Tribunal cancels penalty under Income Tax Act for lack of evidence. Assessee's appeal successful.

The Tribunal found that the penalty under Section 271(1)(c) of the Income Tax Act was not justified as there was no evidence of the assessee receiving any amount over the declared sale consideration. The Tribunal noted that the assessee had adopted the stamp duty value in the return, which was accepted by the Assessing Officer. Due to the absence of evidence of actual higher consideration and the reasonable cause for not originally filing the return, the penalty was deleted. The appeal of the assessee was allowed, and the penalty was removed.

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Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act on the difference between actual sale consideration and DLC value of immovable property sold by the assessee.

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):

Assessee's Argument:
- The assessee sold a shop for Rs. 3,50,000, but the stamp duty authority valued it at Rs. 6,10,313.
- To avoid litigation, the assessee declared capital gains using the stamp duty value of Rs. 6,10,313 in the return of income, resulting in additional tax liability which was paid.
- The penalty under Section 271(1)(c) was levied based on this additional tax liability.
- The assessee argued that the additional tax arose due to the deeming provisions of Section 50C, and all facts and documents were furnished during assessment, with no allegations of receiving consideration over the declared amount.
- It was contended that Section 50C, being a deeming provision, should not be extended for penalty purposes unless there's positive evidence of income concealment.
- The assessee cited several judicial precedents supporting the argument that penalty cannot be levied merely on account of deeming provisions without evidence of actual higher consideration received.

Revenue's Argument:
- The assessee did not file the return of income under Section 139(1) despite earning capital gains.
- The return was filed only in response to a notice under Section 148, indicating concealment of income.
- The Assessing Officer initiated penalty proceedings on the grounds that the return was not filed voluntarily, implying that the assessee would not have declared the capital gains without the notice.
- The Revenue supported the penalty, arguing it was a clear case of income concealment.

Tribunal's Findings:
- The Tribunal referred to several cases where it was held that penalty under Section 271(1)(c) is not justified when additions are made solely by invoking Section 50C without evidence of actual higher consideration received.
- In the case of Anita Beniwal, it was held that the absence of evidence of higher consideration received meant the penalty should be deleted.
- The Tribunal also cited the case of ACIT vs. Lohia Starlinger Ltd., where it was held that penalty is not justified if the addition is made by invoking Section 50C without evidence of actual higher consideration.
- Similarly, in the case of Renu Hingorani, it was held that penalty under Section 271(1)(c) is not sustainable when the addition is based on deeming provisions without evidence of actual higher consideration.

Conclusion:
- The Tribunal found that in the present case, no evidence was brought on record by the Assessing Officer to show that the assessee received any amount over and above the declared sale consideration.
- The assessee had suo-moto adopted the stamp duty value in the return, which was accepted by the Assessing Officer.
- The Tribunal noted that the Revenue's contention of deemed concealment under Explanation 3 to Section 271(1)(c) was not specifically invoked by the Assessing Officer.
- The Tribunal referred to the interpretation of Explanation 3 by the Gujarat High Court, which requires cumulative conditions to be satisfied for deemed concealment.
- The Tribunal found that the assessee had a reasonable cause for not filing the return originally, as the actual sale consideration was below the taxable limit.
- Given the reasonable cause and the absence of adverse material, the Tribunal concluded that the conditions for deemed concealment were not satisfied.
- The penalty under Section 271(1)(c) was therefore directed to be deleted.

Final Order:
- The appeal of the assessee was allowed, and the penalty levied under Section 271(1)(c) was deleted.

Pronouncement:
- The order was pronounced in the open court on 15/02/2021.

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