Assessee not liable for penalty under section 271(1)(c)

The Tribunal concluded that there was no deliberate act of concealment by the assessee. The penalty under section 271(1)(c) was deemed not maintainable, and the AO was directed to delete the penalty. The appeal of the assessee was allowed, and the order was pronounced in the Court on 20/12/2021 at Ahmedabad.

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Issues Involved:

1. Confirmation of penalty levied under section 271(1)(c) of the Income Tax Act, 1961.
2. Non-disclosure of long-term capital gain on the sale of property.
3. Application of section 50C of the Income Tax Act.
4. Determination of deliberate concealment of income by the assessee.
5. Consideration of fair market value as on 1 April 1981 for cost of acquisition.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty Levied Under Section 271(1)(c) of the Income Tax Act, 1961:
The primary issue raised by the assessee was the confirmation of the penalty levied by the Assessing Officer (AO) amounting to Rs. 2,16,162 under section 271(1)(c) of the Act. The penalty was imposed on the grounds that the assessee concealed income related to the sale of land. The AO initiated penalty proceedings during the assessment and concluded that the assessee had not disclosed the capital gain in her return of income, which constituted concealment of income.

2. Non-disclosure of Long-term Capital Gain on the Sale of Property:
The assessee, an individual, had filed her return of income declaring Rs. 1,82,320. She jointly owned a piece of land with three co-owners, which was sold for Rs. 56 Lacs, valued for stamp duty at Rs. 58,55,000. The assessee did not disclose any income under the head capital gain in her return. The AO added Rs. 14,10,039 as long-term capital gain, later confirmed by the CIT(A) at Rs. 9,52,775. The assessee argued that she disclosed all facts during assessment proceedings and did not conceal any information.

3. Application of Section 50C of the Income Tax Act:
The AO computed the long-term capital gain based on the sale consideration as per section 50C, a deeming provision, which considers the stamp duty value as the sale consideration. The assessee contended that the addition was made under section 50C, which is a deeming provision, and thus, no penalty should be levied.

4. Determination of Deliberate Concealment of Income by the Assessee:
The Tribunal examined whether the assessee had a deliberate intent to conceal income. It was noted that the assessee did not disclose the capital gain in her return, which implied concealment. However, the Tribunal referred to the Supreme Court’s judgment in Dilip N. Shroff vs. JCIT, which emphasized that concealment implies a deliberate act or omission with dishonest intent. The Tribunal found no evidence of mala fide intent or deliberate concealment by the assessee.

5. Consideration of Fair Market Value as on 1 April 1981 for Cost of Acquisition:
The Tribunal observed that the land was acquired on 25 April 1977 at Rs. 36,915, taken as the cost of acquisition. The assessee had the option to consider the fair market value as on 1 April 1981 under section 55(2)(b) of the Act. The Tribunal noted that the authorities did not consider this option, which could have increased the cost of acquisition and reduced the capital gain. The Tribunal emphasized that the revenue should not benefit from the assessee’s ignorance.

Conclusion:
The Tribunal concluded that there was no deliberate act of concealment by the assessee. The penalty under section 271(1)(c) was deemed not maintainable, and the AO was directed to delete the penalty. The appeal of the assessee was allowed, and the order was pronounced in the Court on 20/12/2021 at Ahmedabad.

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