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2022 (7) TMI 1216 - AT - Income TaxPenalty u/s 271(1)(c) - Receipt of money in addition to the sale consideration disclosed in the sale deed - HELD THAT - In the case of CIT Vs. Fortune Hotels and Estates Pvt. Ltd. 2014 (10) TMI 783 - BOMBAY HIGH COURT , it has been help that where in respect of sale of a property, matter was referred to DVO who determined sale consideration at a higher amount, that by itself would not amount to furnishing of inaccurate particulars of income so as to levy penalty u/s 271(1)(c) in respect of addition made u/s 50C. Further, in the case of Harish Voovaya Shetty 2014 (7) TMI 1032 - ITAT MUMBAI it has been held that penalty u/s 271(1)(c) cannot be imposed in respect of the addition made by applying Section 50C when there was no material on record to show that the assessee had received more amount than that shown by it on sale of property. In the present case, AO in the absence of any evidence regarding receipt of money in addition to the sale consdiertion disclosed in the sale deed and even without there being any allegation to that effect, the A.O based on the fiction created u/s 43CA of the Act, the addition has been made which cannot be sustained under law. By following the settled principal of law mentioned above, we are of the opinion that, CIT(A) has justified in deleting the penalty imposed by the Ld. A.O. Therefore, the order of the Ld.CIT(A) requires no interference. Accordingly, we dismiss the Revenue s Grounds of Appeal.
Issues:
1. Validity of reference to DVO by AO and deletion of penalty 2. Existence of actual loss of revenue 3. Justification of penalty imposition under section 271(1)(c) of the Act 4. Quashing of penalty proceedings by CIT(A) 5. Merits of the penalty deletion by CIT(A) Issue 1: Validity of reference to DVO by AO and deletion of penalty: The Revenue challenged the CIT(A)'s decision to delete the penalty of Rs. 57,38,358 imposed by the AO under section 271(1)(c) of the Act for the assessment year 2015-16. The AO had referred the case to the District Valuation Officer (DVO) who determined a higher market value compared to the sale value declared by the assessee. However, the Tribunal found that there was no evidence of the assessee receiving more money than declared in the sale deed. Citing judicial precedents, the Tribunal held that penalty imposition under section 271(1)(c) was not justified without evidence of actual receipt of additional funds by the assessee. The Tribunal upheld the CIT(A)'s decision to delete the penalty, concluding that the AO's addition based on the legal fiction of section 43CA could not be sustained under the law. Issue 2: Existence of actual loss of revenue: The Revenue contended that the CIT(A) erred in not acknowledging the reference made by the AO to the DVO as valid and in erroneously deleting the penalty. The Department argued that there was an actual loss of revenue due to the difference in valuation between the DVO and the assessee. However, the Tribunal found that the AO's addition was based on the legal provision of section 43CA without any evidence of the assessee receiving more funds than declared. Therefore, the Tribunal dismissed the Revenue's grounds of appeal, supporting the CIT(A)'s decision to delete the penalty. Issue 3: Justification of penalty imposition under section 271(1)(c) of the Act: The key contention revolved around whether the penalty imposed under section 271(1)(c) was justified. The Tribunal emphasized the importance of evidence regarding the actual receipt of additional funds by the assessee, as opposed to mere discrepancies in valuations. Relying on legal principles and precedents, the Tribunal concluded that the penalty imposition in this case was not sustainable under the law, as there was no proof of the assessee receiving more money than declared in the sale deeds. Issue 4: Quashing of penalty proceedings by CIT(A): The CIT(A) had quashed the penalty proceedings initiated against the assessee, leading to the Revenue's appeal before the Tribunal. The Tribunal analyzed the facts of the case, including the valuation differences and the absence of evidence supporting the AO's penalty imposition. By considering the explanations provided by the assessee and the legal provisions, the Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing the lack of evidence of actual receipt of additional funds. Issue 5: Merits of the penalty deletion by CIT(A): The Tribunal extensively discussed the factual aspects and legal provisions while evaluating the CIT(A)'s decision to delete the penalty. The Tribunal highlighted the assessee's disclosure in the tax audit report and the absence of evidence indicating receipt of excess funds. By citing relevant judicial pronouncements, the Tribunal supported the CIT(A)'s decision, ultimately dismissing the Revenue's appeal and upholding the deletion of the penalty. The Tribunal deemed the penalty deletion justified based on the legal principles and factual circumstances of the case. This detailed analysis of the judgment addresses the key issues involved in the case, providing a comprehensive overview of the legal arguments and conclusions reached by the Tribunal.
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