2016 (9) TMI 13 - AT - Income Tax

Penalty u/s 271(1)(c) - addition u/s 50C on the amount of difference between sale consideration and valuation made by stamp duty authority - Reopening of assessment - Held that - Coordinate Benches in various decisions starting from Renu Hingorani 2010 (12) TMI 795 - ITAT MUMBAI have held that where there is no evidence of receipt of consideration over and above declared by the assessee and the assessment is either completed u/s 143(3) or even u/s 148 based on deemed sale consideration as per stamp duty authority invoking provisions of section 50C, the penalty under section 271(1)(c) is not leviable. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the view that the ld CIT(A) has rightly deleted the penalty levied by the AO u/s 271(1)(c) of the IT Act, 1961. - Decided in favour of assessee.

Summary

Issues:
- Whether the penalty of ?28,00,670 was rightly deleted by the ld. CIT(A) without appreciating the facts and circumstances of the case and in law.

Analysis:
1. The appeal was filed by the Revenue against the order of the ld. CIT(A)-II, Jaipur, questioning the deletion of the penalty of ?28,00,670 imposed under section 271(1)(c) for concealment of income by the assessee.

2. The case involved the sale of two pieces of land by the assessee, where discrepancies arose between the declared sale consideration and the valuation by stamp duty authorities. The AO initiated penalty proceedings after completing the assessment based on increased sale consideration, leading to the penalty imposition.

3. The ld. CIT(A) deleted the penalty by relying on precedents, including the Bombay ITAT decision in the case of Renu Hingorani, emphasizing that no evidence suggested the assessee concealed income or furnished inaccurate particulars. The appellant's explanation was considered bona fide.

4. The assessee argued that the differential income was due to the deeming provision of section 50C, and penalty under section 271(1)(c) was not applicable. Various decisions were cited to support this argument.

5. The Revenue contended that the facts of the present case differed from the Renu Hingorani case, highlighting the assessee's awareness of section 50C provisions during reassessment proceedings.

6. The Tribunal observed that the assessee had disclosed actual sale considerations in the original return, and the Assessing officer relied on the submitted documents during assessment. Lack of awareness regarding section 50C was noted for both the assessee and the Assessing officer.

7. Referring to the Madan Theatres P Ltd case, the Tribunal emphasized the importance of actual consideration received by the assessee, not the deemed value, for penalty imposition.

8. Citing the Fortune Hotels and Estates case, the Tribunal reiterated that the imposition of penalty requires evidence of inaccurate particulars or concealed income, which was absent in the present case.

9. The Tribunal, in line with previous decisions, concluded that in the absence of evidence of additional consideration received by the assessee, and assessment based on deemed sale consideration under section 50C, the penalty under section 271(1)(c) was not justified.

10. Consequently, the Tribunal upheld the ld. CIT(A)'s decision to delete the penalty of ?28,00,670, dismissing the Revenue's appeal.