2015 (10) TMI 251 - AT - Income Tax

Penalty under section 271(1)(c) - assessee has knowingly/deliberately disclosed the sale consideration of property at a lesser rate than what was determined by the registering authority - assessee an individual is a non-resident Indian - Held that - As can be seen from the language of section 50C it is a deeming provision. In a case where A.O. finds that the value determined by the stamp duty authority for the purpose of stamp duty is more than the consideration claimed to have been received by the party, then the value adopted by the SRO shall be deemed to be the consideration received by the assessee for the purpose of computation of capital gain. Thus, for application of section 50C of the Act, it is not necessary for the A.O. to examine whether actually assessee has received anything over and above the amount mentioned in the sale deed as he simply has to go by the valuation adopted by the SRO. However, as far as imposition of penalty is concerned, there must be positive evidence before the A.O. to conclude that assessee has received the amount as valued by SRO for stamp duty purpose. Unless there are positive evidence to indicate Bhavya Anant Udeshi, Hyderabad. receipt of on money to the extent of valuation made by SRO by the assessee, penalty under section 271(1)(c) cannot be imposed. Further, in the present case as is evident from the materials on record, the assessee in the course of assessment proceeding has furnished all necessary and relevant documents relating to the transaction of the property in question including registered sale deed. The assessee has not suppressed any material fact from the notice of the A.O. In these circumstances, the imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income or concealment of income, in our view, is not appropriate. Imposition of penalty under section 271(1)(c) of the Act in the present case is not valid. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Analysis:
The appeal was against the penalty imposed under section 271(1)(c) for the assessment year 2008-2009. The assessee, a non-resident Indian, declared income including short term capital gain from the sale of shares and immovable property in Hyderabad. The assessing officer (A.O.) computed capital gain invoking section 50C due to variance in sale consideration declared and stamp duty valuation. The CIT(A) and ITAT upheld this computation. The A.O. then imposed a penalty for furnishing inaccurate particulars of income, which was confirmed by the CIT(A).

The assessee contended that there was no conclusive evidence of receiving additional amounts beyond the sale deed consideration. The deeming provision of section 50C should not dictate penalty imposition. The assessee provided all relevant documents during assessment, arguing against inaccurate particulars. The Department argued that the assessee knowingly undervalued the property for capital gain computation, justifying the penalty due to upheld section 50C application by ITAT.

The Tribunal observed that while section 50C was appropriately applied for capital gain computation, it did not prove inaccurate particulars or income concealment by the assessee. Positive evidence of receiving the SRO valuation amount was crucial for penalty imposition. The assessee's full disclosure during assessment supported the lack of inaccurate particulars. Referring to precedent judgments, the Tribunal concluded that penalty under section 271(1)(c) was unjustified in this case, deleting the penalty.

In conclusion, the Tribunal allowed the assessee's appeal and pronounced the order on 04.09.2015.