Penalty under deemed valuation addition deleted where no independent evidence of concealment existed.

Penalty under section 271(1)(c) was held not leviable where the addition arose from the deeming fiction in section 56(2)(vii)(b) based on the difference between purchase consideration and stamp duty value of immovable property. The assessee disputed the valuation, and reference to the Valuation Officer substantially reduced the difference. As the assessment was founded on a deemed valuation figure rather than independent evidence of concealment or falsity in the return, the penalty was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on addition made by applying the deeming fiction under section 56(2)(vii)(b) of the Income-tax Act, 1961.

Analysis: The addition arose from the difference between the actual purchase consideration and the stamp duty value of the immovable property under the deeming mechanism of section 56(2)(vii)(b). The assessee had disputed the valuation, and on reference to the Valuation Officer the difference stood reduced substantially. The basis of the assessment was thus a deemed figure adopted under a special valuation provision, rather than a finding of concealed income based on independent evidence of falsity in the return. On these facts, the penalty could not be sustained.

Conclusion: The penalty under section 271(1)(c) was not leviable and was deleted.

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