Case Law Details
Brief about the case
In the case of Bhavya Anant Udeshi Vs ITO (International Taxation) it was held by ITAT Hyderabad that provision of section 50C being a deeming provision, it cannot be used for the purpose of imposition of penalty under section 271(1)(c) unless it is proved that Assessee has received any amount over and above the sale consideration mentioned in the sale deed or it can be imposed if there is a failure on the part of the assessee to disclose all the detail correctly.
Facts of the case:
- The assessee is a non-resident Indian and had filed her return of income on 31.07.2008 declaring income of Rs.3,18,567 which included short term capital gain of Rs.3,06,625 from sale of shares as well as sale of immovable property at Hyderabad.
- During the course of assessment proceedings the AO observed that the value of the immovable property for the purpose of stamp duty was Rs.2,55,50,000 and therefore AO invoked section 50C of the IT Act computing capital gain at Rs.2,54,58,000.
- On moving further the CIT(A) and ITAT too confirmed the AO’s demand.
- In the meanwhile, A.O. issued a notice to the assessee requiring him to show cause as to why penalty under section 271(1)(c) of the Act shall not be imposed for furnishing inaccurate particulars of income for the reason that the assessee has intentionally disclosed the sale consideration of property at a lesser rate than what was determined by the registering authority.
- The assessee in reply submitted that he had furnished all material particulars relating to sale transaction of property by furnishing sale deeds and all other documents for the consideration of the A.O. and the determination of the capital gain is only by applying the provisions of section 50C by adopting the value determined by the SRO for stamp duty purpose as deemed sale consideration, it cannot be said that assessee has furnished inaccurate particulars of income.
- The ITAT Hyderabad Benches “A” observed that since the assessee has not suppressed any material fact from the notice of the A.O. In these circumstances, the imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income or concealment of income is not appropriate.
Contention of the Revenue
The revenue asserted that the assessee having furnished inaccurate particulars with regard to the value of the property being aware of the fact that the stamp valuation authority has valued the property at Rs.2,55,00,000 for stamp duty purpose has shown the value at lesser amount for the purpose of computing capital gain; therefore, to that extent, there is furnishing of inaccurate particulars of income and hence imposition of penalty under section 271(1)(c) is justified.
Contention of the Assessee
- The Assessee submitted that there being no conclusive evidence before the A.O. to prove the fact that assessee has received any amount over and above the sale consideration mentioned in the sale deed, imposition of penalty under section 271(1)(c) is not imposable.
- The A.R. further submitted that the provision of section 50C being a deeming provision, it cannot be used for the purpose of imposition of penalty under section 271(1)(c).
- The A.R. relied upon a handful of cases such as Renu Hingorani, Mumbai vs. ACIT ITA.No.2210/Mum/2010; Shri Chimanlal Manilal Patel, Surat vs. ACIT ITA.No.508/Ahd/2010; Judgment of Hon’ble Karnataka High Court in the case of CIT vs. Madan Theatres Ltd. In asserting that the assessee had furnished all material facts in the course of assessment proceeding like copy of sale deed, other connected documents, there is no material on record to show that assessee has furnished inaccurate particulars of income.
Held by ITAT
Relying upon the decisions in cases of identical nature, whereby penalty u/s 271(1)(c) was deleted, the Bench pronounced that since the assessee had not suppressed any material fact from the notice of the A.O. in these circumstances, the imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income or concealment of income is not appropriate.
