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Facts
The assessee sold a property for Rs. 15,01,000/-, but the registering authority adopted a value of Rs. 33,89,166/-. The assessment was completed at Rs. 18,28,554/-. During remand proceedings, the DVO valued the property at Rs. 46,09,000/-, while the assessee's expert valued it at Rs. 19,34,000/-. The AO imposed a penalty of Rs. 2,97,329/- for furnishing inaccurate particulars.
Held
The Tribunal held that the penalty was levied on the basis of additions made under the deeming provisions of Section 50C, not on proven concealment or furnishing of inaccurate particulars. The CIT(A) had passed an ex-parte order without considering the assessee's submissions. Following various judicial precedents, the Tribunal found no case for concealment and directed the deletion of the penalty.
Key Issues
Whether the penalty under Section 271(1)(c) is sustainable when the addition is based solely on the deeming provision of Section 50C, without establishing concealment or furnishing of inaccurate particulars. Whether the CIT(A) erred in passing an ex-parte order without considering the assessee's submissions.
Sections Cited
271(1)(c), 50C, 143(3), 250, 115WD, 115WE, 142, 142(2A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “SMC”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of NFAC, Delhidated 29.07.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal:-
1. 1. That the Ld. CIT (Appeals), NFAC grossly erred in passing the impugned appeal order dated 29.07.2024 without considering the written submission of the appellant submitted on 13.07.2024 on portal.
2. That in view of the written submission and High Court and ITAT judgments, the impugned penalty of Rs. 2,97,329/- imposed by the AO u/s. 271(1)(c) is bad in law and deserves to be deleted since penalty was imposed on the basis of addition made under deeming provision of section 50C of IT Act.
3. That the appellant prays to add or alter any ground of appeal at or before the time of hearing.
2. The Brief facts of the case are that the assessee individual filed her return of income on 24.12.2007 declaring total income at Rs. (-) 59,360/-. An information received from the office of the CIT, CIB that the assesse sold a property for Rs. 15,01,000/- against the value adopted by the registering authority at Rs. 33,89,166/-. The assessment of the assessee was completed at Rs. 18,28,554/- against the returned income of Rs. (-) 59,360/- u/s. 143(3) of the Act. The assessee being aggrieved with this assessment order of the AO filed an appeal before the Ld. CIT(A), who in turn confirmed the order of the AO. The assessee being further aggrieved with this order of the Ld. CIT(A) preferred an appeal before the coordinate bench. The coordinate bench set aside the matter to the AO for referring the matter to DVO. The DVO in his report determined the value at Rs. 46,09,000/- against the DLC value of Rs. 33,89,166/-.
During the remand proceedings, the assessee countered the DLC value and the report of the DVO by filing her own report prepared by an outsider expert, Registered Valuer at Rs. 19,34,000/-. In nutshell there were total 5 figures available on record for the same property as under:
As per sale deed Rs. 15,01,000/- 2. Value as per section 50C of the Act Rs. 33,89,166/- 3. Value as per DVO Rs. 46,09,000/- 4. Valuation as per Approved Valuer Rs. 19,34,000/-
Valuation as adopted by Ld. CIT(A) Rs. 25,26,381/-
Ultimately, it was concluded by the AO that the assessee had furnished inaccurate particulars and imposed the penalty of Rs. 2,97,329/-. The assessee being aggrieved with this order of the AO preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of the AO. The assessee being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith the grounds taken before us. It is observed that the order of the Ld. CIT(A) was passed Ex-Parte on the ground that on designated dates, i.e. 29.01.2021, 21.06.2024 and 19.07.2024, the appellant neither responded nor any adjournment was sought. We have gone through the paper book submitted by the assessee, which confirms that the assessee duly responded on due dates vide dated: 29.01.2021, 19.04.2021 and 13.07.2024.
5. We found that the assessee submitted her submission well before the Ld. CIT(A), but the same were not considered at all by the Ld. CIT(A). We have gone through the submissions of the assessee before the Ld. CIT(A) and found the same to be in order and tenable as no clear concealment of income was established for the purposes of section 271(1)(c) of the Act. For ready reference we are reproducing the provisions of section 271(1)(c) of the Act as under: [Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the Joint Commissioner (Appeals) or theCommissioner (Appeals)or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person— (a) (b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143or fails to comply with a direction issued under sub-section (2A) of section 142, or (c) has concealed the particulars ofhis income or furnished inaccurate particulars ofsuch income, or (d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty, — (i) (ii) in the cases referred to in clause (b), in addition to tax, if any, payable] by him, a sum of ten thousand rupees] for each such failure ; (iii) in the cases referred to in clause (c)or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceedthree times, the amount of tax sought to be evaded by reason of the concealment of particulars of his incomeor fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.
Explanation 1. —Where in respect of any facts material to the computation of the total income of any person under this Act, — (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals)or thePrincipal Commissioner orCommissioner] to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.
In view of the above provisions of section 271(1)(c) alongwith explanation 1 of the Act, relevant to the matter, it is certain that there is no case made out by the revenue, as far as allegation of concealment/furnishing inaccurate particulars of income is concerned. This conclusion is drawn based on table considered by us in para 3 (supra).
To support our view we placed reliance on the following judicial pronouncements relied upon by the assessee declared by various coordinate benches and Hon’ble High Courts as under:
Jhabar Singh, Jaipur vs. ITO, Jaipur, “6.1 In the present case also, the facts are identical as in the case of Anita Beniwal. In this case also the penalty has been levied on the basis that the actual sale consideration was lesser than the value adopted by the Stamp Valuation Authority. The Revenue has not brought any material on record suggesting that the assessee had received actual consideration as adopted by the Stamp Valuation Authority. Therefore, we do not see any reason for taking a different view as adopted by the Co-ordinate Benches of this Hon'ble Tribunal, at the Hon'ble Calcutta High Court in the case of CIT vs. Madan Theatres Ltd. We therefore direct the Assessing Officer to delete the penalty.” Renu Hingorani vs. ACIT, “8. We have considered the rival contentions and relevant record. We find that the AO had made addition of Rs. 9,00,824/- being difference between the sale consideration as per sale agreement and the valuation made by the Stamp Valuation Authority. Thus, the addition has been made by the AO by applying the provisions of section 50C of the Act. It is evident from the assessment order that the AO 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 AO 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. It is also not the case of the revenue that the assessee has failed to furnish the relevant record as called by the AO to disclose the primary facts. The assessee has furnished all the relevant facts, documents/material including the sale agreement and the AO has not doubted the genuineness and validity of the documents produced before him and the sale consideration received by the assessee. Under these facts and circumstances, it cannot be said that the assessee has not furnished correct 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 this agreement was incorrect and wrong. Accordingly, the addition because of the deeming provisions does not ipso facto attract the penalty u/s 271(1) (c). Hence in view of the decision of the Hon'ble Supreme Court in the case of CIT V/s Reliance Petro products Pvt. Ltd (supra), the penalty levied u/s 271(1) (c) is not sustainable. The same is deleted.”
It has been held in cases of Asstt. CIT v. Mrs. N. Meenakshi [2009] 125 TTJ 856 (Chennai), Prakash Chand Nahar v. ITO [2010] 110 TTJ 886 (Jodh.) and Balkrishna Waghere, July/ Aug, 2010, BCAJ, 3 (Pune) that penalty cannot be levied in cases where addition has been made on the basis of provisions of section 50C of the Act, as there is no 'concealment or furnishing of inaccurate particulars'. This view has also been upheld by the Hon'ble Calcutta High Court in the case of CIT v. Madan Theatres Ltd. (2013) 6 TMI 96 - of 2013, dated May 14, 2013.
The judgements relied upon by us discussed (supra) are similar to the facts of the assessee’s case, hence squarely applied here also and department is failed to produce any authority to contradict the same. In view of the above discussion and considering the judicial pronouncements (supra), we found that the order of the authorities below, are not sustainable and liable to be quashed. In the light of discussion (supra) we can safely conclude that the action of the AO and the Ld. CIT(A) is liable to be set-aside, hence the AO is directed to delete the penalty.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on5thday of February 2025.