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 years. The CIT(A) erred in disposing off the appeal without granting adequate opportunity of being heard, leading to the confirmation of the penalty initially. However, the ITAT ruled in favor of the assessee, emphasizing that the failure to submit the consent waiver form did not justify the penalty, ultimately resulting in the penalty being deleted.

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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.

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