2019 (4) TMI 1133 - HC - Income Tax

Penalty u/s 271(1)(c) - difference in estimation of the value of the land as on 1.4.1981 for capital gain computation - quantum of income determined is certainly not beyond the shadow of doubts - tribunal deleted the addition - HELD THAT - Assessing Officer having imposed the penalty, the CIT(A) and the Tribunal both concurrently held that mere difference in estimation of the value of the land as on 1.4.1981 would not give rise to penalty. The Tribunal recorded that there was neither any concealment of income or particulars thereof. The CIT(A) also highlighted the point of diversion between two sides why there was wide gap between two valuations; one presented by the assessee backed by the Government approved valuer and another obtained by the Assessing Officer during the course of assessment. No error in view of the Tribunal. No question of law arises.

Summary

Issues:
Challenge to ITAT judgment on penalty under section 271(1)(c) for disputed valuation of land leading to capital gain determination.

Analysis:
The appeals filed by the Revenue challenged the ITAT judgment regarding the penalty under section 271(1)(c) for disputed valuation of land resulting in the determination of capital gain. The key question raised was whether the Tribunal was correct in deleting the penalty despite uncertainties in the income determination process. The assessee had sold land during the relevant assessment year, declaring capital gain based on the fair market value as of 1.4.1981, supported by a valuer's report and claiming indexation benefits. The Assessing Officer disputed this valuation, obtaining a separate report and revising the land value lower than claimed by the assessee, leading to a partial confirmation of the addition under capital gain after appeals.

Regarding the penalty proceedings, both the CIT(A) and the Tribunal concurred that the mere difference in land valuation estimates did not warrant a penalty. They emphasized the absence of any income concealment or particulars thereof. The Tribunal specifically noted the divergence in valuations and the reasons behind the significant gap between the valuations provided by the assessee and the Assessing Officer. Consequently, the Court found no error in the Tribunal's view and concluded that no legal question arose, resulting in the dismissal of both appeals challenging the ITAT judgment on the penalty issue under section 271(1)(c) for the disputed land valuation impacting the capital gain determination.