2013 (2) TMI 93 - AT - Income Tax

Penalty u/s 271(1)(c) Concealment of income - Inaccurate particulars while filing return - Assessee has sold immovable property and declared the sale consideration of ₹ 28,54,200/- for the purpose of computing capital gains in the revised return A.O. was that the consideration as disclosed by the assessee qua the property sold was found to be less than the guideline value, which was ₹ 95.40 lakhs instead of ₹ 28.54 lakhs - AO made addition and impose penalty u/s 271(1)(c) Held that - Section 50C(2) is only a deeming provision which cannot be taken as to be an understatement for the purpose of imposing penalty. To attract imposition of penalty, the assessee must be held to have concealed particulars of income or furnished inaccurate particulars. The assessee s revised return stood duly accepted as a valid return and the assessment was completed and merely because the A.O. invoked section 50C(2) and adopted guideline value to be the actual sale consideration and made addition in the assessee s income automatically become a case attracting penalty u/s 271(1)(c) In favour of assessee

Issues Involved:
1. Validity of penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Applicability of section 50C of the Income Tax Act, 1961.
3. Allegations of concealment of income and furnishing inaccurate particulars.
4. Interpretation and application of case laws related to penalty provisions.

Issue-wise Detailed Analysis:

1. Validity of Penalty under Section 271(1)(c):
The primary issue is whether the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, is valid. The assessee contended that the penalty was wrongly confirmed by the CIT(A) merely because the Assessing Officer (AO) invoked the deeming provision under section 50C(2). The assessee argued that there was no substantive allegation that it received any amount over and above what was stated in the assessment proceedings. The Tribunal observed that the mere invocation of section 50C(2) and adoption of guideline value for computing capital gains cannot be the sole basis for imposing penalty. It was noted that the assessee was not guilty of furnishing false or inaccurate particulars regarding the valuation of the property sold.

2. Applicability of Section 50C:
The AO invoked section 50C(2) of the Income Tax Act, 1961, to adopt the deemed sale consideration of Rs.95,40,000/- instead of the assessee's declared sale consideration of Rs.28,54,200/-. The Tribunal noted that section 50C is a deeming provision intended to tackle unaccounted income generated by the understatement of consideration in the acquisition of property. The Tribunal emphasized that the mere application of section 50C(2) does not automatically justify the imposition of penalty under section 271(1)(c). The Tribunal cited the case of Renu Hingorani vs. ACIT, where it was held that penalty merely on the basis of invoking section 50C(2) cannot be sustained.

3. Allegations of Concealment of Income and Furnishing Inaccurate Particulars:
The Tribunal observed that there was no allegation that the assessee received any consideration over and above what was disclosed. The AO did not find any understatement of the actual consideration amount received by the assessee. The Tribunal referred to the case law of K.P. Varghese vs. ITO, where it was held that for the purpose of computation of capital gains, it must be proved that the assessee received an amount more than what was declared. The Tribunal concluded that section 50C(2) is only a deeming provision and cannot be taken as an understatement for the purpose of imposing penalty.

4. Interpretation and Application of Case Laws:
The Tribunal referred to various case laws to support its decision. In the case of Dharmendra Textile Processors, it was held that penalty under section 271(1)(c) is a civil liability and willful concealment is not an essential ingredient. However, the Tribunal distinguished this case by citing the Bombay High Court's judgment in CIT vs. M/s. Aditya Birla Nova Limited, which clarified that while willful concealment is not necessary, the assessee must have concealed particulars of income or furnished inaccurate particulars to attract penalty. The Tribunal found no such allegations against the assessee in the present case.

Conclusion:
The Tribunal held that the assessee's revised return was duly accepted and the assessment was completed. The mere invocation of section 50C(2) and adoption of guideline value for computing capital gains does not automatically attract penalty under section 271(1)(c). The CIT(A) erred in confirming the penalty imposed by the AO. Consequently, the appeals were allowed in favor of the assessee.

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