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2019 (9) TMI 602

..... en where is the question of assessee signing any consent letter form for any bank account with HSBC Geneva? The information of one foreign account maintained by the assessee, i.e., HSBC London has been duly provided for which she has already signed consent letter form. - Thus, what is transpired from the assessment order, it cannot be emphatically said that assessee has failed to comply either with the terms of notice or has failed to file any documents required in the said notice. Here, nowhere from the assessment order it is discernable that any incriminating document pertaining to alleged bank account or anything indirectly linking the said bank account of the assessee has been found. - So once there is no document found during the course of search nor there is any specific information that assessee has bank account with HSBC Geneva, then it is very difficult to rope in the assessee for hold guilty of any kind of non-compliance. In this case we are quite persuaded by the plea that penalty in the case of the assessee should not be levied as assessee had a reasonable and bonafide belief in terms of section 273B, that there had been no violation of notice u/s 142(1) for non-complia .....

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..... re heard together and are being disposed of by way of this consolidated order. In the grounds of appeal, the assessee has raised the following grounds which is common for all the appeals: - 1. That the Commissioner of Income Tax (Appeals) erred on facts and in law in not holding that the impugned order dated 09.01.2015, levying penalty under section 271(1)(b) of the Incometax Act, 1961 ( the Act ) is without jurisdiction, illegal and bad in law. 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in upholding the levy of penalty of ₹ 10,000 under section 271(1)(b), without appreciating that the appellant had duly responded to and complied with the notice issued under section 142(1) of the Act. 3. That the Commissioner of Income Tax (Appeals) erred on facts and in law in holding that the appellant failed to co-operate in the investigation proceedings by refusing to sign the consent-form , without appreciating that the appellant was not at all competent to sign such form. 4. That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that no addition had been made in the assessment order passed under section 153(C)/143(3) o .....

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..... ent, in original- in the Foreign Bank mentioned at point (i) above since beginning. (iii) Residential Status as per the I.T. Act as on the date of opening of Foreign Bank Account mentioned at point (i) and thereafter for all the assessment years. 3.1 The Assessing Officer had also provided a blank consent form addressed to some counsel in Switzerland of HSBC Pvt. Bank (Suisse) of SA, Geneva, Switzerland and directed the assessee to fill in the requisite information and sign the consent form, in case the assessee is not in possession of requisite details. Similar consent form was received from ADIT (Inv.) & DDIT (Inv.), Unit-II (2), New Delhi, vide letter dated 15.04.2013 and 18.07.2013, respectively. In response to the said letter/notice dated 15.04.2013, the assessee vide letter dated 07.05.2013, submitted that, she did not maintain any foreign bank account with HSBC, Geneva, and therefore, information/documents required could not be furnished; and it was further stated that as per legal advice received by her, she was not at all competent to sign the consent/declaration form in respect of the same as bank account does not belong to her. Further, assessee vide letter dated 24. .....

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..... liance whatsoever on the part of the assessee as all the notices were duly responded including notice dated 05.08.2013. However, the Ld. Assessing Officer has levied the penalty u/s 271(1)(b) for failure on the part of the assessee to comply notice dated 05.08.2013 simply on the ground that assessee has not filed the consent letter form. 5. Before the ld. CIT (A), assessee had given very detail submissions which have been incorporated from pages 3 to 6 of the assessment order. In nutshell, assessee reiterated that she has duly complied with all the notices and not only that, she has filed the reply and also given the reasons as to why consent letter could not be signed by her. 6. Ld. CIT(A) has confirmed the penalty based on certain general observations that such kind of cases are not simple cases, but all are suspected tax evasion cases where people have kept illicit funds in the overseas bank. The suspected persons were required to sign consent letter to verify the truth of the allegation against them and it is the duty of every citizen of India to co-operate and join the investigation to ascertain the truth. Refusal to sign the consent form tantamount to refusal to join investig .....

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..... ain the name of the Bank Account. Thirdly, she has only one foreign bank account with HSBC, London for which she had signed the consent form and; Lastly, she was not competent to sign the consent form with respect to HSBC account, Geneva as per legal advice given to her. 7.1 Mr. Vohra argued that, if assessee has duly complied with notice and had clearly given her clarification regarding not signing of consent form, then how the Department can allege that there has been non-compliance by the assessee. Not signing of consent form cannot be the ground for levy of penalty, especially when assessee, not only before the Investigation Wing but also before the Assessing Officer had stated that she is not competent to sign the consent form as she does not have any such bank account with the Switzerland. In respect of various contentions, he relied upon the catena of judgments; Firstly, on the point that no penalty u/.271(1)(b) in respect of foreign bank account can be made simply on the ground that consent waiver has not been signed and; Secondly, no penalty u/s.271(1)(b) can be levied when assessment year has been passed u/s.143(3) the list of such judgments are as under: Re: No Penalty&# .....

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..... sign the consent form so that proper inquiry investigation can be done. Even if assessee was not maintaining any bank account in HSBC Geneva, then also to ascertain the truth and to cooperate with investigation, assessee should have signed the consent form. Failure to do so, tantamount to non-compliance of the notice and hence penalty u/s 271(1)(b) is leviable. 9. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. Here, the sole reason for levying the penalty u/s. 271(1)(b) is that assessee has not complied with notice dated 05.08.2013 issued u/s.142(1) in as much as she has not signed consent waiver form for HSBC Geneva Bank Account. From the perusal of the said notice and the information called upon by the Assessing Officer, it is seen that the Assessing Officer had required the assessee to furnish information in respect of bank account in HSBC, Geneva, Switzerland having a particular code/account number. In response, the assessee had categorically submitted not only before the ADIT (Inv.) but also before the Assessing Officer that she does not maintain any foreign bank account with H .....

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..... t abroad the detail of which is as under: 10.2 Thereafter, Assessing Officer observed that with a view to verify the above foreign bank account, a reference has been sent to competent authority in Switzerland and other countries and till date verificatory report has not been received, and as when report will come, then appropriate action shall be taken later on; and since the assessment is getting time barred he has to pass the assessment. Accordingly, no addition either on substantive or protective basis has been made by the Assessing Officer in any of the assessment orders passed for the impugned assessment years. This clearly indicates that the information which was received there was no mention about any disclosed or undisclosed amount deposited in the said bank account. 10.3 Another very important fact which is emerging from the question and answer recorded by the Assessing Officer u/s.131 is that, the assessee has stated that the bank account confronted to her relates to some LGT bank account and not HSBC Geneva, Switzerland. This is evident from the following relevant questions and answer given by the assessee which is reproduced hereunder: Q.1 Please identify yourself? Ans. .....

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..... in my statement in question no. 5 dated 09.11.2011 sent by post to the representative of the bank Mr. Steward Browmley. Q10. Have you ever authorized any bank/institution/any other agency to open/operate any bank account outside India? Ans. No, I have only bank account in HSBC London. I haven t authorized any bank/institution/any other agency to open/operate any other bank account outside India. Q11. Did you ever authorize any person/institution/company to sign any document pertaining to formation of any company/trust/association of persons/societies outside India? Ans. No, I haven t authorized any person /institution/ company to sign any document pertaining to formation of any company/trust/association of persons /societies outside India. Q12 After coming to know that your name is appearing in a bank account with HSBC Geneva what have you done to find out the veracity of the document/information? Ans. I have only been shown one document today saying that it is from HSBC Geneva. This document does not have any signature or bank name. Q13. This is the same statement which was shown to you on 09.11.2011. Its already 3 years. What have you done to find out the veracity of the documen .....

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..... repute with high social standing. Your name, date of birth and address has been used in a bank account. Despite all this you have not taken any action against the bank You even have stated above that you have not communicated with the bank after coming to know of the existence of an account in your name. This appears highly improbable. Your comments please. Ans. I was only shown one unsigned paper containing my name, date of birth and address. There is no mention of the name of any bank on the said piece of paper. Therefore there was no question of any communication or taking of any action. Q.24 Your father Mr. K.K. Modi was shown a similar kind of paper/document in which his name, address and other particulars were appearing. The documents were unsigned as the document which was shown to you. Mr. K. K. Modi in the return for A.Y 2012-13 has offered the maximum amount appearing in the document for taxation. Since, the information in the document shown to you is of similar nature don't you think as a responsible citizen of the country you should have made efforts to find out the veracity of the documents. Ans. I am not aware what document was shown to my father Sh. K. K. Modi. A .....

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..... . I have no idea about any such information available with the Government of India. I humbly repeat that I have no foreign bank account other than HSBC London. Therefore, I am not competent to sign any declaration form relating to HSBC Geneva. I am committed to giving full cooperation to the Government of India and I have replied to various notices/summons received from time to time. Q28. When the document was shown to you on 09.11.2011, how can you say you have no idea. Are you lying on oath? Ans. As stated earlier one unsigned paper was shown to me on 09.11.2011 and in my statement I had stated that I do not have any bank account in LGT bank Geneva. I am not lying on oath. Q29. After 15.04.2013 another opportunity was given to you vide letter dated 05.08.2013 in which you were informed about the details of a bank account in your name in HSBC bank Geneva and a consent waiver form was again given to you in the spirit of cooperation and helping the Government to get the information from the bank in which your particulars are appearing. You again failed to cooperate by not signing the consent letter. Your comments please. Ans. I repeat that since I do not have any bank account with H .....

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..... the consent form because it does not contain any bank detail. 10.5 To reiterate once again, assessee kept on maintaining her stand that neither has she opened any bank account in LGT Bank Account in Geneva; nor she had any information or knowledge about HSBC Bank Geneva; nor has she made any communication with HSBC Bank Geneva after the date of search. She had also denied visiting HSBC Bank Geneva. Specifically in response to question no.30 she has stated that she has been legally advised that if she does not have any account with HSBC Geneva then she cannot sign any consent form. Ld. Assessing Officer without rebutting her statement recorded on oath nor it is borne out that there was any material before him to prove the contrary, has held that assessee has not complied with notice u/s.142(1) by not signing the consent waiver form. Once assessee has duly complied with all the notices sent by the Assessing Officer and investigation Wing and personally appeared and co-operated with assessment proceedings and explained each and every thing, then without any cogent material or specific information in the document about any undisclosed amount or the name of the bank, etc., how assessee .....

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..... he relevant as mentioned supra. Therefore requested to furnish the following details/evidence: (i) Account opening form in respect of Foreign Bank Account mentioned at para 2 above. (ii) Complete Bank statement, in original, in the Foreign Bank mentioned at point (i) (iii) Residential status as per the I.T. Act as on the date of opening of Foreign Bank accounts mentioned at point i) and thereafter for all the Assessment Years till date. 4. In case you do not have the bank account statement, please furnish dully filled up. Signed and notarized consent letter" so that we may help you obtain the account statement from bank. Copy of the Consent Letter (2 Pages) is enclosed. 5. You are requested to attend the office of the undersigned at 11:30 AM on 13.08.2013 along with the above mentioned information. No further adjournment will be granted. Statutory notices u/s.142(1) of the I.T. Act, 1961 is also enclosed. The above information is required u/s. 142(1) of the Income Tax Act, 1961. Please note that in case of non compliance, penal provision in terms of penalty/prosecution under the Income Tax Act, 1961 would be initiated. Yours faithfully, Enclosed : Blank Consent Letter (2 pages .....

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..... eized documents relating to the assessee. Here in this case, Department had received certain information about alleged bank account, which as stated above, was not even clear, whether the information regarding foreign bank account relates to HSBC Geneva or LGT bank account Geneva. Even in the course of search nothing has been found that assessee has any kind of foreign bank account with HSBC Geneva. So once there is no document found during the course of search nor there is any specific information that assessee has bank account with HSBC Geneva, then it is very difficult to rope in the assessee for hold guilty of any kind of non-compliance. As sated above, the document as is discernable from the assessment order does not mention any name of the bank and it is also not clear whether the information received was with respect to HSBC Geneva bank account or LGT bank account. In such a situation signing of consent letter form for HSBC Geneva bank account tantamount to rowing and fishing inquiry. In any case when no addition whatsoever, protective or substantive has been made by the Assessing Officer and the return of income of the assessee has been accepted on the assessed income, then .....

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..... as with HSBC London and in compliance to the notice; she has signed the consent waiver form. Thus, the facts of the present case are materially different from the case of Sanjay Dalmia (supra). 15. Despite our observations made above in the foregoing paragraphs, still in light of the aforesaid judgment, which came to our notice subsequently and at the stage of the draft order, it was once again felt that, if there is any such information on assessment record or Assessing Officer had any document which mentions the bank name in the document or was there any annexure indicating that assessee had any bank account with HSBC, Geneva, Switzerland, then it must be placed before us. Accordingly, the matter was again listed for limited clarification on 1.03.2019. After giving two opportunities to the Department, Assessing Officer has filed a letter dated 6.03.2019, which was annexed with one document. This document is the same as has been scanned and taken into consideration in the assessment order by the Assessing Officer. From this also, it can be inferred that no bank details are available with the Assessing Officer, bearing bank name of HSBC, Geneva. 16. Be that as may be, here in this .....

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