BABU LAL AGARWAL,JAIPUR vs. ITO WARD 5(1), JAIPUR

Addition/ concealment of capital gain 4,99,561/- 2. Net Tax payable on concealed capital 99,912/- gain income 3. Minimum penalty to be levied @ 100% 99,912/- 4. Maximum penalty to be levied @ 2,99,736/- 300% 9. Considering the facts of the case, I hereby levy a minimum penalty of Rs.99,912/- u/s 271(1)© of the I.T. Act, 1961 on concealment of the particulars of his income. The penalty is levied with prior approval of the Joint/ Addl. Commissioner of Income Tax. Issue demand notice and challan alongwith the copy of this order.’’ 3 ITA NO. 356/JP/2024 BABU LAL AGARWAL VS ITO, WARD 5(1), JAIPUR 2.2 In first appeal, the ld.CIT(A) has confirmed the action of the AO by dismissing the appeal of the assessee with following narration. 6.7 It is seen that in the instant case, that during the assessment proceedings as well as penalty proceedings appellant failed to produce any relevant submission. Once again during the appellate proceedings appellant failed to produced the copy of registered sale deed, affer providing him ample of opportunities. The contention of the appellant that the addition was made on basis of deeming fiction u/s 50C(1) is not acceptable,) Therefore, penalty s 271(1)(c) of the Act of Rs. 99,912/- is confirmed. Accordingly, all the grounds of appeal are dismissed.’’ 2.3 During the course of hearing, the ld.AR of the assessee filed the detailed written submission countering the orders of the lower authorities and submitted that the action of the AO is excessive, illegal, and without jurisdiction and resultantly the penalty of Rs.99,912/- imposed u/s 271(1)© may kindly be deleted in full. 2.4 On the other hand, the ld.DR supported the orders of the lower authorities. 2.5 The Bench has heard both the parties and gone through the orders of the lower authorities including the written submission of the ld.AR of the assessee. The facts of the present case are that the assessee had sold immovable property at Rs2.25 lacs. However, the Sub-Registrar has valued the property at Rs.7,43,847/- for the purpose of charging stamp duty. Thus the AO while passing the order of assessment invoked the provisions of Section 50C of the Act and computed the 4 BABU LAL AGARWAL VS ITO, WARD 5(1), JAIPUR capital gain thereby taking the cost of index as Nil. The Bench also noticed from the records that there was no material available with the AO to the effect that the assessee had in fact actually received sale consideration in excess of Rs.2.25 lacs. Hence, the addition was purely made by invoking the deeming fiction of Section 50C(1) of the Act. Therefore, in my view if any addition is made while invoking deeming provision such as Section 50C of the Act then in that eventuality penalty is not sustainable as no documentary proof was placed on record by the Revenue to substantiate that the assessee had received any amount over and above the amount so mentioned in the registered sale deed and in such a situation the assessee cannot be held guilty of furnishing inaccurate particulars of income or concealment of income. Furthermore, the conduct of the assessee cannot be held to be contumacious so as to warrant the levy of penalty. This proposition is also supported by the decision rendered by the larger Bench of Hon’ble Apex Court in the case of Hindustan Steel vs State of Orissas, 83 ITR 269 and also the decision of Coordinate Bench of ITAT, Jaipur in the case of Jhabar Singh vs ITO vide order dated 17-04-2017 and also the decision rendered by the Coordinate Bench of Ahemdabad in the case of Smt. Varshaben Vipulbhai Bhalani vs DCIT vide order dated 23-11-2022 wherein it was held as under:- ‘’5. We have carefully perused the judgment passed by the Co-ordinate Bench in the case of Chinubhai Ambalal Patel (supra), 5 BABU LAL AGARWAL VS ITO, WARD 5(1), JAIPUR wherein we find that the Co-ordinate Bench while granting relief to the assessee observed as follows:- ‘’5. Section 48 of the Income Tax Act provides mode of computation of capital gains. This section contemplates that income chargeable under the head "capital gain shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely (a) expenditure incurred wholly and exclusively in connection with such transfer to the cost of acquisition of the asset and the cost of any improvement thereafter. Section 50C further provides that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transaction, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration. In other words, full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty 6. Sub-section (2) of section 50C further contemplates that in case the assessce alleges that stamp duty valuation authority under sub-section (1) exceeds the fair market value of the property, the Assessing Officer may refer the valuation to the capital asset to the Valuation Officer a peripheral look to the scheme of section 50C would indicate that full sale consideration received by the assessee and required to be considered for the purpose of computing capital gain under section 48 is to be replaced with the help of deeming fiction provided in this. This replacement is further subject to determination of fair market value as contemplated under section 2. Thus an addition to the income of the assessee with the aid of section 50C is only under deeming condition which may vary if a reference to the DVO is being sent under sub- section (2) of section 50C. It would indicate that it is quite difficult to conclusively hold an assessee liable for concealment 6 BABU LAL AGARWAL VS ITO, WARD 5(1), JAIPUR of facts or furnishing of particulars of income. An assessee may stick to his stand that whatever he has shown as actual consideration and it can be tested by making a reference to the DVO under sub-section (2) of section 50C. Thus, an assessee could not be visited with penalty under section 271(1)(c) when an addition is being made with the help of deeming fiction provided in section 50C 7. As far as other addition of Rs. 15,750/- is concerned no elaborate discussion has been made independently in the penalty order. The Assessing Officer has treated both these amounts at par and took a consolidated figure. He has nowhere made out that the assessee has furnished inaccurate particulars of income. Even in the assessment order much discussion is not available on this issue. Considering overall facts and circumstances, I find force in the contentions of the assessee and delete the penalty.