2012 (9) TMI 1006 - AT - Income Tax

Summary

Issues involved: Appeal against penalty u/s 271(1)(c) of the Income Tax Act, 1961 for assessment year 2005-2006.

Summary:

Issue 1:
The assessee filed an appeal against the penalty of Rs. 86,390/- imposed by the Assessing Officer under section 271(1)(c) for the assessment year 2005-2006, which was confirmed by the CIT(A).

Details:
The assessee, an individual earning income from various sources, declared total income of Rs. 3,30,320/-. The Assessing Officer found discrepancies in the valuation of a property sold by the assessee, leading to the penalty imposition u/s 271(1)(c) for alleged concealment of income.

Issue 2:
The assessee contended before the CIT(A) that the addition to the property value was based on a legal fiction under section 50C, and hence, no concealment was intended. However, the CIT(A) dismissed the appeal.

Details:
The CIT(A) did not accept the assessee's argument regarding the valuation discrepancy and upheld the penalty imposed by the Assessing Officer.

Issue 3:
The assessee cited a precedent case before the ITAT Mumbai Benches, where a similar penalty was cancelled based on the deeming provisions of the Income Tax Act.

Details:
Referring to a previous case, the ITAT cancelled a penalty imposed under section 271(1)(c) due to valuation differences, stating that mere agreement to a valuation does not imply incorrect income particulars.

Conclusion:
Based on the precedent case and similar facts, the ITAT cancelled the penalty of Rs. 86,930/- imposed on the assessee, following the principle that deeming provisions do not automatically attract penalties u/s 271(1)(c).

Final Outcome:
The ITAT allowed the appeal of the assessee, cancelling the penalty imposed by the Assessing Officer and confirmed by the CIT(A).

Note: Order pronounced in the open Court on 28th September, 2012.