2014 (7) TMI 1032 - AT - Income Tax

Penalty under Income Tax Act overturned for lack of evidence

Harish Voovaya Shetty, Sujata Refreshments Versus The ITO 18(2), Mumbai.

Harish Voovaya Shetty, Sujata Refreshments Versus The ITO 18(2), Mumbai. - TMI Issues:- Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Ld. CIT(A).- Quashing of the order passed by the Ld. CIT(A) due to lack of proper opportunity to the appellant.- Error in the conclusion by Ld. CIT(A) regarding inaccurate particulars filed by the appellant.- Error in not appreciating the distinction between valuation under section 50C and penalty under section 271(1)(c).Issue 1: Confirmation of Penalty:The appeal challenged the penalty of Rs. 2,27,800 levied under section 271(1)(c) by the assessing officer, which was confirmed by the Ld. CIT(A). The penalty was imposed due to the difference between the sale price and Stamp Duty value of a property sold by the assessee. The appellant argued that the penalty was unjustified as the AO had not questioned the actual consideration received, and the addition was based solely on deeming provisions without evidence of concealment. The appellant cited precedents where penalties were deleted under similar circumstances, emphasizing the absence of evidence showing actual receipt of additional amounts.Issue 2: Lack of Proper Opportunity:The appellant contended that the order by Ld. CIT(A) should be quashed as it was passed without providing a proper opportunity for the appellant to be heard. The appellant highlighted the necessity for a fair hearing in such matters to ensure due process and procedural fairness.Issue 3: Allegation of Inaccurate Particulars:The Ld. CIT(A) concluded that the appellant filed inaccurate particulars, leading to the penalty imposition. However, the appellant argued that the valuation under section 50C should not be the basis for penalty under section 271(1)(c), as it does not imply concealment of income or furnishing inaccurate particulars. The appellant referenced decisions where penalties were deleted due to the absence of evidence proving actual receipt of higher amounts than declared.Issue 4: Distinction between Valuation and Penalty:The appellant emphasized the distinction between valuation under section 50C for computing capital gains and penalty under section 271(1)(c). The appellant argued that the penalty should not be imposed solely based on deeming provisions without concrete evidence of concealment or inaccurate particulars. Precedents were cited where penalties were deleted when no evidence of actual receipt of additional amounts was presented.In the final judgment, the Tribunal held that the penalty was not justified based on the direct decision by the Hon'ble Calcutta High Court and deleted the penalty. The Tribunal emphasized the importance of following direct decisions on the issue and rejected the arguments supporting penalty imposition based on different contexts or precedents. The appeal filed by the assessee was allowed, and the penalty was deleted.