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2021 (2) TMI 672 - AT - Income TaxLevy of penalty u/s 271(1)(c) - difference between actual sale consideration and DLC value of immovable property sold by the assessee - addition tax liability has arisen on account of applying the deeming provisions of section 50C - HELD THAT - No evidence has been brought on record by the Assessing officer that any money over and above the sale consideration as per the sale deed was received by the assessee. Assessee has suo-moto adopted the value of the immoveable property as determined and adopted by the stamp duty authorities which to our mind, put the case of the assessee on a better footing and in any case, cannot be worse off as compared to aforesaid cited cases where the additions have been made by the AO by invoking the provisions of section 50C and which later on, have been accepted by the respective assessees by not going in further appeal. A case of self declaration and self adoption of value as adopted by stamp duty authorities while filing the return of income by the assessee and which has been accepted in entirety by the AO. Where the value so declared in the return of income has been accepted by the Assessing officer, there cannot be any basis for levy of penalty for concealment of income. Revenue s only contention is that such return of income has not been filed voluntarily and has been filed only in response to notice u/s 148 and thus, in a way, it is a case of deemed concealment - There was a reasonable cause with the assessee for not filing the return originally within prescribed time as he holds a belief that his taxable income was below the taxable limit and no tax liability arises thereon considering the actual sale consideration received by the assessee on sale of shop amounting to ₹ 3,50,000/-. The bonafide of such belief has not been challenged by the Revenue, as we have noted above that there is no finding or adverse material that the assessee has received any consideration over and above the sale consideration. We therefore find that there was a reasonable cause for the assessee for not filing the return of income originally within prescribed time and thus, the second condition is not satisfied in the instant case. The third condition of non-issuance of any notice either u/s 142(1) or section 148 within prescribed time under section 153(1) is satisfied as the notice u/s 148 has only been issued on 29.03.2017. Therefore, given the reasonable cause for non-filing the return of income, one of the essential conditions for invocation of explanation 3 to section 271(1)(c) is not satisfied and thus, the case of the assessee doesn t fall within the meaning of deemed concealment as so defined in the said explanation and the contentions so advanced by the Revenue cannot be accepted. Where the value so declared in the return of income has been accepted by the Assessing officer and infact, the returned income has been accepted, there cannot be any basis for levy of penalty - Decided in favour of assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act on the difference between actual sale consideration and DLC value of immovable property sold by the assessee. Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): Assessee's Argument: - The assessee sold a shop for ?3,50,000, but the stamp duty authority valued it at ?6,10,313. - To avoid litigation, the assessee declared capital gains using the stamp duty value of ?6,10,313 in the return of income, resulting in additional tax liability which was paid. - The penalty under Section 271(1)(c) was levied based on this additional tax liability. - The assessee argued that the additional tax arose due to the deeming provisions of Section 50C, and all facts and documents were furnished during assessment, with no allegations of receiving consideration over the declared amount. - It was contended that Section 50C, being a deeming provision, should not be extended for penalty purposes unless there's positive evidence of income concealment. - The assessee cited several judicial precedents supporting the argument that penalty cannot be levied merely on account of deeming provisions without evidence of actual higher consideration received. Revenue's Argument: - The assessee did not file the return of income under Section 139(1) despite earning capital gains. - The return was filed only in response to a notice under Section 148, indicating concealment of income. - The Assessing Officer initiated penalty proceedings on the grounds that the return was not filed voluntarily, implying that the assessee would not have declared the capital gains without the notice. - The Revenue supported the penalty, arguing it was a clear case of income concealment. Tribunal's Findings: - The Tribunal referred to several cases where it was held that penalty under Section 271(1)(c) is not justified when additions are made solely by invoking Section 50C without evidence of actual higher consideration received. - In the case of Anita Beniwal, it was held that the absence of evidence of higher consideration received meant the penalty should be deleted. - The Tribunal also cited the case of ACIT vs. Lohia Starlinger Ltd., where it was held that penalty is not justified if the addition is made by invoking Section 50C without evidence of actual higher consideration. - Similarly, in the case of Renu Hingorani, it was held that penalty under Section 271(1)(c) is not sustainable when the addition is based on deeming provisions without evidence of actual higher consideration. Conclusion: - The Tribunal found that in the present case, no evidence was brought on record by the Assessing Officer to show that the assessee received any amount over and above the declared sale consideration. - The assessee had suo-moto adopted the stamp duty value in the return, which was accepted by the Assessing Officer. - The Tribunal noted that the Revenue's contention of deemed concealment under Explanation 3 to Section 271(1)(c) was not specifically invoked by the Assessing Officer. - The Tribunal referred to the interpretation of Explanation 3 by the Gujarat High Court, which requires cumulative conditions to be satisfied for deemed concealment. - The Tribunal found that the assessee had a reasonable cause for not filing the return originally, as the actual sale consideration was below the taxable limit. - Given the reasonable cause and the absence of adverse material, the Tribunal concluded that the conditions for deemed concealment were not satisfied. - The penalty under Section 271(1)(c) was therefore directed to be deleted. Final Order: - The appeal of the assessee was allowed, and the penalty levied under Section 271(1)(c) was deleted. Pronouncement: - The order was pronounced in the open court on 15/02/2021.
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