Loading judgment…
Facts
The assessee, an 80-year-old woman, sold agricultural land and disclosed the transaction. An addition was made invoking Section 50C of the Act, and a penalty was levied under Section 271(1)(c). The assessee contended that the addition was based on a deeming fiction and not on concealment or inaccurate particulars.
Held
The Tribunal held that penalty under Section 271(1)(c) cannot be levied on additions based on estimations or deeming fictions, as there was no finding of concealment or furnishing of inaccurate particulars by the AO. Furthermore, the penalty proceedings were initiated for furnishing inaccurate particulars, but the penalty order invoked concealment of income, indicating ambiguity and inconsistency.
Key Issues
Whether penalty under Section 271(1)(c) is leviable when addition is made on the basis of deeming fiction under Section 50C, and if there is ambiguity in the grounds for penalty initiation and levy.
Sections Cited
271(1)(c), 148, 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
(A.Y.2010-11) Smt. Rajeshwari Devi, Village Rashid Garh, Thana Bhawan, Shamli, UP 247777 ...... अपीलाथ�/Appellant PAN: CFMPR-2047-P बनाम Vs. Income Tax Officer, Ward-1(5), ..... �ितवादी/Respondent Shamli, UP 247777 अपीलाथ� �ारा/ Appellant by : Shri Gaurav Sachdeva �ितवादी�ारा/Respondent by : Shri Manoj Kumar, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 19/05/2025 घोषणा क� ितिथ/ Date of pronouncement : : 19/05/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/Additional/Joint Commissioner of Income Tax(Appeals)-4, Kolkata (hereinafter referred to as 'the CIT(A)') dated 20.12.2024, for assessment year 2010-11 confirming penalty levied u/s. 271(1)(c) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’).
Shri Gaurav Sachdeva, appearing on behalf of the assessee submitted that the assessee is 80 years of age. The assessee had sold her agricultural land. The assessee filed her return of income in pursuance to notice u/s. 148 of the Act and disclosed the transaction of sale of land. The addition was made invoking deeming provisions of section 50C of the Act. There is no finding by the Assessing Officer (AO) that the actual sales consideration received by the assessee is at variance with (AY 2010-11) the sale consideration declared by the assessee in the return of income. Since, the addition has been made by AO invoking deeming section, penalty u/s. 271(1)(c) of the Act cannot be levied for concealment of income or furnishing inaccurate particulars of income. In support of his submissions, the ld. AR placed reliance on following decisions:- “(i) CIT vs. Fortune Hotels and Estates (P.) Ltd, 52 taxmann.com 330; (ii) DCIT vs. Trans Freight Containers Ltd. in decided on 24.02.2017; & (iii) ACIT vs. Sunland Metal Recycling decided on 10th December 2014.”
The ld. AR further submitted that the penalty is liable to be deleted on the ground of ambiguity in mentioning charge u/s. 271(1)(c) of the Act. The satisfaction was recorded by the AO in the assessment order for initiating penalty proceedings for furnishing inaccurate particulars of income, whereas, while passing penalty order u/s. 271(1)(c) of the Act, the AO levied penalty for concealment of income. Penalty was initiated on one limb and finally levied on different limb of section 271(1)(c) of the Act, such penalty is unsustainable.
Per contra, Shri Manoj Kumar representing the department prayed for dismissing appeal of the assessee and upholding the impugned order. The ld. DR submits that the addition made by AO has been confirmed by the Tribunal, therefore, penalty has been rightly affirmed by the CIT(A). Hence, prayed for dismissing appeal of the assessee.
Both sides heard, orders of the authorities below examined. The AO has initiated penalty proceedings u/s. 271(1)(c) of the Act in respect of addition made by AO invoking provisions of section 50C of the Act. The addition is based on (AY 2010-11) estimations in exercise of deeming fiction. It is no more res integra that penalty u/s. 271(1)(c) of the Act is not leviable on additions based on estimations. (Re: CIT vs Krishi Tyre Retreading & Rubber Industries, 360 ITR 580 (Raj.); CIT vs. Subhash Trading Company, 221 ITR 110 (Guj.); CIT vs. Sangrur Vanaspati Mills Ltd, 303 ITR 53 (P&H). The addition in the case of assessee is based on report from DVO. There is no finding of fact by the AO that the assessee has concealed particulars of transaction of sale of land or has furnished inaccurate particulars of such transaction. In the facts of case, I am of considered view that penalty levied u/s. 271(1) (c) of the Act is unsustainable.
A further perusal of the assessment order reveals that the AO has initiated penalty u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income, whereas, while passing penalty order u/s. 271(1)(c) of the Act dated 28.03.2019 the AO has recorded, “I am of the opinion that during the course of assessment proceedings, the AO has already established that the assessee has concealed the particulars of her income ……..”. The observations of the AO in penalty order are incoherent with the satisfaction recorded for initiating penalty proceedings u/s. 271(1)(c) of the Act. Ambiguity in the mind of AO with regard to charge u/s. 271(1)(c) of the Act is visible writ large. The Hon'ble Apex Court in the case of T. Ashok Pai vs CIT, 161 Taxman 340 has held that the expression ‘concealment of income’ and ‘furnishing inaccurate particulars’ carry different connotations. The Hon’ble Bombay High Court in CIT vs. Samson Perinchery, 392 ITR 4 has held that order imposing penalty has to be made only on ground for which penalty proceedings has been initiated and it cannot be on a ground other than for which satisfaction has been recorded. Thus, in light of facts of the case and the decisions (AY 2010-11) cited above the penalty levied u/s. 271(1)(c) of the Act is liable to be quashed for the aforesaid reason, as well.
In the result, impugned order is quashed and appeal of the assessee is allowed. Order pronounced in the open court on Monday the 19th day May, 2025. Sd/- Sd/- (VIKAS AWASTHY) �याियक सद�य/JUDICIAL MEMBER िद�ी/Delhi, �दनांक/Dated 19.05.2025 NV/- �ितिलिप अ�ेिषत/Copy of the Order forwarded to :
1. 1. अपीलाथ�/The Appellant , �ितवादी/ The Respondent. 2.