ 10,000 for each of the years. The above order was cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issued to the assessee on 26/11/2012 and notice under section 142(1) was issued on 6/5/2013. Therefore, the argument of the learned authorised representative that assessment proceedings begun only on 21/10/2013 is devoid of any merit. According to the provisions of section 271 (1) (b) if the assessee has failed to comply with the notice issued under section 142 (1) of the income tax act than the assessee may be directed by the learned assessing officer that he shall pay by way of a penalty a sum of ₹ 10,000 for each of such failure. The letter dated 18/7/2013, as per para number 5 clearly mentioned that the above information is required by the learned assessing officer under section 142(1) of the income tax act, 1961. Therefore it is apparent that the above notice dated 18/7/2013 was issued under section 142 (1) of the income tax act and failure to comply with the said notice invites penalty under section 271 (1) (b) of the income tax act. Hence, we reject this argument of the ld AR. 20. The next argument of the learned authorised representative is that that the provisions of section 273B provides that no penalty under section 271 (1) (b) can be levied if the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice to the assessee stating that why penalty of ₹ 10,000 should not be imposed upon the assessee under section 271 (1) (b) of the income tax act for failure to comply with the terms of the notice under section 142 (1) of the income tax act, 1961. In view of this, the argument of the learned authorised representative that it is a show cause notice for initiation of the penalty proceedings and not for the levy of the penalty is devoid of any merit and hence rejected. 22. On reading of the show cause notice, in para no 5 clear cut satisfaction of failure of assessee was also mentioned. 23. The next objection raised by the learned authorised representative is that the assessee has not been given a copy of the information available with the assessing officer of various bank statements / accounts. We are not impressed with this argument for reason that the assessee was shown the information available with the assessing officer during the course of search. Further, as per letter dated 18/7/2013, learned assessing officer in para number 3 has given the complete details that what information is available with the assessing officer and made a request to the assessee to sign the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for stalling the enquiry to be made by the assessing officer for determining the correct income of the assessee. Had assessee signed the consent form the truth would have come out and if the assessee does not have any bank account there would not have been any issue with respect to the addition in the hands of the assessee even on protective basis. Therefore, we reject this argument of the authorised representative. 27. The next argument of the learned authorised representative is that the 3 persons of the family are involved in this case, along with the assessee, none of them has been inquired during the assessment proceedings. This does not have any bearing according to us on the penalty proceedings. The penalty proceedings has been initiated for the reason that assessee did not comply with the notice under section 142 (1) of the income tax act, therefore, calling the other persons would not have served any purpose. Further as per information with the assessing officer, names of all the persons are mentioned in the respective information and separate proceedings are pending against each of them. As per the information submitted by the assessee assessment proceedings were conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the learned AO has passed order under section 143 (3) and not under section 144 of the act. Therefore, it means that the subsequent compliance in the assessment proceedings was considered as good compliance and the default committed earlier were ignored by the learned AO. Hence penalty under section 271 (1) (b) of the income tax act is not leviable. The coordinate bench in para number 2.5 has held that the subsequent compliance in the assessment proceedings was considered a good compliance and the default committed earlier were ignored by the AO. However, in the present case, the facts are quite stark which shows that even in the assessment proceedings assessee has not submitted the consent letter to the assessing officer. Therefore, even in the assessment proceedings to there was no compliance by the assessee of the information asked for by the learned assessing officer. Therefore, even in this case, there is no compliance at all, leave aside the subsequent compliance. In view of this, the facts of the present case are quite different from the facts stated before the coordinate bench in the case cited before us. Hence the reliance placed by the learned authorised representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of time. 34. Lastly, the revenue has relied upon the decision of Mr. Sanjay Dalmia ITA No. 3795 to 3801/Del/2014 (Assessment Year: 2006-07 to 2012-13 Sanjay Dalamia wherein in the course of same search, same alleged bank accounts the penalty under section 271 (1) (b) of the act was levied for the same offence of not submitting the consent letter was confirmed by the coordinate bench as under:- Reasons and decisions 12. We have carefully considered the rival contentions and also perused the relevant paper book furnished by the assessee. We have also perused the relevant decisions cited before us. In the present case the simple issue is that Ld. assessing officer has received certain information with respect to certain bank accounts with HSBC accounts, Geneva where the name of the assessee is mentioned. Subsequently, search was also conducted under section 132 of the income tax act. With respect to the bank account with HSBC, Geneva the assessee was issued a notice under section 142 (1) on 18/07/2013 where the assessee was required to furnish certain information with respect to that bank account and in case the assessee does not have the bank account statement then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above facts, the only inference that can be drawn is that, that assessee does not want revenue to reach at the conclusion whether the assessee is having the bank account or not. According to us the assessee is making an attempt to forestall the enquiry of the revenue. b. The revenue is not making any fishing or rowing Inquiry. It has received the information in the form of document that has been collected by the government of India as part of tax information exchange treaty. The name of the assessee is appearing in that particular document. Therefore, the revenue is asking assessee to help in ascertaining the correct facts. The revenue has further established that the particular bank account has some connection with the assessee because name of the assessee is mentioned and further the name of the family members of the assessee are also appearing as attorney and account holder 1 and account holder 2. This fact gives credence to the enquiry of the revenue and the document received in information exchange from foreign country. Therefore, the revenue has got the specific information, but to ascertain the correct facts because of the confidentiality agreement between the bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the opinion that the Ld. assessing officer is empowered under the provisions of this act, even in case of assessment under section 153A to issue notice under section 142(1) of the income tax act. Hence the above plea of the assessee is rejected. 13. Now we come to the various decisions cited by the assessee before us pleading that penalty levied under section 271 (1) (b) is not sustainable. a. First decision cited before us is in case of ITA No. 4429 to 4434/del/2015 for assessment year 2003 - 04 to 2008 - 09 in case of LK G builders private limited versus DCIT where in the penalty was deleted for non-compliance of statutory notices where the assessee has shown a reasonable cause. The facts of the case shows that assessee is engaged in real estate and lending trading etc and search and seizure action was conducted at the premises of the assessee on 31/01/2008. All the assessments completed under section 144 read with Section 153A of the income tax act and during the course of assessment proceedings, the assessing officer initiated penalty proceedings under section 271 (1) (b) for non-compliance of certain statutory notices. The reason shown by the assessee for such no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before us have distinct facts which are not comparable with the facts before us. It is further to be noted that when the relatives of the assessee are having the bank accounts and addition are confirmed in their hands by the 1st appellate authority and where the name of the assessee appears in the information received under the information exchange agreement between the two countries, We do not agree that there is no material brought on record by the revenue for initiating an enquiry. Therefore, the reliance placed by the assessee on the decision of the coordinate bench does not apply to the peculiar facts of the case. c. The 3rd decision relied upon by the assessee is with respect to the decision of coordinate bench in case of Piagam Impex private limited versus ACIT in ITA No. 4787/del/2013 dated 06/02/2014. The above decision does not apply to the facts of the case as there was no issue of information received by the government of India under the information exchange. In view of this the reliance by the Ld. authorised representative on this decision is incorrect. d. The 4th decision relied upon by the assessee is with respect to the decision of the coordinate bench i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relatives of the assessee are also subject to similar proceedings and addition in their hands are confirmed by the 1st appellate authority. Therefore the decision of Hon'ble Supreme Court are rendered on different facts and do not apply in the present case as the offence of the assessee for non-compliance with the notice of the assessing officer is neither technical nor venial in nature. 14. Further on the identical facts and circumstances in the ITA No. 5157-5162/Del/2014, the penalties have been confirmed by the coordinate bench considering the peculiar facts of the case as under :- 11. The Ld. CIT(A) has properly taken note of all these relevant facts, legality of notices, nature of noncompliance and its adverse impact on investigations related to alleged undisclosed HSBC bank account. We find no infirmity in the order of Ld. CIT(A) confirming the imposition of penalty of ₹ 30,000/- each in above assessment years as defaults are more than 3 times. It has been rightly held that there is no law that for each default separate notice u/s 27(1)(b) should be issued on defaulting assessee. The orders of ld. CIT(A) being justified on proper appreciation of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee‟s complicity, there was no question of compelling him to answer to the letters and also submit the consent form under Section 142(1) of the Act. It is submitted that in the course of the search, no incriminating material was, in fact, seized from the assessee and therefore the penal consequence heaped upon him, is without authority of law. This Court has considered the submissions of the parties. The material on the record indicates that the French official source shared information with the Indian Government with respect to accounts held in HSBC Bank. Prima facie, such material disclosed that the assessee was an attorney of some account holder. In the Court‟s opinion, if the assessee really had no connection with such accounts, no prejudice could really have ensued to him if he would have complied with the notice under Section 142(1) of the Act and filed the consent form. In these circumstances, the penalty cannot be held to be erroneous or unwarranted. No question of law arises. The appeals are dismissed. 36. Assessee aggrieved with the order of the Hon High court challenged the same before Honorable Supreme Court by filing special lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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