Section 50C deeming addition does not by itself prove concealment, and penalty failed without specific findings

A penalty for concealment was held unsustainable where the income addition arose from substitution of sale consideration under the section 50C deeming fiction, because such an adjustment for capital gains does not by itself conclusively establish concealment or inaccurate particulars. The commentary also notes that the small additional receipt was not supported by any separate and specific finding in the penalty order; it was merely clubbed with the larger addition. On that basis, the penalty under section 271(1)(c) was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the addition to income arose from substitution of sale consideration under section 50C and from a small undisclosed receipt.

Analysis: The addition on account of the property transaction was made by applying the deeming fiction in section 50C, under which the declared sale consideration is replaced by the stamp duty valuation for the purpose of computing capital gains under section 48. Since such addition depends on a statutory deeming provision and may vary if the matter is referred for valuation, it does not by itself conclusively establish concealment of income or furnishing of inaccurate particulars. As to the further amount of Rs. 15,750, no separate and specific finding was recorded in the penalty order to show that the assessee had furnished inaccurate particulars; the amount was merely treated along with the larger addition in a composite manner.

Conclusion: The penalty under section 271(1)(c) was not sustainable and was deleted.

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