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2023 (2) TMI 691 - AT - Income TaxPenalty u/s 271 (1)(c) - capital gain assessed as per the provisions of section 50C/2(14) - Case re-opened on the basis of AIR information regarding sale of property - HELD THAT - The direction of CIT(A) is clear that penalty cannot be imposed on the basis of legal fiction of section 50C - He therefore, directed to work out the concealed capital gain in accordance with the sale value of the property - No infirmity into the direction of CIT(A). It would be open before the AO even to decide whether the land in question was a capital asset or not. Therefore, grounds raised by the assessee are rejected.
Issues Involved:
1. Imposition of penalty under Section 271(1)(c) for assessing capital gain as per Section 50C/2(14) of the Income Tax Act. 2. Legality of the penalty amounting to Rs. 2,84,382/- imposed by the Assessing Officer (AO). 3. Validity of the notice issued by the AO for penalty under Section 271(1)(c). Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c) for Assessing Capital Gain as per Section 50C/2(14): The assessee argued that no penalty could be imposed under Section 271(1)(c) for assessing capital gain as per the provisions of Section 50C/2(14) of the Income Tax Act. The AO had made an addition of Rs. 24,87,500/- on account of Long Term Capital Gain (LTCG) based on the market value for stamp duty purposes and initiated penalty proceedings under Section 271(1)(c). The CIT(A) partly allowed the appeal, but the assessee contended that the legal fiction of Section 50C should not apply to determine concealed particulars of income. The Tribunal upheld the CIT(A)'s direction that penalty cannot be imposed based on the legal fiction of Section 50C and directed the AO to calculate concealed capital gain based on the sale deed value. 2. Legality of the Penalty Amounting to Rs. 2,84,382/- Imposed by the AO: The AO imposed a penalty of Rs. 2,84,382/- under Section 271(1)(c), claiming the assessee had concealed particulars of income amounting to Rs. 15,71,914/-. The CIT(A) found that the assessment was completed under Sections 148/144, indicating the assessee's intention not to disclose capital gain as per the law. The CIT(A) directed the AO to rework the concealed capital gain based on the sale deed value and the cost of acquisition allowed in appeal. The Tribunal found no infirmity in CIT(A)'s direction and upheld the decision, rejecting the grounds raised by the assessee. 3. Validity of the Notice Issued by the AO for Penalty under Section 271(1)(c): The assessee contended that the penalty notice issued by the AO was vague and did not specify whether the penalty was for concealing particulars of income or furnishing inaccurate particulars. Citing the case of Smt. Rachna Shiv and other precedents, the assessee argued that such ambiguity in the notice invalidates the penalty. The Tribunal, however, did not find merit in this argument and upheld the penalty imposed by the AO, as the assessee had been negligent and did not attend the proceedings despite sufficient opportunities. Conclusion: The Tribunal dismissed the appeal filed by the assessee, upholding the penalty imposed by the AO and the directions of the CIT(A). The Tribunal emphasized that penalty under Section 271(1)(c) cannot be based on the legal fiction of Section 50C and must be calculated based on actual sale value and cost of acquisition. The Tribunal also found that the assessee's negligence and failure to attend proceedings justified the penalty imposed. Order Pronounced: The appeal of the assessee was dismissed, and the order was pronounced in open court on 02nd February, 2023.
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