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Facts
The assessee declared sale consideration of Rs. 23,00,000/- for a property. The DVO determined the fair market value at Rs. 30,08,800/-, leading to an addition of Rs. 7,08,800/- under Section 50C. Penalty was levied under Section 271(1)(c) on this addition.
Held
The Tribunal held that the addition was made based on deeming provisions of Section 50C and an expert estimation by the DVO, not on any proven concealment or furnishing of inaccurate particulars by the assessee. Relying on precedent, the Tribunal noted that the Revenue failed to establish that the assessee actually received more than the declared consideration.
Key Issues
Whether penalty under Section 271(1)(c) is leviable when addition is made under Section 50C based on DVO's estimation of fair market value without disputing the declared sale consideration.
Sections Cited
271(1)(c), 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Per Vijay Pal Rao, JM:
This appeal by the assesse is directed against the order dated 19.03.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centers,(NFAC), Delhi arising from penalty order passed u/s 271(1)(c) of the Act for A.Y.2009-10.
2. Assessee has raised following grounds of appeal: “01.The assessee has not concealed any particulars of income nor has she filed any accurate particulars thereof and as such levy of Smt. Mohini Shrivastava penalty u/s 271(1)(c) is absolutely arbitrary, baseless, Irreasonable, unlawful and contrary to prevailing legal standards/practices. Therefore, the same deserves to be deleted. Mere difference in Sale Consideration and Value as per Section 50C/DVO's Valuation on Account of Capital gains does not amount to concealment or furnishing of inaccurate particulars of income.
That the DVO's Report is merely an Opinion in respect of Valuation of a piece of land and not a concrete evidence to establish that the assesse did receive the Sale Consideration of Rs. 30,08,800/- resulting into Concealment of Income in filing inaccurate Particulars thereof attracting Provisions of Section 271(1)(c).
The assessee craves leave to add or amend any other grounds of appeal at the me of hearing.”
3. The Ld. AR of the assessee submitted that in the quantum proceedings this Tribunal remanded the matter to the A.O for determination of fair market value u/s 50C(2) of the Act. In the remand proceedings the DVO determined the fair market value of the property at Rs.30,08,800/- as against the actual consideration declared by the assessee at Rs.23,00,000/- and consequentially an addition of Rs.7,08,800/- was made by the A.O u/s 50C of the I.T Act to the capital gain of the assessee. The A.O has levied the penalty u/s 271(1)(c) of the Act in respect of Rs.7,08,800/- made u/s 50C of the I.T. Act. The Ld. AR has further contended that the addition made by the A.O is under deeming provisions of Section 50C and further based on estimation of fair market value by the Smt. Mohini Shrivastava DVO and therefore, the case of the assessee does not fall in the category of concealment of income or furnishing of inaccurate particulars of income attracting the levy of penalty u/s 271(1)(c) of the Act. In support of his contention he has relied upon the decision of Coordinate Bench dated 28.10.2016 in case of Anil Bhatewara vs ITO in ITA No.430/Ind/2016.
On the other hand Ld. Departmental Representative has relied upon the orders of the authorities below.
We have considered the rival submissions as well as the relevant material on record. The A.O has levied the penalty u/s 271(1)(c) of the Act against the addition made u/s 50C of the I.T.
1. Act to the capital gain of the assessee. The assessee has declared the sale consideration of Rs.23,00,000/- as actual consideration received by the assessee which was not disputed by the A.O but the addition was made under the deeming provisions of Section 50C of the Act. In the quantum proceedings this Tribunal remanded the matter to the record of the A.O for determination of fair market value of the property after making a reference to the DVO. In the remand proceedings as per the Valuation Report of the DVO the fair market value of the property was determined at Smt. Mohini Shrivastava Rs.30,08,800/- as against the actual sale consideration of Rs.23,00,000/- and consequently the A.O has made an addition of Rs.7,08,800/- by applying the provisions of Section 50C of the Act.
Thus, it is clear that the addition was made by the A.O on the basis of determination of fair market value by the DVO which is an estimation by an expert. The A.O has not doubted the actual sale consideration received by the assessee therefore, the question of concealment of particulars of income or furnishing inaccurate particulars of income does not arise. This Tribunal in case of Anil Bhatewara vs ITO (supra) while considering an identical issue of levy of penalty u/s 271(1)(c ) of the Act has held in para 3 of the order as under:
“3. We have heard both the sides. Looking to the facts and circumstances of the case, we find that the issue in controversy is whether the assessee has sold the property at Rs.9,60,000/- while the Registrar has taken the market value at Rs.13,86,000/-, the penalty can be imposed u/s 271 is decided by the Calcutta High Court in the case of CIT vs. Madan Theatre (supra) wherein it was decided as under :- "Thus obviously, it is only on account of deeming provisions of s.50C, the A.O. has made the add by adopting the sale consideration of Rs.5,19,77,000/- being the value adopted for the purpose of stamp valuation. The Revenue has also not shown as to how the assessee could be held to have actually received this amount which is in excess the amount of Rs.2,51,50,000. It has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. In any case, the issue is also covered by the decision of the coordinate Bench of this Tribunal in the case of Renu Hingorani (supra). In the circumstances, respectfully following the decision of the Coordinate Bench of the 4 Smt. Mohini Shrivastava Tribunal in the case of Renu Hingorani (supra) as also on account of the fact that the Revenue has not been able to dislodge the findings of the learned CIT(A) that the bona fides of the assessee are genuine, the findings of the learned CIT(A) stand confirmed. In the circumstances, the appeal of the Revenue is dismissed."
5.1 Accordingly, in the facts and circumstances of the case when the assessee has declared all the relevant facts and details regarding the sale consideration of the property sold by the assessee and addition was made by the A.O by applying deeming provisions of Section 50C of the Act then the case of the assessee would not fall in the category of concealment of particulars of income or furnishing of inaccurate particulars of income attracting the penalty provisions u/s 271(1)(c) of the Act. Hence, the penalty levied by the A.O u/s 271(1)(c) of the Act is deleted.
The appeal of the assessee is allowed.
Order pronounced in the open court on 09.10.2024.