2016 (12) TMI 304 - AT - Income Tax

Penalty u/s 271(1)(c) - deemed addition made u/s 50C - Held that - The impugned addition was merely based on the calculation made by ld. Assessing Officer taking jantri price as against sale price shown by the assessee. At any point of time Revenue has not placed on record any material evidence to show that the assessee has received consideration over and above the agreement value. Assessing Officer has not doubted the genuineness of the document or the details furnished by the assessee and assessee agreed to the addition because of the deeming provisions of section 50C of the Act which cannot be construed to filing inaccurate particulars of income or concealment of income on the part of assessee. Thus we direct the Assessing Officer to delete the penalty - Decided in favour of assessee

Summary

Issues:
Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 based on deemed addition under section 50C for Assessment Year 2006-07.

Detailed Analysis:

1. Assessment and Penalty Imposition:
The appeal was against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2006-07. The penalty was imposed by the Assessing Officer on the deemed addition made under section 50C of the Act. The assessment order determined the total income after making additions under sections 50C and 69B of the Act. The penalty proceedings were initiated after the assessment order was passed, and the penalty was imposed based on the addition sustained under section 50C by the CIT(A).

2. Arguments by Assessee and Revenue:
The assessee contended that the addition under section 50C was made without concrete evidence of receiving consideration above the agreement value. The assessee argued that the addition was based on the jantri price without proving mens rea or guilty mind. The assessee relied on the fair market value of the property and cited relevant judgments to support their case. On the other hand, the Revenue supported the orders of the lower authorities.

3. Judicial Findings and Precedents:
The Tribunal observed that the addition under section 50C was solely based on the difference between the jantri price and the sale price shown by the assessee, without any evidence of actual consideration received. The Tribunal referred to a similar case where the penalty under section 271(1)(c) was deleted as the assessment was completed based on legal fiction, and no additional consideration was proven. Citing judgments from the High Court and Co-ordinate Bench, the Tribunal emphasized that the deeming provisions of section 50C do not imply inaccurate particulars or concealment of income by the assessee.

4. Decision and Order:
Considering the facts and precedents, the Tribunal allowed the appeal of the assessee and directed the Assessing Officer to delete the penalty of ?3,04,330 imposed under section 271(1)(c) of the Act. The Tribunal concluded that the addition under section 50C did not warrant penalty as the assessee had not concealed income or furnished inaccurate particulars. The Tribunal also noted that the second ground of the appeal, of a general nature, did not require adjudication.

In conclusion, the Tribunal set aside the penalty imposed on the assessee, emphasizing that the deeming provisions of section 50C did not establish any wrongdoing on the part of the assessee. The decision was based on the lack of concrete evidence proving additional consideration received by the assessee, in line with established judicial precedents and legal principles.