TaxTMI 
TaxTMI 
2017 (10) TMI 629
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.... of alleged undisclosed overseas bank account, even though the appellant denies having any such bank account and consequently cannot furnish such 'consent form' containing some bank a/c number not being owned by the appellant assessee and his order is bad in law and against the facts and circumstances of the case. 2. That since the appellant denies having any bank account with HSBC Bank, Geneva, Switzerland, it cannot be compelled to generate artificial bank account opening form and issue consent letters, in favour of any authority. 3. That the appellant having duly complied with notice u/s 142(1) of the Income Tax Act, 1961 there was no reason for levy of penalty u/s 271(l)(b) of the Income Tax Act, 1961 on incorrect assumption of facts. 4. That the learned Commissioner of Income Tax (Appeals) has erred in not adjudicating upon Ground No.5 of the appeal reading as under "5. That levy of seven penalties under the same provisions of the Act in response to alleged non-compliance of one notice is mala fide and deserves to be cancelled." 5. That the above Grounds of Appeal are without prejudice to one another. grounds of appeal on or....
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....71(1)(b) of Rs. 10000/- each for all these years. Proceedings before CIT (A) 7. The assessee aggrieved with the order of the ld Assessing Officer preferred an appeal before the ld CIT(A) contesting that: a. Assessee does not have any bank account b. It does not have any connection with any of the alleged accounts and transaction detailed in the notice and that assessee denied that any of these accounts transactions or codes belonging to the assessee 8. Therefore, it was submitted that there is no question of receiving the information from that bank or signing any consent letter. With respect to the penalty assessee submitted that assessee has already complied by submitting the above letter on 23.07.2013. Therefore, there was no non-compliance. The ld CIT(A) after considering the above submission noted as under upholding the levy of penalty :- "4. I have gone through the submissions of the appellant and have perused the AO's order and considered the facts and evidences on record. The issue of imposing the penalty is to be seen in the following background. 4.1 In April/May, 2011 India received information from a Foreign Government unde....
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....otarize the "consent letter" to verify the truth of the allegation against them. It is the duty of every citizen of India to cooperate with and join the investigation to ascertain the truth regarding cases with such serious allegation. The purpose of the penal provision contained in section 271(l)(b) is to ensure compliance to tax enquiry/investigation. This penalty is attracted where there is failure to comply with notices under section 142(1) or under section 143(2). In criminal law, similar provisions are contained in Sections 160 and 161 in the Code of Criminal Procedure, 1973 and the punishment for the same is prescribed in Section 174 of the Indian Penal Code, 1860. Under the civil law also, the relevant provisions are contained in Sections 31 and 32 and Order XVI (Schedule-1) of the Code of Civil Procedure, 1908. Under the Income Tax Act, 1961 the enforcement provisions are contained in Sections 131, 132, 133, 133A 142 and 143. The penal provisions contained in Chapter XXI relevant to enforcement of sections 142/143 are Sections 271 and 272A. 4.3 Thus, in the facts of present case there was a information the appellant is engaged in suspected tax evasion by transferr....
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....ers Pvt. Ltd. Vs. DCIT 2017 TIOL-1242-ITAT-Del dated 29.08.2017, for deletion of penalty. d. He further raised an issue that there is no specific provision for issue of notice u/s 142(1) of the Act in search proceedings and therefore, no penalty can be levied for non compliance of notice u/s 142(1) of the Act. He submitted a detailed note on this as under:- "In absence of a specific provision for issuance of a notice u/s 142(1) of the Act, no penalty u/s 271(b) of the Act is leviable. 1. Provisions of the Chapter XIV-B regarding the block assessment were introduced w.e.f. 01/07/1995 and this chapter ceased to apply after 31/05/2003 when section 153A was inserted in respect of searches conducted after 31/05/2003. Section 158BC of the Act provided for special procedure for block assessment in case of searches and the sub section (b) therein provides that "(b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142. sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply; " NO SUCH PROVISION SPECIFICALLY R....
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....ns 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section 144. Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158- BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter....
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....such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. 65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an asse....
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....it information as mentioned in the impugned notice dated 18/07/2013 was against the above judgments as it would be some evidence, much less incriminating, not found at the time of search. 6. The above judgments also support the view of the appellant as has been held in the cases of Ashok Chaddha and Sumanlata Bansal (supra) that the new provisions does not require issue of notice u/s 143(2) (and on the same corollary u/s 142(1) of the Act) as the assessment under this new section has to be based only on the basis an incriminating material found during the course of search and for that purpose, no notice u/s 142(1) of the Act for producing any fresh material is required. Thus, the legislature in its wisdom has very categorically omitted reference to the same while enacting the new provisions for assessments in the search cases w.e.f. 01/06/2003 though the same were specifically mentioned in the earlier special provisions to make assessments of income after search. This cannot be an oversight as the earlier provisions of search assessments were very much in consideration while replacing the same with new scheme of search assessments. Thus, on facts and law explained as above....
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....d the deficiencies if there be any. The Court must interpret the statute as it stands and in case of doubt, in a manner favourable to the taxpayer. v) CIT Vs Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC) Where a literal construction would defeat the obvious intention of the legislation and produce a wholly unreasonable result, the court must "do some violence to the words" and so achieve that obvious intention and produce a rational construction. If the interpretation of a fiscal enactment is open to doubt, the construction most beneficial to the subject should be adopted. Submissions on the main ground 8. It is trite law that a statutory tribunal derives only those powers, jurisdiction and authority from the express provision of that statute and has no vested powers extraneous to the provisions of the statute. The Apex Court in Jyoti Basu & Others vs Debi Ghosal & Others 1982 AIR 983, copy placed in paper book, has held that: "A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to di....
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....d only and only to "accounts and documents". Needless to emphasize that a statutory authority can exercise only those powers which are conferred by the relevant statute and he cannot on his own extend these powers. The term "Document" has not been exhaustively defined under Income-tax Act but the section 2(22AA) of the Act provides inclusion of an electronic record under document. Clause (t) of the Section 2(1) in The Information Technology Act, 2000 referred to in the Section 2(22AA) defines "electronic record" means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro film AND THIS DEFINITION IS ALL IN PAST TENSE. The term "document" as defined u/s 3 of the Indian Evidence Act means " any matter expressed or described upon any substance by means of letters, figures or mark or by more than one of those means, intended to be used or which may be used, for the purpose of recording that matter. It may kindly be noted that in the above definition the term used is "expressed or described" which is also in past tense and not in future tense. Asking someone to write something or to execute power of attorne....
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....in Amiya Bala Paul vs CIT (2003) 262 ITR 407 in para 11, copy placed in paper book, has held that a reference to the DVO cannot be made u/s 142(2) of the Act because that cannot be called an enquiry by the assessing officer himself but was the result of an enquiry by the DVO. Thus, asking to file a consent waiver form is not the enquiry by the AO himself under the said section. 13. It is also submitted that similarly a specific section 142(2A) was enacted for getting the special audit report by the AO from an independent expert. This special enactment was made because the AO could not have demanded special audit u/s 142(1) of the Act. On the same analogy, mandate / consent letter cannot be asked for without a specific statutory provision. 14. Kindly refer to section 142(2) of the Act "For the purpose of obtaining full information in respect of the income or loss of any person, the Assessing Officer may make such inquiry as he considers necessary. " It is submitted that only this sub-section can be resorted to by the AO for making inquiry about the alleged foreign bank account which he has admittedly made by sending reference to the foreign jurisdiction through the....
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....nt is unwarranted and is judicial harassment of the appellant. The law cannot be twisted so as first to demand compliance from an assessee in excess of the statutory powers and then, levy penalty for not meeting the illegal demands. 17. Further, the assessment order was finally passed under section 143(3) of the Act and not u/s 144 of the Act (that too on protective basis in the case of Sanjay Dalmia). This means that the AO has ignored the alleged default committed earlier and the information desired by the said notice did not have any bearing on the information relied in the assessment made. It was held in Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust 115 TTJ 419 (copy placed in paper book) that "2.5 We also find that finally the order was passed under s. 143(3) and not under s. 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, in such circumstances, there could have been no reason to come to the conclusion that the default was wilful. " 18. The same view has been held in Chetan ARC Electrodes (P) Ltd. 2015- TIO....
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....verment in the appellate order. However, instead of giving the reply of the information sought by the appellant, the CIT(A) refused to give any information on the plea of confidentiality. Copies of the RTI application and its reply have been filed in the PB submitted on 29/05/2017. Thereafter, the appellant inspected the relevant appellate files /folders in the office of the CIT(A) and found no material therein to support the averments of the CIT(A) which clearly shows that the same were made on surmises and just to vitiate the Hon'ble higher judicial authorities. A letter dated 12/04/2017 was submitted to the CIT(A) thereafter on 13/04/2017 mentioning therein as to what was found in the appellate folders relating to the impugned penalty, a copy of which has been placed in the PB. The same has not been denied by the CIT(A) so far. 23. Further, he also has stated that where the account holders denied holding any such account, the prescribed consent form duly signed by the alleged account holder was sent to HSBC by the revenue after obtaining the same from the alleged account holder to seek the information. He also stated that only in those cases where the alleged accounthol....
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....il in Appeal no. 6727/Mum 2012 by ITAT Mumbai 67 SOT 52 The fact that the supplier is declared as a "Hawala dealer" by the VAT department is a good starting point for making further investigation and taking it to its logical end. However, suspicion of highest degree cannot take place of evidence. The AO ought to have called for details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. No such exercise was done. There is nothing in the order of the AO about the cash trail. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue. Proof of movement of goods is not in doubt. In the absence of sufficient evidence, the purchases cannot be treated as bogus. iv) G. G. Diamond International v Dy. CIT (2006) 104 TTJ 809 (Mum.) (Trib.) It is not case of the Revenue that the assessee is not maintaining books of account. The purchases are recorded in the books of account. Payments are made by cheque to the immediate purchasers. They accepted and confirmed the sale. To hold otherwise, there should be some evidence in the possession of the Revenue. Su....
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....Tribunal. In this regard, we may refer to the decision of Hon'ble Supreme Court in Dr. T.A. Quereshi vs. CIT (2006) 206 CTR (SC) 489 : (2006) 287 ITR 547 (SC) wherein it is held that cases cannot be decided on one"s moral view and law is different from morality. In other words, if there is a statutory provision then it is to be followed irrespective of moral values on the issue and the plea taken by the assessee before lower authorities. Accordingly, this ground of Revenue is rejected. iii) CIT vs Pt. Vishwanath Sharma 316 ITR 419 (Allahabad) The Apex Court held that when an assessee is being taxed under the Income-tax Act, the question has not been decided on the basis of emotions or moral approach but on legal approach. iv) CIT Vs Koodathii Kallyatan 2008-TIQL-427-HC-MUM-IT The Supreme Court in Commissioner of Income Tax vs. Gwalior Rayon Silk Mill Manufacturing Co. Ltd. 196 ITR 149 has observed as follows: "Logic alone will not be determinative of a controversy arising from a taxing statute. Equally, common sense is a stranger and an incompatible partner to the Income-tax Act. It does not concern itself with the principles of morality or e....
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....er and ld CIT(A) grossly erred in levying and sustaining the above penalties. Arguments of the Revenue 11. The ld DR vehemently submitted that assessee has failed to comply with the notice issued u/s 142(1) of the act by neither supplying the information about the bank account nor the consent letter. He submitted that the letter, which is said to be compliance of the notice, is no compliance as neither of the information is furnished. He stated that if the assessee is so certain that he does not have the bank account in that bank then there should not be any fear in submitting the consent letter. He stated that claim of the assessee that he does not have bank account is full of falsity for the reason that assessee is not giving the consent . If the assessee gives the consent then the correct information would be received and if the assessee does not have the bank account there is nothing to fear. He submitted that the conduct of the assessee shows that assessee has bank account. Further merely if the protective addition is made it does not result in to compliance of the notice, it is the result of assessment and appellate proceedings and has nothing to do with the impugned pe....
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....(A) in confirming the above penalty and our reasons are as under:- a. The name of the assessee appeared in a particular bank account maintained with the HSBC account and therefore the Ld. assessing officer has requested the assessee to furnish either the bank account of that particular bank or to give consent letter in a particular form so that the assessee can be helped by the revenue for obtaining the copies of the above bank account. In case if the contention of the assessee is correct, then naturally the bank account would not by the HSBC bank stating that such accounts are not held by the assessee. If the assessee has such account, in the status of the account holder or a case of beneficiaries or settlers, then naturally the HSBC bank to the revenue will supply the bank account. If the assessee signs the consent letter then the version of the assessee is proved if no such bank account is received from that particular bank or such bank refuses stating that the assessee does not own that bank account. Therefore there is no reason for the assessee to not to sign the consent form. In view of the above facts, the only inference that can be drawn is that, that assessee does....
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....as been deleted, which was made on the protective basis. Therefore, the result of appeal of the assessee before the appellate authority does not help the case of the assessee so far as these penalties are concerned. f. The argument of the assessee is that there is no provision of issue of notice under section 142 (1) of the act for assessing the income unearthed during the course of search and therefore the penalty originating from non-compliance of that notice does not survive because of the reason that assessment has been made under section 153A of the income tax act. The above argument of the assessee is required to be rejected at the threshold itself because of the reason that the provisions of section 153A provides that the return furnished by the assessee in response to the notice under section 153A are to be treated as if their returns furnished under section 139 of the income tax act. The provisions of section 142 (1) also provides that for the purpose of making an assessment under the Act, the assessing officer may serve a notice requiring assessee on the date specified therein to furnish certain details. Therefore, we are of the opinion that the Ld. assessing off....
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....pinion that in that particular case, it was not considered by the coordinate bench that whether the non-filing of the consent letter is a compliance or not. The bench also did not consider that the consent letter in the absence of the information was not submitted, and therefore there was a non-compliance of the notice under section 142 (1) of the income tax act. Furthermore in para No. 6 of that particular order it is stated by the coordinate bench that:- " In our opinion, when nothing was brought on record to substantiate that the alleged bank and account actually belong 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 belong to him." [underline supplied by us] In the present case there is a specific name of the assessee showing that assessee has some relationship with the particular bank account held with the HSBC account. In the present case the family members of the assessee are found to having such bank accounts and the appellate authority in their hands has confirmed additions. Therefore the decision cited before us have distinct facts which are not compara....
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....hority will be justified in refusing to impose penalty. In that particular case the issue was pertaining to the sales tax matters where whether the amounts charged by the company as a fixed percentage for storage insurance etc it can be said to be that assessee was carrying on business of supplying material and it would not be a "dealer". Further, merely registering the assessee is a "dealer" under the genuine belief that company was not a dealer, no penalty should be levied. In the present case, the facts are quite different. In the present case the information was received by the government of India under the information exchange agreement with other countries. Issue involved is not of registering or mere technical or venial compliance default by the assessee but it is with respect to holding a foreign bank account with the bank of the foreign country, which has not been allegedly disclosed by the assessee to the Indian tax authorities. Therefore it is neither a technical nor venial default to not to sign a consent letter to arrive at the true facts of that particular bank account when the two of the relatives of the assessee are also subject to similar proceedings and addition i....