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TMI Blog2017 (9) TMI 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... egularly assessed to tax. On 26.09.2011, he furnished a declaration before the Director General of Investigation, Kolkata. In the said declaration claimed to be filed voluntarily, the assessee admitted that he had maintained a Bank Account with HSBC in Switzerland, which was not disclosed in his books of account. It was stated by the assessee that the said Bank account was closed by him sometime back and the amount of US Dollars 9,53,187 equivalent to Rs. 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 Rs. 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 Rs. 4,43,23,196/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee that the said Bank account having been closed and the entire amount lying therein having been brought back into India in the previous year relevant to assessment year 2012-13, the amount was surrendered as his undisclosed income by the assessee for A.Y. 2012-13 and after disclosing the same in the return of income for that year, the tax due thereon was also paid by the assessee. This explanation 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 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten a letter to DGIT (Inv) Kolkata on 26-09-2011 in which it was stated by the assessee as under: "I had an account with HSBC Switzerland along with my wife, Mrs Kavita Poddar and son, Mr Yash Wardhan Poddar, I have decided now to disclose the said account to the Income Tax Department and pay tax in order to buy peace and avoid protracted litigation. The amount maintained at HSBC 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 Rs. 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or issue of any notice for this bank account and deposits made therein. Accordingly, assessee's appeal on grounds no 1 to 4 are allowed". The ld. CIT(Appeals) thus accepted the arguments raised by the assessee on the imposition of penalties under section 271(1)(c) for both the years under consideration on merit and without going into the preliminary issues raised by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 271 would not satisfy the requirement of law. Explaining further, it was observed by the Hon'ble Karnataka High Court that the person who is accused of the conditions mentioned in section 271 should be made known about the grounds on which they intend imposing penalty on him as section 274 makes it clear that the assessee has a right to contest such proceedings and should 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 agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer under section 271(1)(c) for both the years under consideration although on different grounds. 9. It is observed that the penalties imposed by the Assessing Officer under section 271(1)(c) for both the years under consideration were cancelled by the ld. CIT(Appeals) vide his impugned order by accepting the stand of the assessee on merit that the 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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