TMI Blog2017 (9) TMI 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer under section 274 in the present case for both the years under consideration not being in accordance with law, the penalty orders passed by him in pursuance thereof are liable to be cancelled being invalid. We accordingly uphold the impugned orders of the ld. CIT(Appeals) cancelling the penalties imposed by the Assessing Officer under section 271(1)(c) for both the years under consideration although on different grounds. Voluntary declaration of his foreign Bank account before the Income Tax Department - As declaration made by the assessee surrendering his undisclosed income representing the amount lying in the overseas Bank account with HSBC Switzerland on 26.09.2011 without initiation of any action or issuance of any notice issued by the Income Tax Department was voluntary showing the bonafide of the assessee The contention as raised by the ld. counsel for the assessee in this regard is that any assessee as per the said Act thus could get away by paying tax @60% on the value of an undisclosed asset located outside India in the year 2015, while the assessee in the present case even after declaring his undisclosed asset located outside India in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... US Dollars 9,53,187 equivalent to ₹ 4,43,23,196/- lying therein was recently brought back to India. The assessee agreed to surrender the said amount as his undisclosed income for the assessment year 2012-13 and also paid tax thereon amounting to ₹ 1,36,95,868/- on 28.09.2011. Pursuant to the said declaration, a notice under section 131 was issued by the Director General of Investigation, Kolkata requiring the assessee to appear personally on 30.09.2011. In response to the said notice, the assessee appeared on 30.09.2011 and in his statement recorded on that date, he reiterated the stand taken in the declaration filed on 26.09.2011. Thereafter the assessee filed his return of income for A.Y. 2012-13 on 26.07.2012, wherein he declared the amount of ₹ 4,43,23,196/- as his income under the head income from other sources . The said return was duly processed by the Assessing Officer under section 143(1) on 10.05.2013 thereby accepting the income offered by the assessee on account of the amount lying in his overseas undisclosed Bank account as his income for A.Y. 2012-13. 3. Meanwhile, the Assessing Officer noted from the information received by the Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the assessee was not found acceptable by the Assessing Officer. According to him, irrespective of the source of income or the route through which the same might have come to the possession of the Department, the fact that remained undisputed was that the assessee had maintained an account with HSBC, Switzerland, which was an undisclosed, concealed offshore account. He held that the assessee by evading tax had generated income in the form of money either in Indian or foreign currency and had sourced the investment and transaction in violation of law or provision of Income Tax Act, 1961. As regards the disclosure made by the assessee in his return of income for A.Y. 2012-13, he held that it was not understandable as to how the assessee declared the income earned in A.Y. 2006-07 and 2007-08 as apparent from his Bank account with HSBC, Switzerland in A.Y. 2012-13 and paid tax thereon. The Assessing Officer held that it was thus a clear case of concealment of income by the assessee for both the years under consideration, i.e. A.Y. 2006-07 2007-08 and accordingly penalties of ₹ 3,76,15,923/- and ₹ 7,29,657/- were imposed by him for A.Y. 2006-07 and 2007-08 being 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Switzerland was closed some time back and the money kept outside has recently been brought back to India. I shall introduce the said money in my books and pay tax now. Since I have decided to come clean and pay tax voluntarily. I hope no penal action would be taken against me, my wife and my son. I would further like to mention that my wife, Mrs Kavita Poddar and son, Mr. Yash Wardhan Poddar were only the joint account holders and authorized signatories but the money kept abroad was solely belonging to me and consequently the disclosure is being made in my name . I further find that the assessee suo moto made payment of ₹ 1,36,95,868/- as tax liability on 28-09-2011. The AO issued notice u/s 148 for the same bank account and same deposits in that account on 27-03-2012 for AYs 2006-07 2007-08. The AO had issued such notice on the basis of certain information in his possession regarding deposits made in the foreign bank account of the assessee during those assessment years. Later on assessment orders were passed by the AO for the AYs 200607 2007-08 on 04-03-2015 (which are not subject matter under this appeal filed by the assessee). In the assessment order penalty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee challenging the validity of the initiation of penalty proceedings as well as the consequent penalty orders passed under section 271(1)(c), he cancelled the penalties imposed by the Assessing Officer under section 271(1)(c) for both the years under consideration. Aggrieved by the orders of the ld. CIT(Appeals), the Revenue has preferred these appeals before the Tribunal, while the assessee has also filed his Cross Objections. 6. We have heard the arguments of both the sides and also perused the relevant material available on record. In his Cross Objections, the assessee has raised a preliminary issue challenging the validity of the penalty orders passed by the Assessing Officer on the ground that in the absence of any specific mention in the show-cause notices issued under section 274 of the Act for the years under consideration by the Assessing Officer as to whether the asseessee is guilty of having furnished inaccurate particulars of income or of having concealed particulars of such income , the initiation of penalty proceedings itself was bad in law and the penalty orders passed in pursuance thereof are liable to be quashed. In support of the case of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have full opportunity to meet the case of the Department and show that the conditions stipulated in section 271(1)(c) do not exist as such he is not liable to pay penalty. It was held that the practice of the Department sending a printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law, inasmuch as the principles of natural justice is offended if the show-cause notice is vague and on the basis of such notice, no penalty could be imposed on the assessee. It is pertinent to note here that a similar view as expressed in the case of Manjunatha Cotton Ginning Factory (supra) was reiterated by the Hon ble Karnataka High Court in the case of SSA s Emerald Meadows (ITA No. 380 of 2015 dated 23.11.2015) and the Special Leave Petition filed by the revenue against the judgment of the Hon ble Karnataka High Court in the case of SSA s Emerald Meadows has been dismissed by the Hon ble Supreme Court vide order dated 05.08.2016. 7. It is well settled position of law that the penalty under section 271(1)(c) is leviable if the Assessing Officer is satisfied that the assessee has concealed particulars of his income or furnished inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the assessee surrendering his undisclosed income representing the amount lying in the overseas Bank account with HSBC Switzerland on 26.09.2011 without initiation of any action or issuance of any notice issued by the Income Tax Department was voluntary showing the bonafide of the assessee. In this regard, the ld. D.R. has submitted before us that the matter relating to the leakage of information regarding the undisclosed Bank accounts maintained by the Indian residents by one of the employees of HSBC Switzerland was already reported in Print Media well before the declaration made by the assessee on 26.09.2011 and, therefore, the said declaration made by the assessee cannot be said to be voluntary as held by the ld. CIT(Appeals). The ld. counsel for the assessee, on the other hand, has narrated the sequence of the relevant events in details and contended that going by the said sequence as well as keeping in view that the declaration made by the assesese on 26.09.2011 was without any specific detection by the Department and was without any initiation of action or issue of notice by the Department was a voluntary one made suo motu by the assessee as rightly held by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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