2015 (10) TMI 2644 - AT - Income Tax

Penalty u/s 271(1)(c) - addition made on account of short term capital gain was under section 50C - Held that - On a plain reading of the sec 50 provision it is absolutely clear that in a case where the declared sale consideration by the assessee is lesser than the value adopted by the stamp valuation authority for stamp duty purpose such value shall be the sale consideration deemed to have been received by the assessee of course subject to the provisions contained under sub sections (2) and (3) of the Act. Thus for applying the said provision the Assessing Officer need not have to establish whether actual sale consideration received by assessee is the value adopted by the stamp valuing authority for stamp duty purpose. However as far as imposition of penalty under section 271(1)(c) of the Act is concerned the Assessing Officer has to prove the fact that the assessee actually received as sale consideration the amount determined as the value for stamp duty purpose. There is not even a single evidence brought on record by the Assessing Officer which could even remotely establish that the assessee has received anything over and above the declared sale consideration. Merely because the addition was made by applying the provisions of section 50C of the Act on the basis of value determined by the stamp valuation authority the assessee cannot be saddled with penalty under section 271(1)(c) of the Act either for furnishing of inaccurate particulars of income or for concealment of income. - Decided in favour of assessee.

Summary

Issues:
- Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2006-07.

Analysis:
1. The appeal by the Revenue was against the deletion of penalty under section 271(1)(c) by the learned Commissioner (Appeals) for the assessment year 2006-07. The Assessing Officer found discrepancies in the declared sale consideration of two office premises by the assessee, invoking section 50C of the Act and resulting in the addition of short term capital gain. The penalty was imposed alleging inaccurate particulars of income.

2. The learned Commissioner (Appeals) observed that the assessee had provided all transaction details and the issue of the value adopted by the stamp valuation authority was debatable due to section 50C. Hence, the penalty was deleted as there was no furnishing of inaccurate particulars of income.

3. The ITAT Mumbai upheld the decision to delete the penalty. It was noted that under section 50C, the stamp valuation authority's value is deemed as sale consideration, but for penalty under section 271(1)(c), the actual consideration received by the assessee needed to be proven. Since no evidence showed the assessee received more than the declared consideration, the penalty for inaccurate particulars of income was unjustified. The Assessing Officer's allegation lacked substance as the assessee had provided all relevant particulars.

4. The judgment highlighted that the application of section 50C did not automatically warrant a penalty under section 271(1)(c). The decision emphasized the distinction between valuation for tax purposes and penalty imposition based on actual consideration received. The lack of evidence supporting the allegation of inaccurate particulars of income led to the dismissal of the Revenue's appeal.

In conclusion, the ITAT Mumbai upheld the deletion of the penalty imposed under section 271(1)(c) for the assessment year 2006-07, emphasizing the necessity to establish actual consideration received for penalty imposition despite the application of section 50C for valuation purposes.