TaxTMI 
TaxTMI 
2018 (12) TMI 1134
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....parately, 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 these appeals are heard together and decided by this common order. 3. Firstly , we state the facts for assessment year 2006 - 07 and also the ground raised by the assessee which are as under:- "1. That learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty levied by the Assessing Officer u/s 271(l)(b) of the Income Tax Act, 1961 in an amount of Rs. 10,000/- for Assessment Year 2006-07, on the basis that the appellant has not furnished 'consent form' in respect 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 FISBC Bank, Geneva, Switzerland, it cannot be compelled to generate artificial bank account opening form and issue conse....
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....e 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 hearing on 30/9/2013. On the appointed date the assessee submitted a letter stating that assessee has already complied with the letter notice dated 18 July 2013 and stated that the reply to the said letter is submitted on 22 July 2013(actual date of submission is 23/07/2013). The assessee, therefore, stated that there is no reason for issue of notice for penalty. The learned assessing officer noted that the letter submitted by the assessee on 23/7/2013 stated that she does not have any connection with any of the alleged accounts and transactions detailed in the above notice and deny that any of these accounts, transactions belong to her. She further stated that since these transactions, accounts or codes do not belong to her, there is no question of her receiving any information from HSBC bank, Switzerland or her submitting any of the details asked in notice issued by the learned AO. She also stated that there is no question of signing her any consent letter in this regard, as she does n....
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.... 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 any account or any transaction in the account reference has been made to Hong Kong and Shanghai banking Corp by way of a consent letter signed by the account holder duly notarized to enable Hong Kong and Shanghai banking Corp to furnish the requisite details such as account opening form, other documents, names of beneficiaries, details of transactions et cetera of the account holder. In some such cases, account holders have already received information from HSBC and are cooperating with the department in its investigations. The learned CIT further noted that the income tax act, 1961 has also been amended to provide for reopening of tax assessments for a period of 16 years to cover such cases, which has escaped assessment. Therefore, only in such cases where such persons have refused to deliver signed consent letters the penalty has been initiated and imposed under section 271 (1) (b) of the act. Therefore, these were not the cases of simple tax evasion, but of suspected tax evasion by tra....
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....aper 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 arguments of the assessee, legal in nature and therefore those are admitted and are dealt with in the arguments raised by the ld AR. 11. The learned authorised representative vehemently submitted that there is no failure on the part of the assessee in complying any of the notices issued by the learned assessing officer, therefore the penalty levied u/s 271(1)(b) of the act for all the seven years is not sustainable. He submitted his arguments as under. i. He submitted a date chart and submitted that the notice was issued on 18/7/2013 to sign the consent form by 22/7/2013. He submitted that 21st and 22 July 2013 were holidays. He further stated that assessee submitted a reply on 23/7/2013. He submitted that as the reply is submitted by the assessee, there is complete compliance. ii. According to him first notice under section 143 (2) was issued only on 21/10/2013. Thereafter the penalty was imposed on 12/1/2015. After the issue of notice under section 143 (2) and up to t....
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....tice 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 the default of the assessee. He further stated that satisfaction must be discernible from the notice which is absent in this particular case. He therefore submitted that in absence of any satisfaction recorded by the learned assessing officer about the failure of the assessee, the penalty proceedings are invalid. v. That in the notice, assessee was not given copy of the information available with assessing officer. He referred to page number 199 of his paper book, which is an assessment order under section 153A read with section 143 (3) of the income tax act, 1961 dated 27/3/2015 and submitted that information was provided in the assessment order itself. He further referred to page number 213 wherein para number 10 of the assessment order, assessee has submitted by letter dated 20 January 2015 that the alleged bank statement of HSBC account stated to be belonging to the assessee is not authentic or signed by the any of the officers of the bank or any compe....
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....e 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 officer himself. Therefore, when the assessing officer himself is not sure whether the account belongs to the assessee or not, there is no purpose and no reason that assessee must sign a consent form. He referred to the provisions of section 142 (1) of the income tax act and stated that the provisions of that section does not ask an assessee to create a document or evidence against him. Therefore, by asking for the consent letter from the assessee is asking the assessee to produce evidence against her, which is not permitted by the law. He further stated that the assessing officer has asked the assessee to render assistance in the assessment proceedings, but such assistance cannot lead to the asking for information. xi. He further stated that the issue in the case of Sanjay Dalmia was different and does not apply to the facts of the case, as in the present case, the assessee has shown reasonable cause and further ....
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..... 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 special leave petition before the honourable Supreme Court has also been dismissed. He extensively referred to the decision of Mr. Sanjay Dalmia and stated that the penalty has been confirmed by the honourable Delhi High Court on the same set of accounts, same facts, same search and authored by the Accountant member, therefore that decision binds the ITAT and therefore should be followed. He further submitted that the futile distinction of the order made by the ld AR is irrelevant. He further submitted that it is not the merely the question of morality in the case of the assessee but to join the investigation. In this case, also there is no prejudice caused to assessee if she signs the consent letter. He also submitted that it is not the evidence against her but if she does not hold any such alleged bank account, it is in her favour so that inquiry can be closed against her in favour of the assesse....
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....t 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 the 4 days time was found short by the assessee, the best course would have been to seek adjournment. No adjournment was sought by the assessee during that time. If the assessee wanted more time to submit the detail, then a proper application for adjournment should have been addressed to the assessing officer and he was sure that the learned assessing officer might have considered the same in the most judicious manner. He stated that assessee is neither applied for the adjournment and nor even approached the assessing officer for extension of the time. He also referred to the letter submitted on 23/7/2013 which even does not give any hint that assessee wants more time. Therefore, now this plea in the penalty proceedings is just to avoid levy of the penalty. He further stated that in absence of any plea by the assessee there is no violation of rules o....
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....entative 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 that why the assessee is thinking that signing of form is creating evidence against her. It is submitted that when the assessee is so sure that the account does not belong to her, it is not evidence against her but in her favour and will absolved her from all the future proceedings. xi. He further submitted that order is passed u/s 143 (3) of the act. The assessee has not made subsequent compliance by submitting consent form even till to date, therefore it is not mandatory to pas an order u/s 144 of the act for initiating penalty u/s 271 (1) (b) of the act. 14. In view of the above facts, the learned departmental representative vehemently supported the order of the lower authorities and submitted that the penalty has been rightly levied by the learned assessing officer and confirmed by the learned Commiss....
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....ain 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 further adjournment will be granted and the above mentioned information is required under section 142 (1) of the income tax act and in case of non-compliance penal provisions in terms of penalty/prosecution under the income tax act may be invoked. The assessee submitted reply to that letter on 23/7/2013 vide letter dated 22/7/2013. The main contention of the assessee is that she does not have any connection with any of the alleged bank accounts and transactions detailed in the notice and deny that any of these accounts of transactions or accounts belong to her. She further stated that since the transaction accounts or accounts do not belong to her, there is no question of her receiving any information from HSBC banks, Switzerland because her submitting any of the details called for in the above referred lette....
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....d 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 Rs. 10,000 for each of the years. The above order was challenged before the learned commissioner of income tax appeals, who confirmed the penalty for all the 6 years. Now we deal with each of the contentions raised by the ld AR. 18. The 1st contention of the learned authorised representative is that assessee has complied with the notice dated 18/7/2013 by submitting a letter dated 22/7/2013 on 23/7/2013 in the office of the learned assessing officer. The said letter has been placed at page number 3 of the paper book. On careful perusal of the above said letter, it is apparent that the assessee has denied that she does not have any bank account as stated by the learned assessing officer and therefore she refused to sign any consent letter in this regard. The notice under section 142 (1) of the income tax act stated that if she does not have bank statement account, then t....
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.... 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 shows that the default was for the reasonable cause. The assessee has not shown any reasonable cause for not complying with the notice dated 18/7/2013 before AO. The assessee has flatly refused stating that assessee does not have any such accounts or there is no question of signing any consent letter in this regard. That letter was also submitted on 23/7/2013 and not on the appointed date on 22/7/2013. The assessee also did not apply for any adjournment on those dates. Further if the assessee does not have any bank account, then the assessee should have submitted the consent letter. No prejudice would have caused to the assessee. Further by not submitting the consent assessee has put herself in greater difficulty as penal proceedings were initiated as well as assessment has also made on her on protective basis. Further....
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....d 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 consent letter if The above information is not available with her. Therefore, we do not find any merit in the above argument of the assessee that assessee was not having any information about the foreign bank account. Furthermore, in the case of two of the relatives of the assessee on identical facts were shown in the proceedings and various proceedings were going on in those cases. Therefore, the above argument of the assessee does not hold any water. 24. The next argument of the learned authorised representative was that the penalty levied as per the codified law which is income tax act, whereas the learned commissioner of income tax appeal has talked about the morality. According to him the penalty cannot be levied even if the assessee has not acted according to the morals. We have carefully perused the order of the l....
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....(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 continuing as it is apparent as per the information submitted at sr no 32 and 33 of paper book of the assessee where the appellate orders with respect to the other 2 persons are mentioned. Even otherwise we do not find any reason that why AO should examine in penalty proceedings u/s 271 (1) (b) of the act. 28. On the issue regarding applicability of the decision of the another person, Mr Sanjay Dalmia as well as Mr.Manish Periwal, we find that coordinate bench orders in case of Mr Sanjay Dalmia are also based on the same documents on which the penalty proceedings are in case of the assessee. There is also no violation of the principle of natural justice in the case of the assessee, as assessee was aware about the information during the course of search as well as as per notice issued under section 142 (1) of the income tax act....
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....formation 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 representative on this case is rejected. 31. Assessee has also stated that asking assessee to sign a consent form is violative of article 20 (3) of the constitution of India. We are not in agreement with the assessee on this point. Firstly the assessee is not at all an accused. Further merely making a statement that it violates the article 20 (3) without substantiating the reason for the same , plea of assessee cannot be accepted. Even other wise we fail to understand that why assessee thinks that it is a evidence against her when she does not have any bank account. In fact, the evidences are not against her but in her favour. Further the case of the assessee does not hold any credence in view of the decision of the hon. SC in case of Ritesh Sinha V State of Uttar Pradesh AIR 2013 SC 1132 2 SCC 357 where the honourable SC has held....
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....oned. 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 a particular consent letter was required to be signed, so that the office of the income tax officer can help the assessee in obtaining bank account from that particular bank. In response to that notice the assessee did not furnish either the bank account or furnished the consent letter but pleaded that the assessee does not have any such bank account. Therefore, the penalty under section 271 (1) (b) of the income tax act was initiated and show cause notice dated 26/09/2013 was issued to the assessee in response to which assessee submitted that he has already submitted reply to the notice dated 18/07/2013 submitting the reply on 23/07/2013 and copy of which was also submitted on 23/09/2013. Therefore the claim of the assessee is that there is a complete compliance of the said notice and therefore penalty c....
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....f 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 and the assessee, the consent letter is required to be signed by the assessee. This is not done by the assessee despite specific notice issued by the assessing officer. c. Merely signing the consent letter would not have prejudiced the interest of the assessee because if the account would not have been having any connection with the assessee. The foreign bank would not give the details of such account. Therefore, the intentions of the assessee in not signing the consent letter prove what assessee wants to hide the information. d. Notice issued by the Ld. assessing officer under section 142 (1) of the act was very specific and precisely on the point giving the clear cut requirement of the law, and in absence of compliance of such notice, the penalty under section 271 (1) (b) ....
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....nding 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 non-compliance was that there were more than 303 group assessments conducted during short span of 5 months. Hence, it was practically difficult to comply with all the notices in all the cases at the appointed date and therefore there was delay in compliance of the notices. Furthermore, it was also stated that the controlling person of the group was in judicial custody for more than 2 years, who was helm of the affairs for taking all the decisions and was aware of the tax matters and documents. Therefore, there was delay in collecting such information and consequently making certain compliances. In view of this particular facts the penalties were deleted. In the present case, the facts are very clear that the assessee was asked to comply with certain notices which assess....
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....e 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 in case of Pushpa Garg Vs. ACIT in ITA No. 4852/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. authorized representative on this decision is incorrect. e. In the end the assessee has placed upon the decision of the Hon'ble Supreme Court in case of M/s Hindustan steel Ltd versus state of Orissa 83 ITR 26 (SC). We have carefully considered the rival contentions with respect to the applicability of this decision. The Hon'ble Supreme Court has held that an order-imposing penalty for failure to carry out a statutory obligation is the r....
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.... 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 Rs. 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 and law and based on relevant Supreme Court judgments are upheld. The appeals of assessee are dismissed." 15. In view of above facts we do not find any infirmity in the order of the ld. AO in levying penalty u/s 271(1) (b) of the act of Rs. 10,000/- for all these seven years and Ld CIT (A) in confirming the same. 16. In the result all the appeal filed by the assessee are dismissed." 35. Assessee aggrieved with the order of the coordinate bench, challenged the order of the coordinate bench before honourable Delhi high court. Hon High court vide order dated 21/3/2018 has dismissed the appeal of the assessee holding as under :- "The assessee in these appeals questions the order of....