2025 (10) TMI 750 - AT - Income Tax

Penalty u/s 271(1)(c) cannot be imposed solely for u/s 43CA addition based on circle rate discrepancy, penalty quashed

ITAT DELHI - AT held for the taxpayer, directing that section 271(1)(c) penalty could not be imposed merely because of an addition under section 43CA ... Penalty levied section 271(1)(c) - quantum addition representing difference between actual sale price of the housing units and circle rate thereof - HELD THAT:- The tribunal has given it’s due consideration to the assessee’s pleadings and Revenue’s foregoing vehement contentions against and in support of the impugned section 271(1)(c) penalty wherein both the learned lower authorities held the assessee to have concealed and furnished inaccurate particulars of income regarding addition made u/s 43CA of the Act. There could be hardly any dispute that the instant statutory provision comes into play wherein a difference of more than 10% margin rises between actual sale price and stamp value of the residential units/stock-in-trade sold by an assessee’s. There is not even an iota of evidence against the assessee that it had actually charged anything over and above the actual sale price since an addition u/s 43CA is more in the nature of deemed income only. The tribunal therefore quotes CIT vs. Reliance Petroproducts (P) Ltd.[2010 (3) TMI 80 - SUPREME COURT] to conclude that the same does not automatically result in levy of section 271(1)(c) penalty - Decided in favour of assessee. Appeal against levy of penalty under section 271(1)(c) for AY 2016-17 was heard ex parte. Penalty of Rs. 7,53,129/- related to a quantum addition of Rs. 38,84,000/- under section 43CA, reflecting the difference between actual sale price and circle rate (?49,00,000 vs ?87,84,000). Lower authorities held the assessee had 'concealed and furnished inaccurate particulars of income' by making the 43CA addition. Tribunal observed that section 43CA operates as deemed income where a margin exceeding 10% between actual sale price and stamp value triggers the provision, and there was 'not even an iota of evidence' that the assessee charged excess over actual sale price. Reliance placed on CIT v. Reliance Petroproducts (2010) 322 ITR 158 (SC): the deemed addition 'does not automatically result in levy of section 271(1)(c) penalty.' Sole substantive ground of the assessee accepted and appeal allowed.