MILAN KAVINCHANDRA PARIKH, MUMBAI V. ADDITIONAL COMMISSIONER OF INCOME TAX, CENTRAL RANGE-2, MUMBAI

ITA 4621/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3308 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 27-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY B JAKKE
• Assessee Lawyers: APURV GANDHI
• Keywords: Double taxation relief; Opportunity of being heard; Principle of natural justice
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4621/MUM/2017 ASSESSMENT YEAR: 2006 - 07 & ITA NO. 4622/MUM/2017 ASSESSMENT YEAR: 2007 - 08 & ITA NO. 4623/MUM/2017 ASSESSMENT YEAR: 2008 - 09 & ITA NO. 4624/MUM/2017 ASSESSMENT YEAR: 2009 - 10 & ITA NO. 4625/MUM/2017 ASSESSMENT YEAR: 2010 - 11 & ITA NO. 4626/MUM/2017 ASSESSMENT YEAR: 2011 - 12 SHRI MILAN KAVINCHANDRA PARIKH 11/B, ATLAS APARTMENTS, 11, J MEHTA ROAD, HANGING GARDENS MUMBAI - 400006. VS. ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE - 2, 10 TH FLOOR, ROOM NO. 1001 , OLD CGO, M.K. ROAD, MUMBAI. PAN NO. AADPP0814G APPELLANT RESPONDENT ASSESSEE BY : MR. APURV GANDHI, AR REVENUE BY : MR. UDAY B. JAKKE , D R DATE OF HEARING : 01/02/2019 DATE OF PRONOUNCEMENT: 11/02/2019 MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 2 ORDER P ER BENCH THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 52 , MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF PENALTY LEVIED U/S 272(A)(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE O F CONVENIENCE. WE BEGIN WITH THE ASSESSMENT YEAR (AY) 2006 - 07. 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DISPOSING OFF THE APPEAL IN VIOLATION O F PRINCIPLES OF NATURAL JUSTICE. IT IS PRAYED THAT THE ADEQUATE OPPORTUNITY OF BEING HEARD WAS NOT GRANTED AND ACCORDINGLY THE ORDER OUGHT TO BE TREATED AS BAD IN LAW. 2. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LD. CIT (A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.10,000/ - U/S 272(A)(1)(C) OF THE ACT. IT IS PRAYED THAT THE SAID LEVY IS WITHOUT ANY BASIS AND HENCE OUGHT TO BE DELETED. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE BELONGS TO THE MAHENDRA BROTHERS GROUP, WHICH IS ENGAGED IN PROCESSING AND EXPORT OF DIAMOND JEWELLERY. THE ASSESSING OFFICER (AO) RECEIVED INFORMATION THAT THE GROUP WAS MAINTAINING VARIOUS BANK ACCOUNTS WITH THE HSBC, GENEVA IN THE NAME OF GROUP CONCERNS LIKE SULAY TRADING LTD ., LAPTIS TRADING LTD., OLGA LTD. AND BLACKBERRY INTERNATIONAL LTD. AS PER THE BASE NOTE RECEIVED FROM THE FRENCH GOVERNMENT UNDER DTAA, THE ASSESSEE IS ONE OF THE BENEFICIARIES OF THESE BANK ACCOUNTS, WHICH WERE IN THE NAME OF DI FFERENT COMPANIES OF THE G ROUP. MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH THE CONSENT WAIVER FORM DULY NOTARIZ ED IN RESPECT OF THESE ACCOUNTS. HOWEVER, AFTER REPEATED OPPORTUNITIES AND DIRECTIONS, THE ASSESSEE FAILED TO FURNISH THE CONSENT W AIVER FORM. THE AO NOTED THAT THE ASSESSEE FAILED TO SUBMIT THE REQUISITE DOCUMENTS/DETAILS CALLED FOR U/S 131 OF THE ACT. THEREFORE, THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO IMPOSE PENALTY U/S 272A(1)(C) OF THE ACT. THE AO THUS LEVIED A PENALT Y OF RS.10,000/ - . 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD ISSUED SUMMONS U/S 131 DATED 18.07.2013 TO THE ASSESSEE ASKING TO FURNISH SPECIFIC D ETAILS LIKE CONSENT WAIVER FORM IN RESPECT OF HIS ACCOUNTS WITH HSBC, GENEVA. BUT THE ASSESSEE FAILED TO FURNISH THE SAME. THEREAFTER, THE AO ISSUED A SHOW CAUSE VIDE LETTER DATED 19.08.2013 TO THE ASSESSEE TO EXPLAIN THE NON - COMPLIANCE. ONCE AGAIN, THE ASSESSEE FAILED TO COMPLY. THEREAFTER, THE AO ISSUED A FURTHER SHOW CAUSE TO THE ASSESSEE ON 30.08.2013, BUT ONCE AGAIN THE ASSESSEE FAILED TO FURNISH ANY SATISFACTORY REPLY BEFORE THE AO. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AO ISSUED A NOTICE DATED 05.12.2013 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 272A(1)(C) SHALL NOT BE LEVIED. IN REPLY TO IT , THE ASSESSEE FILED A LETTER DATED 21.02.2014 STATING THAT HE CANNOT GIVE THE CONSENT WAIVER FORM FOR THE HSBC BANK DETAILS, AS THEY DO NOT HAVE ANY INTEREST WHATSOEVER IN THE SAID BANK ACCOUNTS. IT WAS FURTHER STATED BY THE ASSESSEE THAT HE HAD BEEN ATTENDING ALL THE PROCEEDINGS WITHOUT ANY FAILURE ON HIS PART AND IS CO - OPERATING WITH THE PROCEEDINGS UNDER THE ACT AND THEREFORE, MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 4 PENALTY U/S 272A(1)(C) IS NOT LEVIABLE. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE EX PLANATION OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE FAILED TO SUBMIT THE REQUISITE DOCUMENT EVEN AFTER BEING PROVIDED AMPLE OPPORTUNITIES TO SUBMIT THE SAME. THEREFORE, THE AO LEVIED A PENALTY OF RS.10,000/ - U/S 272A(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THERE WAS REPEATED NON - COMPLIANCE BY THE ASSESSEE BEFORE THE LD. CIT(A) ON THE DATE FIXED FOR HEARING. THE LD. CIT(A) FOUND THAT VIDE SUMMONS ISSUED U/S 131 DATED 18.07.2013, THE ASSESSEE WAS ASKED BY THE AO TO FURNISH SPECIFIC DETAILS LIKECONSENT WAIVER FORM , IN RESPECT OF HIS ACCOUNT WITH HSBC, GENEVA. BUT THE ASSESSEE FAILED TO FURNISH THE SAME. THEREAFTER A SHOW CAUSE VIDE LETTER D ATED 1 9.08.2013 WAS ISSUED TO THE ASSESSEE, TO EXPLAIN THE NON - COMPLIANCE. BUT ONCE AGAIN THE ASSESSEE FAILED TO COMPLY. THEREAFTER, A FURTHER SHOW CAUSE WAS ISSUED BY THE AO ON 30.08.2013, BUT ONCE AGAIN THE ASSESSEE FAILED TO FURNISH ANY SATISFACTORY REP LY BEFORE THE AO. THOUGH AFTERWARDS, THE ASSESSEE FILED A LETTER DATED 21.02.2014, THE EXPLANATION GIVEN BY HIM WAS UNSATISFACTORY AND THAT RESULTED IN LEVY OF PENALTY OF RS.10,000/ - U/S 272A(1)(C) OF THE ACT. THE LD. CIT(A) OBSERVED THAT DURING THE APPELL ATE PROCEEDINGS BEFORE HIM, THE ASSESSEE COULD NOT FURNISH ANY DETAILS OR EXPLANATION OR EVIDENCE TO SHOW AS TO HOW THE PENALTY LEVIED BY THE AO U/S 272A(1)(C) WAS UNFAIR OR UNJUSTIFIABLE, EVEN THOUGH NUMBER OF OPPORTUNITIES OF BEING HEARD WAS GIVEN TO HIM . THEREFORE, THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY OF RS.10,000/ - BY THE AO. MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 5 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT TIME AND AGAIN, THE APPELLANT HAD SUBMITTED BEFORE THE AO THAT IT HAD NO BANKING RELATIONSHIP WITH HSBC GENEVA A ND HAD NEITHER OPENED, NOR OPERATED NOR RECEIVED ANY BENEFIT OUT OF ANY BANK ACCOUNTS WITH HSBC GENEVA AS REFERRED IN THE SUMMONS ISSUED BY THE AO. IT IS ALSO STATED THAT THE APPELLANT WAS NEITHER A DIRECTOR NOR A SHAREHOLDER OF THE COMPANIES WHOSE BANK AC COUNTS WERE MENTIONED IN THE SUMMONS. FURTHER, THE APPELLANT IS NOT THE AUTHORIZED SIGNATORY OF THE CONCERNED BANK ACCOUNTS WITH HSBC GENEVA, AS MENTIONED IN THE SUMMONS. THE LD. COUNSEL FURTHER SUBMITS THAT THE APPELLANT HAD SUBMITTED A LETTER FROM HSBC G ENEVA, CONFIRMING THAT IT HAD NO BANKING RELATIONSHIP WITH HSBC GENEVA IN RELATION WITH THE COMPANIES, AS MENTIONED IN THE SUMMONS. THEREFORE, THERE WAS NO NEED TO FURNISH THE CONSENT WAIVER FORM . THE LD. COUNSEL SUBMITS THAT THE APPELLANT ALWAYS CO - OPER ATED WITH THE INCOME TAX DEPARTMENT AND ATTENDED ALL THE HEARINGS AND SUB MITTED ALL THE RELEVANT DETAILS. THEREFORE, IT IS SUBMITTED BY HIM THAT THE PENALTY OF RS.10,000/ - LEVIED BY THE AO U/S 272A(1)(C) BE DELETED. THE LD. COUNSEL ALSO FILES A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF JAY PARIKH (ITA NOS. 4438 TO 4443/MUM/2017), RAJ PARIKH (ITA NOS. 4499 TO 4504/MUM/2017) AND SAUNAK PARIKH (ITA NOS. 4505 TO 4510/MUM/2017) AND SUBMITS THAT ON SIMILAR GROUNDS, THE PENALTY LEVIE D BY THE AO HAS BEEN DELETED. 6. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THE ASSESSEE FAILED TO FILE THE SPECIFIC DETAILS LIKE CONSENT WAIVER FORM BEFORE THE AO AS WELL AS THE LD. CIT(A). THERE WAS NO COMPLIANCE BY THE ASSESSEE TO FILE THE MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 6 SAID DETAI LS IN RESPONSE TO SUMMONS U/S 131 DATED 18.07.2013 ISSUED BY THE AO. THEREFORE, THE LD. DR SUBMITS THAT THE ORDER OF THE LD. CIT(A) BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IT IS FOUND THAT SIMILAR ISSUE AROSE BEFORE THE ITAT F BENCH, MUMBAI IN THE CASE OF JAY PARIKH (ITA NOS. 4438 TO 4443/MUM/2017), RAJ PARIKH (ITA NOS. 4499 TO 4504/MUM/2017) AND SAUNAK PARIKH (ITA NOS. 4505 TO 4510/MUM/2017). THE TRIBUNAL VIDE ORDER DATED 26.10.2018 HELD AS UNDER: 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY, THE PRESENT PROCEEDINGS ARE AN OFFSHOOT OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE CAPTIONED ASSESSEES FOR ASSESSMENT YEARS ENUMERATED EARLIER . IN THE COURSE OF ASSESSMENT PROCEEDINGS, SUMMONS U/S 131 OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER, I.E. ACIT CENTRAL CIRCLE - 9, MUMBAI AND IN TERMS OF SUCH SUMMONS, ASSESSEE WAS, INTER - ALIA, REQUIRED TO SUBMIT A DULY FILLED AND NOTARISED CONSENT WA IVER FORM IN CONNECTION WITH HSBC BANK, GENEVA. IT IS ALSO NOTEWORTHY THAT THE ASSESSMENT PROCEEDINGS INTENDED TO ASSESS THE INCOME IN THE HANDS OF THE ASSESSEE ARISING FROM THE SAID BANK ACCOUNT, TO WHICH ASSESSEE WAS DENYING ITS LIABILITY. BE THAT AS IT MAY, IN THE PRESENT PROCEEDINGS WE ARE NOT CONCERNED WITH THE MERIT OF SUCH STAND OF THE ASSESSEE AS THE SAME WOULD BE DEALT WITH IN THE RESPECTIVE QUANTUM PROCEEDINGS. THE LIMITED ISSUE BEFORE US IS AS TO WHETHER THERE WAS ANY DEFAULT ON THE PART OF THE A SSESSEE TO COMPLY WITH THE REQUIREMENTS OF SUMMONS U/S 131 OF THE ACT SO AS TO JUSTIFY IMPOSITION OF PENALTY IN TERMS OF SEC. 272A(1)(C) OF THE ACT. THE ADDL. CIT CENTRAL RANGE - 2, MUMBAI HAS LEVIED PENALTY ON THE FAILURE OF THE ASSESSEE TO SUBMIT A DULY FI LLED, SIGNED AND NOTARISED CONSENT WAIVER FORM IN CONNECTION WITH HSBC BANK, GENEVA. THE MOOT QUESTION THAT IS BROUGHT UP BY THE ASSESSEE IS AS TO WHETHER NON - SIGNING MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 7 OF SAID CONSENT WAIVER FORM CONSTITUTES A DEFAULT SO AS TO ATTRACT PENALTY U/S 272A(1)(C) OF THE ACT. A COPY OF THE SAID CONSENT WAIVER FORM IS PLACED IN THE PAPER BOOK AT PAGES 10 TO 13 ALONGWITH A COPY OF THE SUMMONS DATED 18.07.2013. IN THE SUMMONS, THE ACIT CENTRAL CIRCLE - 9, MUMBAI REQUIRED THE ASSESSEE TO FILL - UP THE CONSENT WAIVER FORM, GET IT NOTARISED AND FURNISH THE SAME. 13. IN TERMS OF CLAUSE (C) OF SUB - SECTION (1) OF SEC. 131 OF THE ACT, THE ASSESSING OFFICER OR OTHER SPECIFIED INCOME - TAX AUTHORITIES, CAN COMPEL PRODUCTION OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS. SO FAR THE PRESEN T CASE IS CONCERNED, THE AFORESAID PROVISION IS LIMITED TO COMPELLING OF PRODUCTION OF DOCUMENTS , AS OBVIOUSLY THE CONSENT WAIVER FORM DOES NOT CONSTITUTE BOOKS OF ACCOUNT. A PERUSAL OF CLAUSE (C) OF SEC. 131(1) OF THE ACT WOULD SHOW THAT IT EMPOWERS THE INCOME - TAX AUTHORITIES TO COMPEL PRODUCTION OF DOCUMENTS; AND, OBVIOUSLY, IT IMPLIES THAT ASSESSEE IS ALREADY IN POSSESSION OF SUCH DOCUMENTS. IT IS QUITE WELL UNDERSTOOD THAT WHEN A LAW EMPOWERS AN AUTHORITY TO COMPEL PRODUCTION OF A DOCUMENT FROM A SUBJ ECT, IT IS IMPLIED THAT THE SUBJECT CONCERNED IS INDEED IN POSSESSION OR EXPECTED TO BE IN POSSESSION OF THE DOCUMENT. HOWEVER, IN THE INSTANT CASE, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE SAID CONSENT WAIVER FORM WAS IN POSSESSION OF THE ASSE SSEE. A BARE READING OF THE SUMMONS SHOW THAT A PROFORMA OF CONSENT WAIVER FORM WAS ENCLOSED REQUIRING THE ASSESSEE TO SIGN IT, NOTARISE IT AND THEREAFTER SUBMIT IT BACK. THEREFORE, IT CANNOT BE SAID THAT THERE WAS ANY DEFAULT ON THE PART OF THE ASSESSEE T O SUBMIT A DOCUMENT WHICH WAS ALREADY IN HIS POSSESSION, AS IS THE WONT OF THE PROVISION CONTAINED IN CLAUSE (C) OF SEC. 131(1) OF THE ACT. WHAT THE ASSESSING OFFICER SEEKS TO DO IN THE PRESENT CASE IS TO COMPEL THE ASSESSEE TO EXECUTE A DOCUMENT, AS RIGHT LY PUT BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE BEFORE US, AND NOT A CASE WHERE A DOCUMENT ALREADY IN POSSESSION OF THE ASSESSEE IS BEING ASKED TO BE PRODUCED. THEREFORE, WITHOUT GOING INTO ANY OTHER ASPECT OF THE CONTROVERSY, WE FIND THAT THE INSTAN T DEFAULT IS NOT OF THE TYPE UNDERSTOOD BY A CONJOINT MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 8 READING OF CLAUSE (C) OF SEC. 131(1) OF THE ACT WITH CLAUSE (C) OF SEC. 272A(1) OF THE ACT. THEREFORE, ON THIS COUNT ITSELF, WE FIND NO MERIT IN THE LEVY OF PENALTY U/S 272A(1)(C) OF THE ACT, WHICH IS H EREBY ORDERED TO BE DELETED. 14. BEFORE PARTING, WE MAY CLARIFY THAT OUR DECISION IS ONLY VIS - A - VIS THE TENABILITY OF PENALTY U/S 272A(1)(C) OF THE ACT AND DOES NOT IMPINGE UPON THE MERIT OF THE CONTROVERSY REGARDING THE OWNERSHIP OR OTHERWISE OF BANK ACCO UNT IN QUESTION, WHICH WOULD BE A SUBJECT MATTER OF DISPUTE IN THE RELEVANT PROCEEDINGS. 15. THEREFORE, WE SET - ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.10,000/ - LEVIED. 7.1 FACTS BEING IDENTICAL, WE FOLLOW TH E ABOVE ORDER OF THE CO - ORDINATE BENCH AND DELETE THE PENALTY OF RS.10,000/ - LEVIED BY THE AO U/S 272A(1)(C) OF THE ACT. ALSO FACTS AND CIRCUMSTANCES BEING SIMILAR, OUR DECISION FOR THE AY 2006 - 07 SHALL APPLY MUTATIS MUTANDIS TO AYS 2007 - 08 TO 2011 - 12. 8. IN THE RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/02/2019. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/02/2019 RAHUL SHARMA, SR. P.S. MILAN KAVINCHANDRA ITA NOS. 4621, 4622, 4623, 4624, 4625 & 4626/MUM/2017 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI