Case Law Details
Vinay Khetan Vs DCIT (ITAT Delhi)
Introduction: In a significant development that offers clarity on the implications of property sale considerations on income tax penalties, the Income Tax Appellate Tribunal (ITAT) in Delhi has delivered a ruling in the case of Vinay Khetan Vs DCIT. The ITAT’s decision to delete the penalty under Section 271(1)(c) of the Income Tax Act, 1961, reinforces the legal principle that mere substitution of sale consideration as per Section 50C does not automatically translate to furnishing inaccurate particulars of income.
Detailed Analysis: The case centers on the penalty imposed by the Commissioner of Income Tax (Appeals), Ghaziabad, under Section 271(1)(c) for the Assessment Year 2006-07, alleging the furnishing of inaccurate particulars of income following the sale of certain parcels of land. The crux of the matter was the Assessing Officer’s (AO) revision of the sale consideration based on the circle rate under Section 50C, leading to an enhanced short-term capital gain and subsequent penalty.
In the appellate proceedings, the ITAT meticulously reviewed the arguments, emphasizing the distinction between the quantum proceedings and the penalty proceedings. The Tribunal noted that the penalty under Section 271(1)(c) requires clear evidence of concealment or furnishing inaccurate particulars of income, which was not established merely by the application of Section 50C’s deeming provisions.
The Tribunal further highlighted procedural lapses in the penalty notice under Section 274 read with Section 271(1)(c), pointing out the ambiguity in the charge against the assessee, whether for concealment of income or for furnishing inaccurate particulars. Drawing on precedent, including the Hon’ble Bombay High Court’s judgment in CIT vs. Fortune Hotels and Estates Pvt. Ltd., the ITAT underscored the necessity for specificity in penalty notices, reinforcing the legal tenet that penalties cannot be imposed based on presumptive or deeming provisions alone.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
