TaxTMI 
TaxTMI 
2025 (3) TMI 1786
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....s are as follows:- The assessees in these cases are brothers and partners in M/s Pothys group. A search u/s.132 of the Income Tax Act was conducted in the case of M/s. Pothys P.Ltd on 18.10.2016. Consequent to search, notice u/s.153C r.w.s 153A was issued to the assessees. For assessment year 2017-18, assessment was completed u/s.153C r.w.s. 153A r.w.s 143(3) vide order dated 18.11.2019. A common addition was made for all these assessees for AY 2017-18 u/s.56(2)(vii)(b)(ii) of the Act. All the five assessees during the previous year relevant to concerned assessment year 2017-18, had jointly purchased a property at Kancheepuram vide sale deed dated 07.06.2016. The total consideration disclosed in sale deed was Rs. 31,80,000/-. The guideline value of the impugned property was Rs. 84,80,000/-. During the course of assessment proceedings, the AO proposed to treat the guideline value as sale consideration. The difference of sale price mentioned in sale deed and guideline value was sought to be added as per deeming provision u/s. 56(2)(vii)(b) of the Act. The assessee objected to the proposal of the AO and requested that matter may be referred to valuation cell of the department. The ....
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....s pointed out that the assessee has been indulging in generation of unaccounted income which are represented in the form of unaccounted assets. Hence the AO was not satisfied with the explanation of the appellant that there was no under reporting of income. The clause (b) of subsection 6 applies to a situation where the income is estimated but the books are correct and complete and in the instant case, this situation does not exist. 5.9 During the course of search and seizure, the appellant and his family members were found to be involved in the generation of unaccounted income which was invested in purchase of unaccounted assets. In this year also, the appellant and his family members were found to have purchased properties below guideline value and no bonafide explanation was provided regarding the purchase of property below guideline value. The additions made in this case make out a case for underreporting of income for the year. As no other reasons exist to differ, I concur with the action of AO in levying Penalty for underreporting. Hence I uphold the levy of penalty in this case." 6. Aggrieved by the order of CIT(A), assessees have filed present appeal before the ....
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....imate made by the DVO hence penalty levied u/s 270A of the Act is not in accordance with law. This fall in line with the decision of Honourable ITAT A Bench Pune in ITA No 840/PUN/2022 dated 10-02-2023 in the case of Jaibalaji Business Corporation Ltd Vs ACIT, Pune where the addition was made u/s 56 in consequence of addition u/s 43CA held that penalty u/s 270A cannot be levied for the addition made under deeming provisions of the Act. 6. The ITAT Delhi in the case ITO vs. Ajay Sharma (ITAT Delhi, 2017) cancelled the penalty under Section 271(1)(c) for an addition made under Section 50C. The tribunal held that the valuation by the Stamp Valuation Authority does not conclusively prove that the actual sale consideration was higher than reported. Since there was no evidence of the assessee receiving more than what was declared in the sale deed, the penalty for concealment was found unjustified. 7. In the case, Smt. Varshaben Vipulbhai Bhalani vs. ITO (ITAT Ahmedabad, 2023), the Income Tax Appellate Tribunal (ITAT) ruled that penalties under Section 271(1)(c) cannot be imposed solely based on the deeming provision of Section 50C. The tribunal emphasized that Section 5....
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....8 vide order dated 11.07.2018. iv) ITAT., Mumbai decision in the case of Satyam Print House Vs. ACIT in ITA No.2898/Mum/2023 (order dated 08.03.2024). 8. The learned DR supported orders of AO and CIT(A). 9. We have heard the rival submissions and perused material on record. On a query from the Bench, the learned AR submitted as against the quantum assessment, appeal is pending adjudication before the Hon'ble High Court. In the instance case, the addition is made invoking deeming provision as per section 56(2)(vii)(b) of the Act. The only basis of addition is estimate made by the DVO. There is nothing on record to suggest that assessee had paid more than the price mentioned in the sale deed. When deeming provisions are applied for addition of income, neither concealment of income or under reporting of income can be established against assessee without other material facts on record. The AO has failed to appreciate section 270A(6)(a) of the Income Tax Act, which prescribes "under reporting" of income shall not include the amount of "under reported income" determined on the basis of estimation. On identical facts, the Mumbai Bench of the Tribunal in the case of Satyam P....