Case Law Details

Case Name : Sharvan Gupta Vs ACIT (High Court of Delhi)
Appeal Number : ITA Appeal No. 1100/2015 & Crl. M.A. No. 4098/2015
Date of Judgement/Order : 06/04/2015
Related Assessment Year :
Courts : All High Courts (3996) Delhi High Court (1252)

Brief Background of case

The petitioner by letter dated 17th November, 2011 had disclosed a foreign bank account which existed with the HSBC Private Bank, Geneva, Switzerland to the Director of Income Tax (Investigation-II). The peak amount lying in the said account during the year ending 31st March, 2007 was around US$ 1.3 million. The account was closed in the year 2007. After recording the petitioner’s statement on 24th November 2011 and 9th December 2011 u/s 131 of the I.T. Act, DCIT issued notice dated 9th July 2012 u/s 148 of the Act. In response, return of income declaring the peak balance of said bank account amounting to Rs.6,48,76,162 for A.Y. 2006-07 and Rs.27,94,163 for A.Y. 2007-08 was filed. Notices u/s 142(1) of the Act, were issued by respondent on several dates i.e., on 02-05-2013, 12-06-2013, 11-07-2013, 20-08-2014 and 15-12-2014 calling upon the petitioner to furnish details of the foreign bank account and its statement along-with transactions details. The petitioner filed the replies of above notices. On 05-01-2015, statement of the petitioner was recorded on oath that he had voluntarily disclosed his foreign bank account with HSBC Private Bank, Geneva, Switzerland by letter dated 17-11-2011. A show-cause notice dated 07-01-2015 u/s 279(1) read with section 276-D was issued informing the petitioner to launch prosecution for alleged willful failure to produce accounts and documents in terms of notices u/s 142(1) of the Act. In response to this show-cause notice, reply was furnished by petitioner through a letter dated 19-01-2015. On 09-02-2015, the petitioner sent another reply whereby it was stated that the petitioner with great difficulty had been able to obtain the copy of the bank statement of the Account Number 12119836 at HSBC, Private Bank, Geneva, Switzerland for the entire period of operation of the said Account enclosing the said bank statement with letter. This was again reiterated by reply dated 11-02-2015 on the subject which was received by respondent on the same date. CIT, however, authorised Dr. Sujeet Singh, ACIT, to institute a Criminal Complaint u/s 276-D of the Act for A.Y. 2006-07 through a sanction/authority letter dated 10-02-2015 containing reason of such initiation which mainly read out as…..

“The assessee has surrendered the peak credit in foreign bank account it clearly shows that he is in possession of the complete details of his said account including bank statements etc. which he has wilfully not furnished.

  1. AND WHEREAS from the perusal of records placed before me, I am satisfied and am of the opinion that the assessee has wilfully not furnished the required details as per Notices U/s 142 (1) of the IT Act and has thus committed offence punishable u/s 276-D of the I.T. Act 1961.”

The Criminal Complaint was filed by respondent through ACIT on 12-02-2015 with the Addl. Chief Metropolitan Magistrate. The Additional Chief Metropolitan Magistrate passed the summon order holding failure on the part of assessee for various notices issued u/s 142 (1) of the IT Act i.e., dated 02-05-2013, 12-06-2013, 11-07-2013, 20-08-2014 and 15-12-2014 calling details of the said foreign bank account including statement since beginning till date and account opening form etc. for the purposes of completion of assessment was issued by respondent, though replies were sent by him but no details was furnished of the said foreign bank account.”

The present petition has been filed by the petitioner under Section 482 Cr.P.C. seeking quashing of the sanction/authorization dated 10th February, 2015 granted by the Commissioner of Income Tax (Central-I), the complaint No.CC/91/14 dated 12th February, 2015 preferred by the respondent through Dr.Surjeet Singh, ACIT, Central Circle 02 before the Court of Additional Chief Metropolitan Magistrate and the order dated 27th February, 2015 passed by the Additional Chief Metropolitan Magistrate.

Contention of Petitioner

Learned Senior counsel of the petitioner argued that CIT has without considering the reply dated 9th February, 2015, along with which copy of the bank statement was enclosed, and suppressing the same, filed a criminal complaint under Section 276-D of the Act for the assessment year 2006-07 and on 10th February, 2015 the authorization was granted under Section 279(1) of the Act. He further submitted that at the time of sanction/authorization to file the criminal complaint against the petitioner, the department was fully aware that all the details of the account have been sent/disclosed. Since the details were available with the department, the question of filing the criminal complaint against the petitioner does not arise.

Contention of Respondent

Learned counsel appearing on behalf of the respondent, submitted that there is a total non-compliance/non-cooperation on behalf of the petitioner when the notices under Section 142(1) of the Act were issued on 02-05-2013, 12-06-2013, 11-07-2013, 20-08-2014 and 15-12-2014. He further submitted that the department did not have the knowledge about the reply dated 9th February, 2015 at the time of filing the complaint otherwise in the sanction letter the factum of the reply ought to have been considered. He suggested that letter dated 11th February, 2015 might have come to the appropriate desk after one or two days at that time as the criminal complaint was already filed on 10th February, 2015.

Held by Court

It appears that the petitioner in compliance with notices issued under Section 142(1) of the Act and in furtherance to the reply dated 19th January, 2015 sent another reply dated 9th February, 2015 whereby it was stated that with great difficulty the petitioner had been able to obtain the copy of the bank statement of the Account Number 12119836 at HSBC, Private Bank, Geneva, Switzerland for the entire period of operation of the said account and again a letter dated 11th February, 2015 was sent in which the reference of letter dated 9th February, 2015 was mentioned. The said letters and bank statement furnished by the petitioner have not been discussed in sanction even no reference is given. The fact of receiving the letter dated 11-02-2015 by the department is not in dispute. It is also a matter of fact that the criminal proceedings have been initiated by the respondent against the petitioner on the basis of the sanction issued by the department on 10th February, 2015 and in case the grounds of the sanction are read, it is evident that the reply sent by the petitioner contains the copy of the bank statement filed for the period has not been mentioned/ discussed in the same. Even otherwise assuming for the sake of the argument that the reply dated 9th February, 2015 was not put up before the appropriate officer, when the sanction was issued, it is admitted position that the said complaint was filed on 12th February, 2015 when the letter dated 11th February, 2015 was admittedly received by the department. The factum of receipt of the said letter is not mentioned in the complaint. Assuming for the sake of the argument that even the said letter was not placed at the appropriate desk till 12th February, 2015 as counsel for the respondent mentioned to the court that usually any letter filed at the counter is received by the appropriate desk within two days, but in the present case, the pre-summoning evidence in the above said matter was recorded on 27th February, 2015. At least on that date, the department had full knowledge of the contents of the two letters dated 9th February, 2015 and 11th February, 2015. The statement of Dr. Surjeet Singh, ACIT, does not contain the details of receipt of the said replies/letters. It was also not disclosed in the statement that the petitioner has already sent the bank statement for the entire period as alleged by the petitioner. It is also not denied by the respondent that when the pre-summoning evidence was recorded, the said documents were not in the possession of the respondent. Thus, it is apparent that while recording the statement of the complainant and passing the summoning order dated 27th February, 2015, all the facts were not available with the trial Court otherwise the Court might have asked the respondent to produce the same and to consider the replies dated 9th February, 2015 and 11th February, 2015 before passing the summoning order or the respondent ought to have sought prayer for amendment in the sanctioning letter. The same has not happened in the present case.

Under these circumstances, the order dated 27th February, 2015 passed in Criminal Complaint No.100/4/15 dated 12thFebruary,2015 titled “ITO Versus Shravan Gupta” whereby the summoning order has been passed, is liable to be quashed on technical reason.  The respondent is at liberty to issue fresh sanction against the petitioner after considering the replies filed by the petitioner on 9th February, 2015 and 11th February, 2015 and would be entitled to initiate proceedings if so desires on failure of compliance of various letters issued under Section 142(1) of the Act. The petitioner at the same time would be entitled to contest the said proceedings in accordance with law. The petition was accordingly disposed of.

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