2019 (2) TMI 2070 - AT - Income Tax

ITAT deletes penalty under section 272A(1)(C) for failure to submit consent waiver form

The ITAT allowed the appeals, following precedent, and deleted the penalty imposed under section 272A(1)(C) for the assessment year 2006-07 and subsequent ... Penalty levied u/s 272(A)(1)(C) - no compliance by the assessee to file the said details in response to summons u/s 131 issued by the AO - assessee failed to file the specific details like ‘Consent Waiver Form’ before the AO as well as the Ld. CIT(A) - HELD THAT:- It is found that similar issue arose in the case of JAY KETAN PARIKH, RAJ HITEN PARIKH, SAUNAK JITENDRA PARIKH [2018 (10) TMI 1989 - ITAT MUMBAI] as held a bare reading of the summons show that a proforma of Consent Waiver Form was enclosed requiring the assessee to sign it, notarise it and thereafter submit it back. Therefore, it cannot be said that there was any default on the part of the assessee to submit a document which was already in his possession, as is the wont of the provision contained in clause (c) of Sec. 131(1) of the Act. What the Assessing Officer seeks to do in the present case is to compel the assessee to execute a document, as rightly put by the learned representative for the assessee before us, and not a case where a document already in possession of the assessee is being asked to be produced. Therefore, without going into any other aspect of the controversy, we find that the instant default is not of the type understood by a conjoint reading of clause (c) of Sec. 131(1) of the Act with clause (c) of Sec. 272A(1) of the Act. Therefore, on this count itself, we find no merit in the levy of penalty u/s 272A(1)(c) of the Act, which is hereby ordered to be deleted. - Decided in favour of assessee. Issues:1. Violation of principles of natural justice by the CIT(A)2. Confirmation of penalty under section 272A(1)(C) of the Income Tax Act 1961 by the CIT(A)Issue 1: Violation of principles of natural justice by the CIT(A)Analysis: The appeals filed by the assessee were against the order of the Commissioner of Income Tax (Appeals)-52, Mumbai, regarding the penalty levied under section 272A(1)(C) of the Income Tax Act. The assessee contended that the CIT(A) erred in disposing off the appeal in violation of principles of natural justice by not granting adequate opportunity of being heard. The assessee failed to furnish the consent waiver form despite repeated opportunities and directions from the Assessing Officer (AO). The AO issued show cause notices to the assessee, but the latter failed to comply, leading to the imposition of a penalty of Rs.10,000. The CIT(A) found that the assessee repeatedly failed to furnish the required details or explanation to justify the penalty, even during appellate proceedings, resulting in the confirmation of the penalty.Issue 2: Confirmation of penalty under section 272A(1)(C) of the Income Tax Act 1961 by the CIT(A)Analysis: The assessee argued that they had no banking relationship with HSBC Geneva and were not associated with the mentioned bank accounts. The assessee's representative stated that the appellant cooperated with the Income Tax Department, attended all hearings, and submitted relevant details. The representative also cited similar cases where penalties were deleted on similar grounds. However, the Departmental Representative (DR) contended that the assessee failed to provide the required details, including the consent waiver form. The ITAT referred to a similar case where it was held that the failure to submit the consent waiver form did not constitute a default justifying the penalty under section 272A(1)(C) of the Act. Consequently, the ITAT followed the precedent and deleted the penalty of Rs.10,000 levied by the AO for the relevant assessment year and subsequent years.In conclusion, the ITAT allowed the appeals, following the precedent set in a similar case and deleting the penalty imposed under section 272A(1)(C) for the assessment year 2006-07 and subsequent years.