DCIT CENTRAL CIR -1(2) , MUMBAI vs. SAUNAK JITENDRA PARIKH, MUMBAI

O R D E R PER AMIT SHUKLA, JM :

The aforesaid appeals have been filed by the Revenue against separate impugned orders dated 11.11.2021 for Assessment Year 2007-08 and 15.11.2021 for Assessment Year 2006-07 passed by learned Commissioner of Income Tax (Appeals)-47, Mumbai (in short ‘ld. CIT(A)’) in relation to penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’). In both the years, Revenue is aggrieved by deletion of penalty of Rs.2,16,27,860/- for Assessment Year 2007-08 and Rs.9,42,29,730/- for Assessment Year 2006-07.

2.1. The appellant Mr. Saunak Jitendra Parekh is a director in Mahendra Brothers Exports Pvt. Ltd, a company engaged in processing and export of diamonds. In this case, specific information (hereinafter called as Base Note) was received from the French Government, under DTAA (Double Taxation Avoidance Agreement) that the present assessee was a beneficial owner of undisclosed overseas bank accounts in the names of the companies Sulay Trading Ltd and Laptis Trading Ltd with HSBC Bank, Geneva. Therefore a search and seizure action u/s.132(1) of the Act was conducted in the case of Mahendra Brothers Exports Pvt. Ltd. and other group concerns and directors including the appellant on 08.08.2011 by the DDIT (Inv.), Unit IX(3), Mumbai after receipt of information of undisclosed overseas HSBC accounts. The assessee being director in Mahindra Brothers Exports Ltd, a company engaged in processing & polishing of rough diamonds and its export. At the time of search, the assessee was shown "Base Note" as received from the French Authorities containing information about HSBC, Geneva, accounts and assessee being beneficial owner of such accounts. However, the assessee denied being beneficial owner of such accounts. A few days later the assessee produced a letter from HSBC Geneva, wherein it was stated that the assessee had no bank accounts in HSBC Geneva and that he had no transactions with the bank. Thereafter the Addl. DIT(inv.) Mumbai wrote a letter to HSBC, Geneva to verify whether they had indeed issued communication, presented by the assessee and also seeking information about the assessee being beneficial owner in respect of accounts in name of Laptis Trading Itd., Sulay Trading Ltd etc.. But the HSBC refused to divulge any information about Sulay Trading and Laptis Trading Ltd and the assessee being beneficial owner of such accounts citing Swiss secrecy laws but confirmed that they had issued a communication as submitted by the assessee.

3 & 1243/Mum/2022 Saunak Jitendra Parikh 3. During the course of assessment proceedings under Section 153A of the Act, assessee was examined on oath by the Assessing Officer under Section 131 of the Act wherein he had denied any such foreign bank account and also refused to sign consent waiver form. The Assessing Officer, accordingly, made addition of Rs.6,43,39,532/- in Assessment Year 2007-08 and Rs.27,99,64,660/- in Assessment Year 2006-07 on account of peak credit in HSBC Bank. Accordingly, penalty has been levied under Section 271(1)(c) of the Act for both the assessment years by the Assessing Officer. The ld. CIT(A) noted that the ITAT Mumbai vide order dated 07.04.2021 in ITA No. 1969 and 1970/Mum/2020 has allowed the appeals of the assessee, which order has been incorporated in the impugned appeal order from pages 6 to 18. Accordingly, he held that once the quantum itself has been deleted, then penalty levied under Section 271(1)(c) of the Act is unsustainable and does not survive.

Order pronounced in the open court on 29th June, 2022.