JAGDISH GOBINDRAM HEMRAJANI ,MUMBAI vs. ITO (INT TAX) WARD 2(2)(1), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “F” BENCH, MUMBAI BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.1258/MUM/2026 (AY:2016-17) Jagdish Gobindram vs. INT TAX WARD 2(2)(1), Kautilya Hemrajani, Bhavan, Bandra Kurla Complex, 52, The K Sara Chs. Ltd. Pali Mala Bandra East, Mumbai-400051. Road, Plot No. 240 Bandra West, Mumbai-400050. PAN/GIR No: ΑΙΑΡΗ6133M (Appellant) (Respondent) Assessee by Shri Hari S. Raheja Revenue by Shri Vikas Chandra ( SR. DR) Date of Hearing 22.04.2026 Date of Pronouncement 15.06.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the assessee emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of

Income-Tax (Appeals), 56, Mumbai [in short, ‘CIT(A)’], dated 16.12.2025 for

the assessment year (AY) 2016-17.

“1. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the levy 1. of penalty of Rs. 1,09,532/- u/s 271(1)(c) of the Income Tax Act. 1961. 2.The appellant submits that the penalty notice was vague in much as the Assessing Officer has not made up his1 mind whether the appellant had concealed the particulars of income or furnished inaccurate particulars of income, and hence, the levy of penalty u/s 271(1)(c) of the Income Tax Act. 1961 is uncalled for. 3. The appellant and submits that the notice of penalty u/s 271(1)(c) of the Income Tax Act. 1961, is bad in law1 since there is no satisfaction of the Assessing Officer having stated that "the appellant has concealment the particulars of income or furnished inaccurate particulars". 1

4.The appellant submits the addition has been made on pure guesswork and estimate and as such does not attract the provisions of concealment or the furnishing of 1 inaccurate particulars of income 5. WITHOUT PREJUDICE to the above, the appellant 1 submits that mere variation in the valuation u/s 50C does not attract penalty since there is no concealment nor is it a case of furnishing of inaccurate particulars, but a question of estimation which does not attract the provisions of S. 271(1)(c) 6. The CIT(A) was not justified in disregarding the fact that the DVO had reduced the fair market value as compared 1 to the registered value looking to the facts of the case and merely because the appellant has accepted the quantum addition and paid the tax, the same would lead to a liability to penalty u/s 271(1)()(c) for concealment or furnishing of inaccurate particulars of income. 7. The CIT(A) has erred to holding that the claim of distress sale and repayment of loan is not established. 8. The appellant craves leave to, add to alter or vary the grounds of appeal at or before the hearing of the appeal.”

did not filed return of income for the AY 2016-17. The case was reopened by issue

of notice u/s 148 dated 21.06.2021. In response, the assessee filed return on

08.04.2022 declaring total income of Rs.2,173/-. The AO completed the

assessment u/s 147 r.w.s. 144C(3) of the Act determining total income at

Rs.9,06,710/-. The addition was due to valuation difference of Rs.9,06,705/-

between the actual consideration and valuation made by the DVO. The AO also

initiated penalty proceedings u/s 271(1)(c) of the Act. Subsequently, the AO

passed order u/s 271(1)(c) by levying penalty of Rs.1,09,532/-, being 100% of the

tax sought to be evaded.

The assessee raised ground stating that the notice was vague without specifying

the limb sought to be applied. Further, mere variation in valuation u/s 50C of the Act does not attract penalty because there is neither concealment of income nor

any furnishing of inaccurate particulars. In case of estimation, penalty u/s

271(1)(c) is not attracted. However, the CIT(A) did not accept the contention of

the assessee and dismissed the appeal.

Tribunal. The Ld. AR of the assessee submitted that the addition was based on

higher estimation of the property by the DVO as compared to the value in the

agreement. Hence, there was no concealment of income or furnishing of

inaccurate particulars of income. The Ld. AR relied on the decisions of the ITAT,

Chennai in case of Ravi Vijayalakshmi vs. ITO in ITA No.2887/Chny/2025 dated

04.03.2026 and the decision of Hon’ble Bombay High Court in case of Mohd.

Farhan A. Shaikh vs. CIT, (2021) 434 ITR 1 (Bom.) and submitted that the case of

the appellant is squarely covered by these decisions.

also deliberated on the decisions relied upon by the Ld. AR. There was addition of

Rs.9,06,705/- to the total income of the assessee due to difference between the

purchase consideration and valuation by the DVO. The basis for levy of penalty

was the above addition. We find that penalty levied under the similar factual

situation was decided by the ITAT, Chennai in favour of the assessee in case of Ravi Vijayalakshmi (supra). The relevant part of the order is reproduced below for

ready reference:

“14. The core issue involved in the present appeal is whether penalty u/s.271(1)(c) of the Act can be sustained when the addition is made purely on account of a deeming fiction u/s 56(2)(vii)(b) of the Act, based on stamp duty valuation. On the substantive issue, it is undisputed that the assessee disclosed the actual purchase consideration of the immovable property in the return of income and the transaction was duly recorded in a registered sale deed. The addition was made solely by substituting the stamp duty value in place of the actual consideration u/s.56(2)(vii) (b) of the Act under a statutory deeming provision. There is no finding that the assessee suppressed the transaction or furnished incorrect particulars of income. 15. The addition in question arises purely on account of a statutory deeming fiction. The value adopted by the Stamp Valuation Authority for stamp duty purposes does not automatically establish that the actual consideration declared by the assessee is false. The deeming provision operates for computation purposes and cannot, by itself, constitute evidence of concealment or furnishing of inaccurate particulars. There is no allegation that the assessee concealed the transaction or suppressed material facts. The addition was made on account of difference between actual consideration and stamp duty value, which is a value determined by the Registration Department for stamp duty purposes and not necessarily reflective of actual fair market value. 16. In this context, we find support from the decision of the Coordinate Bench of this Tribunal in the case of Asstt. Commissioner of Income-tax vs. Mrs. N. Meenakshi, wherein it was held that where the Assessing Officer adopts the guideline value obtained from the Sub-Registrar as the fair market value, it cannot be said that the assessee is guilty of furnishing inaccurate particulars of income or concealment so as to attract penalty under section 271(1)(c) of the Act. The Tribunal observed that the guideline value is not conclusive proof of actual market value and that an addition made on such basis does not automatically justify imposition of penalty. 17. The ratio of the above decision squarely applies to the facts of the present case. An addition made on the basis of a statutory deeming fiction, without any independent finding of concealment or furnishing of inaccurate particulars, does not automatically warrant imposition of penalty. 18. It is trite law that penalty proceedings are distinct and separate from assessment proceedings. The confirmation of addition in assessment does not ipso facto warrant imposition of penalty. The burden is on the Revenue to establish that the assessee has either concealed the particulars of income 4 or furnished inaccurate particulars thereof. In the present case, no such independent material has been brought on record. 19. Therefore, in the absence of any cogent evidence demonstrating deliberate concealment or furnishing of inaccurate particulars, the essential ingredients for invoking section 271(1)(c) are not satisfied. Hence, we are of the considered view that the levy of penalty cannot be sustained merely because an addition has been made by applying a deeming provision. Therefore, in the absence of any material to demonstrate deliberate concealment or furnishing of inaccurate particulars, the levy of penalty u/s.271(1)(c) of the Act is unsustainable.”

7.1 The facts of the case are similar to the facts of the above case. The Ld. Sr.

DR has not been able to controvert the finding of the Tribunal on fact or law by

bringing any contrary material on record. Hence, following the above decision,

the order of CIT(A) is set aside and the AO is directed to delete the penalty.

Accordingly, the ground is allowed.

Order is pronounced on 15.06.2026.

Sd/- Sd/- (SANDEEP SINGH KARHAIL) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 15.06.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order Assistant Registrar ITAT, MUMBAI