Deeming provisions and penalty:

[C.A. DEV KUMAR KOTHARI]

On consideration of facts case can be made out of no concealment of income merely because AO applied some deeming provision- some voluntary information from taxpayer is always better.

Additions or disallowances made under a deeming provision should not be regarded as concealment of income unless the factual position is also near to the deeming position and the assessee has not furnished relevant information. However, on principal of ‘play safe’ the assessee should disclose actual position, deemed position and should submit that deemed position is not applicable in his case for reasons to be specified. This will help assessee to avoid penal provisions, even if deeming provisions are applied by the AO and the assessee accepts them in view of small amount involved and to avoid costly and lengthy litigation. In context of S. 50C author suggests  that the assessee should made disclosure before the AO about actual consideration and the valuation adopted by stamp authorities and explains that the difference is not taxable as capital gains or other income. There is no point of hiding these information because the AO will sooner or later get such information and in that case there can be consideration of a situation like concealing necessary particulars for consideration for making computation of taxable income.