Brief fact of the case
The Assessee sold immovable property for a sale consideration of Rs.13,70,000/-. The stamp duty valuation price was Rs.17,90,085/-. Accordingly AO invoking the provision of section 50C made addition on account of short-term capital gain. The assessee objected to the applicability of section 50C on the ground that the property in question was a business asset. In the quantum appeal, the ld. CIT(A) dismissed the appeal of the assessee and issue of addition of short term capital gain attained finally. The A.O. initiated penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs. 1,38,628/- being 100% of the tax sought to be evaded vide order dated 31-3-2010. The assessee challenged the action of the A.O. levying the penalty u/s 271(1)(c) by filing the appeal before the ld. CIT(A) but could not succeed. The assessee has raised the following grounds of appeal before ITAT:-
“1.1 The Ld. CIT (A) erred in law and on facts in upholding the order of the Assessing Officer levying penalty of Rs. 138628/- U/S 271(1)(c) of the I.T. Act, 1961 on unjustifiable and untenable grounds. .
1.2 The Ld. CIT(A) failed to appreciate that having regard to law and the facts of the case the Appellant has not committed any default in terms of section 271(1)(c) of the I.T. Act, 1961.
1.3 The Appellant prays that the Assessing Officer be directed to delete the penalty of Rs. 138628/-levied U/S 271(1)(c) of the I.T. Act, 1961.”
Contention of the Assessee
The ld. Counsel contended that the addition made by the A.O. by applying the deeming provision would not bring the case of the assessee in the category of furnishing of inaccurate particulars of income or concealment of income. The assessee has disclosed the actual consideration received by the assessee on sale of the property in question. Further, in the Wealth Tax Return, the assessee has shown this property as business asset which is the matter of record therefore, the claim of the assessee is a bonafide claim that the provisions of section 50C are not applicable on the property.
Contention of the Revenue
The ld. D.R. submitted that the addition made by the A.O. of short term capital gain attained finality, therefore, the assessee furnished inaccurate particulars of income by not disclosing the correct sale consideration of the property in question as per the provisions of the Act.
Held by Tribunal
The Tribunal relying upon the decision of co-ordinate bench in the case of Smt. Dipti Barai, held that the addition has been made by the A.O. by invoking the provisions of section 50C, it is not a case of suppress of correct fact or presenting inaccurate facts regarding the sale consideration. The assessee has disclosed the amount for which the assessee sold the property in question. In case of Renu Hingorani Vs ACIT an identical issue was considered by the Tribunal wherein it was held ‘the addition has been made by the A.O. by applying the provisions of section 50C of the Act. It is evident from the assessment order that the A.O. has not questioned the actual consideration received by the assessee but the addition is made purely on the basis of deeming provisions of the Income Tax Act, 1961. The A.O. has not given any finding that the actual sale consideration is more than the sale consideration admitted and mentioned in the sale agreement. Thus it does not amount to concealment of income or furnishing inaccurate particulars of income. Merely because the assessee agreed for addition on the basis of valuation made by the Stamp Valuation Authority would not be a conclusive proof that the sale consideration as per agreement was incorrect and wrong. Accordingly the addition because of the deeming’ provisions does not ipso facto attract the penalty u/s 271(l)(c ).
Thus when the assessee has disclosed all relevant primary facts and details and furnished the relevant document showing the sale consideration received by the assessee, then, the genuineness of the actual sale consideration received by the assessee was not in question and the addition was made only by invoking the provisions of section 50C of the Act. Therefore, merely because the addition was made as per the deeming provision of section 50C would not ipso facto lead to the conclusion that the assessee has furnished inaccurate particulars of income or concealed its income. The Tribunal deleted the penalty levied u/s 271(1)(c) of the Act and appeal filed by the assessee was allowed.