2014 (10) TMI 783 - HC - Income Tax

Penalty u/s 271(1)(c) Addition of deemed income u/s 50C - Whether the Tribunal was right in holding that the penalty cannot be imposed with reference to addition of deemed income u/s 50C Held that - The Tribunal was rightly of the view that this cannot be taken as a case of furnishing inaccurate particulars of income inasmuch as there was a registered sale deed and there was consideration mentioned - the document was forwarded to the Valuer and for determination of the value, by itself would not mean that the Assessee had furnished inaccurate particulars of income or has concealed the income thus, imposition of penalty was not justified as such no substantial question of law arises for consideration Decided against revenue.

Summary

Issues:
1. Interpretation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 in relation to deemed income under Section 50C.
2. Valuation of property for tax purposes based on stamp duty assessment.
3. Imposition of penalty for alleged inaccurate particulars of income.

Analysis:
1. The appellant challenged the order of the Income Tax Appellate Tribunal regarding the deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The main issue was whether the penalty could be imposed based on the addition of deemed income under Section 50C. The appellant relied on the judgment of the Supreme Court in a similar case. However, the High Court found that the Tribunal's decision was justified based on the peculiar facts of the case, where the Assessee sold office premises at a certain price but the Assessing Officer determined a higher market value for tax purposes. The Assessee requested a valuation by the Departmental Valuation Officer, which resulted in a different value. The High Court concluded that the penalty for inaccurate particulars of income was not warranted in this scenario.

2. The High Court noted that there was no dispute regarding the valuation of the property for tax assessment purposes. The Assessing Officer used the stamp duty valuation to determine the tax liability, which differed from the actual sale consideration received by the Assessee. Despite the variance in values, the High Court observed that the Assessee did not furnish inaccurate particulars of income or conceal any income, as there was a registered sale deed with the consideration mentioned. The High Court emphasized that the mere referral of the valuation to the Valuer did not imply inaccurate reporting by the Assessee, leading to the conclusion that the imposition of penalty was unjustified in this context.

3. In the context of the penalty imposition, the Tribunal held that the case did not involve furnishing inaccurate particulars of income, as there was no intention to conceal income. The High Court agreed with the Tribunal's decision, stating that the circumstances did not warrant the penalty under Section 271(1)(c). The High Court clarified that the Tribunal's order did not raise any substantial question of law for further consideration and dismissed the appeal accordingly, without imposing any costs. The High Court left the door open for the Revenue to raise contentions related to deeming provisions in future cases, indicating that the specific facts of this case did not support the imposition of the penalty.