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Issues involved: Appeal against penalty u/s 271(1)(c) on addition made u/s 50C of the IT Act.
Summary: 1. The appeal was filed against the penalty imposed u/s 271(1)(c) on an addition made u/s 50C of the IT Act. The AO substituted the declared sale consideration with the valuation done by the Stamp Valuation Authority, resulting in an addition to the declared income. Penalty proceedings were initiated, and the penalty was levied on the grounds of willful ignorance to pay capital gain tax properly. 2. The CIT(A) confirmed the penalty, stating that the valuation by the Stamp Valuation Authority is deemed to be the full value of consideration received, and there was an attempt to conceal income by not substituting this valuation. However, the Accountant Member of the ITAT disagreed, stating that there is no blanket requirement for the assessee to accept the valuation done by the Stamp Valuation Authority. The assessee has the option to request the property to be referred to the Departmental Valuation Officer for determining market value, and the valuation by the DVO can be considered for calculating capital gains. 3. The Accountant Member further emphasized that merely making a claim based on available options in the law does not amount to concealment or filing inaccurate particulars. Referring to the decision in CIT vs. Reliance Petroproducts, it was highlighted that penalty cannot be levied solely on the basis of a claim not accepted by the AO. The explanation provided by the assessee was found to be bona fide, and as per the requirements of explanation-1 to section 271(1)(c), the penalty was not justified. 4. Consequently, the penalty was canceled, and the appeal filed by the assessee was allowed. The order was pronounced on 8/7/2010.
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