Penalty under section 271(1)(c) not sustainable where section 50C addition alone did not prove concealment or inaccurate particulars

Penalty for concealment was held unsustainable where the addition arose only from the deeming valuation under section 50C and there was no finding that the assessee had actually received suppressed consideration. The assessee had placed explanations and supporting material on record, and the record did not establish concealment of income or furnishing of inaccurate particulars as required under section 271(1)(c) read with Explanation 1. A deeming addition by itself was insufficient to prove the statutory conditions for penalty, so the penalty was deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the addition arose from the deeming operation of section 50C of the Income-tax Act, 1961 and the assessee had placed material and submissions on record.

Analysis: The penalty provision applies only where concealment of particulars of income or furnishing of inaccurate particulars is established. On the facts, the addition was based on valuation under section 50C and not on any finding that the assessee had actually received suppressed consideration. The record also showed that the assessee had furnished explanations and supporting material, and no clear concealment or inaccuracy in the particulars of income was demonstrated. The deeming addition by itself did not establish the conditions required for penalty under section 271(1)(c), read with Explanation 1.

Conclusion: Penalty under section 271(1)(c) was not sustainable and was directed to be deleted, in favour of the assessee.

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