Refusal To Fill Consent Form To Obtain Information About Swiss Bank Account, Delhi High Court Upholds Penalty

The Bench, consisting of Justices Manmohan and Sudhir Kumar Jain, has held that even if the Assessee had no connection with the alleged Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice issued under Section 142(1) of the Income Tax Act and had filled the consent form.

The revenue department had received documents from French official sources indicating that the Appellant Assessee, Jayanti Dalmia, was an account holder of a Swiss Bank account in HSBC Bank. The Assessee was requested to furnish the details of the Swiss Bank Account. Alternatively, a notice was issued upon the Assessee under Section 142(1) of the Income Tax Act, 1961 calling upon the Assessee to fill the consent-cum-waiver form to enable the tax authorities to obtain information from the Swiss Bank in respect of Assessee's bank account. The ITAT had upheld the order of the Commissioner of Income Tax (CIT) with respect to non-compliance of the notice issued under Section 142(1) of the Act by the Assessee and the consequent imposition of penalty under Section 271(1)(b) of the Act. The Assessee had filed an appeal before the Delhi High Court.

The counsel for the Assessee before the Delhi High Court had submitted that the Assessee Dalmia never held an account in the Swiss banks and that she was not obliged to fill the said consent form as she had no connection with the said bank accounts. The counsel for the Assessee had also submitted that asking the Assessee to furnish a consent letter was violative of Article 21 of the Constitution of India in view of the judgment passed by the Supreme Court in Selvi & Ors. versus State of Karnataka (2010).

Section 142(1) of the Income Tax Act gives the Assessing Officer the power to issue notice to the assessee to produce such accounts or documents as the Assessing Officer may require for the purpose of inquiry under the Act. Section 271(1)(b) gives the Assessing Officer the power to issue penalty on the assessee who has failed to comply with the notice issued under Section 142(1) of the Act.

The Delhi High Court observed that in the case of Sanjay Dalmia versus PCIT (2018), the Delhi High Court had upheld the penalty imposed under Section 271(1)(b) of the Act which had arisen from the same search and bank account under consideration in the present case and for the same reason of not having filled the consent form. Also, the High Court observed that a Special Leave Petition against the said order was dismissed by the Supreme Court.

The High Court also observed that the judgment passed by the Supreme Court in Selvi & Ors had no application to the facts of the present case as the same had only upheld the principle of 'right of silence' in the context of criminal proceedings.

The High Court observed that even if the Assessee had no connection with the Swiss Bank accounts, no prejudice would have been caused to her if she had complied with the notice issued under Section 142(1) of the Act and had filled the consent form. Moreover, since the penalty with respect to the attorney holder of the same bank account was upheld by the High Court in the case of Sanjay Dalmia versus PCIT, the High Court held that penalty with regard to Assessee, who was an account holder of the same bank account, had to be upheld.

The High Court therefore upheld the penalty imposed upon the Assessee and dismissed the appeal.

Case Title: Mrs. Jayanti Dalmia Versus DCIT

Counsel For The Assessee: Mr. Ramesh Singh, Sr. Advocate, Ms. Shreya Jain And Mr. Gaurav Tanwar, Advocates

Counsel For The Revenue Department: Mr. Ajit Sharma, Senior Standing Counsel

Citation: 2022 LiveLaw (Del) 203

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