Tribunal overturns penalty decision as no income concealment or inaccurate particulars

The Tribunal held that the penalty under section 271(1)(c) was not justified as the assessee had not concealed income or furnished inaccurate particulars. The addition based on deeming provisions did not automatically attract a penalty, especially when the actual consideration was not in question. The decision aligned with the Supreme Court ruling in CIT v. Reliance Petro products Pvt. Ltd., resulting in the deletion of the penalty and allowing the assessee's appeal.

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Issues:
Levy of penalty under section 271(1)(c) for addition arising under section 50C.

Analysis:
The appeal was against the CIT(A)'s order upholding the penalty under section 271(1)(c) for the assessment year 2006-07. The main issue was the addition of Rs. 9,00,824 due to the difference in sale consideration and stamp valuation of a flat. The AO initiated penalty proceedings and levied a penalty of Rs. 1,98,181 at 100% of the tax sought to be evaded. The CIT(A) confirmed this decision, leading to the appeal.

The assessee sold two flats at Mangalgyan and one flat at Navmeghdoot during the year. While the sale consideration for the flats at Mangalgyan exceeded the stamp valuation, the flat at Navmeghdoot was undervalued by Rs. 9,00,824. The AO added this amount to the total income under section 50C. The penalty was imposed based on this addition.

The assessee argued that agreeing to the addition should not automatically lead to a penalty unless there is concealment of income or furnishing inaccurate particulars. The assessee admitted the lower sale consideration for the flat, maintaining it was the actual amount received. The AO's addition was based on deeming provisions, not questioning the actual consideration received. The assessee provided all relevant documents, and the AO did not doubt their authenticity. The Tribunal found that agreeing to the addition based on stamp valuation does not prove incorrect particulars of income, citing the decision in CIT v. Reliance Petro products Pvt. Ltd. The penalty was deemed unsustainable and was deleted, allowing the assessee's appeal.

In conclusion, the Tribunal held that the penalty under section 271(1)(c) was not justified as the assessee had not concealed income or furnished inaccurate particulars. The addition based on deeming provisions did not automatically attract a penalty, especially when the actual consideration was not in question. The decision was in line with the Supreme Court ruling in CIT v. Reliance Petro products Pvt. Ltd., leading to the deletion of the penalty and allowing the assessee's appeal.

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