2017 (5) TMI 160 - AT - Income Tax

Tribunal directs deletion of penalty under Section 271(1)(c) for deemed income.

Shri Jhabar Singh Versus The ITO, Ward 4 (1), Jaipur

The Tribunal directed the Assessing Officer to delete the penalty imposed under Section 271(1)(c) as the addition was based on the deeming provisions of ... Penalty u/s 271(1)(c) - the actual sale consideration was lesser than the value adopted by the Stamp Valuation Authority - Held that:- The Revenue has not brought any material on record suggesting that the assessee had received actual consideration as adopted by the Stamp Valuation Authority. Therefore, we do not see any reason for taking a different view as adopted by the Co-ordinate Benches of this Hon’ble Tribunal, at the Hon’ble Calcutta High Court in the case of CIT vs. Madan Teatres Ltd.[2013 (6) TMI 96 - CALCUTTA HIGH COURT]. We therefore direct the Assessing Officer to delete the penalty. - Decided in favour of assessee Issues Involved:1. Confirmation of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.2. Applicability of Section 50C of the Income Tax Act, 1961 for computation of Long Term Capital Gain and its basis for penalty imposition.3. Allegation of concealment of income or furnishing inaccurate particulars of income by the assessee.Issue-wise Detailed Analysis:1. Confirmation of Penalty Imposed under Section 271(1)(c) of the Income Tax Act, 1961:The primary issue in this appeal was the confirmation of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The assessee argued that the penalty was imposed without establishing a case of concealment or furnishing inaccurate particulars of income. The Tribunal noted that the penalty was levied merely on account of additions made by the Assessing Officer (AO) during the assessment proceedings. The AO had not specified how these additions indicated any concealment of income or furnishing of inaccurate particulars by the assessee.2. Applicability of Section 50C of the Income Tax Act, 1961 for Computation of Long Term Capital Gain and its Basis for Penalty Imposition:The assessee sold an immovable property for Rs. 39 lakhs and declared capital gain accordingly. However, the AO invoked Section 50C, which deemed the sale consideration to be Rs. 1,07,40,030 based on the Stamp Valuation Authority's assessment. The AO computed the capital gain at Rs. 83,64,430 and imposed a penalty under Section 271(1)(c). The Tribunal observed that Section 50C creates a legal fiction, deeming the value assessed by the Stamp Valuation Authority as the full value of consideration for computing capital gains, even if the actual consideration received was less. The Tribunal emphasized that the actual amount received by the assessee was not doubted by the AO, and no material was brought on record to show that the assessee received any amount over and above what was disclosed.3. Allegation of Concealment of Income or Furnishing Inaccurate Particulars of Income by the Assessee:The Tribunal noted that the assessee had truly and correctly disclosed his income and furnished accurate particulars in the return of income. The addition was made solely based on the deeming provisions of Section 50C, and there was no evidence to suggest that the assessee received any consideration over and above the disclosed amount. The Tribunal referred to various judicial pronouncements, including CIT vs. Madan Theatres Ltd., Late Smt. Urmila Tyagi vs. ITO, and others, which supported the view that no penalty under Section 271(1)(c) could be levied merely because the addition was made by invoking Section 50C. The Tribunal concluded that the penalty could not be sustained as the addition was based on a deeming provision, not on any concealment or furnishing of inaccurate particulars by the assessee.Conclusion:The Tribunal directed the Assessing Officer to delete the penalty imposed under Section 271(1)(c), as the addition was based on the deeming provisions of Section 50C and not on any actual concealment or furnishing of inaccurate particulars of income by the assessee. The appeal of the assessee was allowed.