2023 (7) TMI 1631 - AT - Income Tax

Penalty under Section 271(1)(c) for sale consideration differing from stamp valuation rejected as insufficient to prove inaccurate particulars

A discrepancy between the sale consideration declared by the taxpayer and a higher valuation adopted by the stamp valuation authority for registration, ... Penalty u/s 271(1)(c) - Addition u/s 50C on the basis of valuation adopted by Stamp Valuation Authority for the purpose of registration of transaction - Allegation of Furnishing inaccurate particulars of income - difference of sale consideration shown by assessee vis a vis the value of asset determined by Stamp Valuation Authority at the time of registration of sale deed HELD THAT:- We find that almost on similar set of facts, the Coordinate Bench of Tribunal [2017 (3) TMI 1872 - ITAT AHMEDABAD] while considering similar ground of appeal against levy of penalty, deleted the similar penalty by holding that in terms of deeming provision of Section 50C, higher sale consideration of property determined by DVO did not by itself Amount to furnishing inaccurate particulars of income so as to levy penalty under Section 271(1)(c) of the Act - Appeal of assessee is allowed. Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 can be levied where the assessing officer made additions solely by invoking the deeming provision of Section 50C based on stamp valuation authority's valuation.Analysis: Section 50C operates as a deeming provision fixing a deemed sale consideration for taxation where the consideration declared is less than the value adopted by the stamp valuation authority. A penalty under Section 271(1)(c) requires furnishing of inaccurate particulars or concealment of income. Where the addition arises exclusively from the application of the deeming fiction in Section 50C (i.e., no evidence that the assessee actually received higher consideration than shown in the sale deed), the mere invocation of Section 50C does not prove that the assessee furnished inaccurate particulars or concealed income. Absent independent evidence that the assessee actually received the higher amount or misrepresented facts, the revenue fails to discharge its burden to justify penalty. The Tribunal's consistent view on similar facts supports deletion of penalty when addition flows only from Section 50C valuation.Conclusion: Penalty under Section 271(1)(c) cannot be sustained where the only basis for addition is the deeming provision of Section 50C without evidence of actual receipt of higher consideration; the appeal is allowed in favour of the assessee.