KANAIYALAL B SHAH,MUMBAI vs. JOINT COMMISSIONER OF INCOME TAX RANGE 19(2), MUMBAI

Brief facts of the case as extracted from the order of lower authorities, leading to levy of penalty under section 272A(2)(c) are that assessment of assessee was reopened on the basis of information received by Government of India from French Government under Double Taxation Avoidance Agreement in exercise of its sovereign power that some Indian nationals and residents including assessee had Foreign bank account with HSBC Bank, Geneva, Switzerland, which were undisclosed to the Indian Tax Department. This information was received in the form of a document called Base Note. In the said Base Note various details of account holder such as name, date of birth, place of birth, sex, residential 4 Mum 2018-Kanaiyalal B. Shah address, profession, nationality along with date of opening of the bank account with HSBC, Geneva and balance in certain years were informed. In case of assessee, a Base Note was also allegedly received. Base Note allegedly contained all personal details of the assessee including his name, date of birth, place of birth, sex residential address, profession, nationality with date of opening of the bank account with HSBC Bank, Geneva and the amount of balance in that particular years in the said document. On the basis of aforesaid information, the assessing officer was of the view that all the details clearly show the account belongs to assessee. The assessing officer reopened the case of assessee under section 147, by issuing notice under section 148 on 12th March 2014. A survey under section 133A was also conducted at the business premises of the assessee’s group on 30th September 2011 by Investigation Wing of Income Tax Department, Mumbai. During the course of survey proceeding and subsequently statement of son of assessee was recorded under section 131 on 23rd December 2011. However, Shri Sanjay K Shah, son of assessee denied of having any Bank account with HSBC, Geneva in the name of assessee or his family members. During the course of reassessment proceeding summon under section 131 was issued to assessee on 2nd July 2014 for furnishing complete details of statement of bank account in HSBC, Geneva, since inception till date and if he is not in possession of the statement of his bank account then he was required to 5 Mum 2018-Kanaiyalal B. Shah fill up a Consent Waiver Form (for facilitating the copy of account from HSBC Bank Geneva to assessee). In response to the notice issued by assessing officer to assessee under section 131 the assessee attended the proceeding on 7th July 2014, wherein the statement of assessee on oath was recorded. During the statement on oath the assessee denied ownership of any bank account with HSBC Geneva. The assessing officer also issued notice under section 133(6) of the Act dated 19th December 2013 for obtaining the assessee’s Consent Waiver Form. The assessee in response to the said notice denied the ownership of the alleged bank account. On failure to sign Consent Waiver Form by the assessee, a show cause notice dated 21.11.2014 under section 272A(2)(c) for levying penalty was served also upon the assessee. The assessee filed his reply dated 8th December 2014 and again reiterated his earlier stand that he does not owe any bank account with HSBC Geneva. The assessing officer treated the stand in the reply of assessee as refusal to file Consent Waiver Form. The assessing officer concluded that the Base Note contained all personal detail of the assessee including his name, date of birth, place of birth, sex, residential address, profession, nationality along with the date of opening of the bank account in HSBC Geneva and that the bank account BUP_SIFIC_PER_ID 5090178703 has linkage with the bank accounts pertaining to Balsum Trust, and that all the details clearly shows that the accounts belong to assessee. The assessing officer held that 6 Mum 2018-Kanaiyalal B. Shah assessee wilfully failed to produce the required document as a specified in the notice under section 133(6) list of the assessing officer levied the penalty of ₹ 36400/under section 272A(2)(c). On appeal before ld. Commissioner (Appeals) the action of assessing officer was confirmed.

We have heard the rival submission of ld. Authorised Representative of party and perused the material available on record. The learned AR of the assessee submit that in response to the notice under section 133(6), the assessee clearly stated that he does not own any bank account with HSBC, Geneva and there was no occasion for assessee to sign such consent waiver form. The assessee duly replied the notice under section 133(6) as there was no cause to treat the reply of assessee is non- compliance. The Assessing Officer is entitled to levy the penalty in case the assessee failed to file reply the question raised by assessee or to fail 7 Mum 2018-Kanaiyalal B. Shah the in attending proceeding before him. The assessee duly replied the notice under section 133(6) dated 19.12.2013. In the reply dated 08.12.2014, the assessee denied the ownership in respect of the alleged bank account with HSBC, Geneva. Hence, the conclusion arrived by Assessing Officer that the assessee wilfully failed to produce the required document.

On the other hand, the ld. DR for the revenue supported the order of lower authority. The ld. DR further submits that the assessee failed to furnish the consent waiver form to the Assessing Officer, therefore, the assessee has committed default under section 272A(2)(c).

We have considered the submission of both the parties and gone through the orders of authorities below. A narrow dispute in controversy before us is, if the assessee failed/committed default of non-compliance of section 133(6). Section 133 deals with ‘power to call for information’ by Assessing Officer, Deputy Commissioner, Joint Commissioner or Commissioner. Sub-section (6) of section 133 prescribed that Assessing Officer, Deputy Commissioner, Joint Commissioner or Commissioner may require any person, including a banking company or any officer thereof to furnish information in relation to such point or matter or to furnish statement of account and the affairs verified in the manner prescribed by them, which will be useful for, or relevant to any enquiry or proceeding under the Act. These powers can also be exercised by 8 Mum 2018-Kanaiyalal B. Shah Principle Director General, Director General, Principle Chief Commissioner or Chief Commissioner or Principle Chief Commissioner. Further, 2nd proviso attached with the sub-section prescribed that for the purpose of agreement referred to in section 90 or section 90A, an Income- tax Authority notify under sub-section (2) of sub-section 131 may exercise all power conferred under this section, notwithstanding no proceeding are pending before it or any other Income-tax Authority. In the present case, though, the Assessing Officer was allegedly having information in the form of a Base Note wherein various details of account holder were provided. The assessee in reply to the notice under section 133(6) specifically denied ownership or any relation of any bank account.

We have noted that the assessee in his reply categorically stated neither he owned bank account nor he has owned any relationship with the alleged bank account in HSBC Bank, Geneva. The Assessing Officer without rebutting his reply that there was any material before him to prove the contrary, has held that assessee has not complied with notice under section 133(6) by not signing the consent waiver form. Once assessee has duly complied with all the notices sent by the Assessing Officer, he cannot take the view that assessee failed to produce the required document. We have also noted that on the basis of same information the case of assessee was reopened under section 147 by issuing notice under section 148 dated 12.03.2014. The assessee before 9 Mum 2018-Kanaiyalal B. Shah the ld. CIT(A) specifically contended that the re-opening proceeding was dropped by the Assessing Officer. In our view once the assessee denied the ownership of the bank account in response to the notice under section 133(6), the Assessing Officer cannot take the plea that assessee failed to comply with the condition of aforesaid notice. Hence, we are of the view that levy of penalty by Assessing Officer under section 272A(2)(c) was not justified. Therefore, we direct the Assessing Officer to delete the entire penalty. No contrary fact or material is placed before us. No contrary law is cited by revenue to take the other view. Hence, the grounds of appeal raised by assessee are allowed.

In the result the appeal of the assessee is allowed.