Penalty under Section 271(1)(c) does not apply to additions made under 50C.
Facts and Issue of the Case
The assessee filed his return voluntarily on 08.10.2014 declaring total income of Rs. 1,30,00,000/- and paid tax on the long term capital gain calculated as per actual sale consideration. Later on 15.10.2014 the assessee was issued notice under section 148 for difference in stamp value in sale consideration as disclosed in return of income and as assessed by registrar stamps (i.e. Rs. 1,91,50,085/-) however later the matter was referred under section 50C(2) to departmental valuer who assessed the same at Rs. 1,71,72,400/- thereby resulting into an addition of Rs. 23,23,310/-. Thus the above addition is on account of deeming provision (i.e. section 50C). The variation in the sales value versus value as adopted by departmental valuer as per Section 50C shows that there is no withholding or misrepresentation of facts by the assessee before the AO. The concealment is always with reference to the facts and it cannot be imposed with reference to claim or disallowance on difference of opinion. The addition has been only based upon the estimates and values obtained from the departmental valuer in preference to the value as per sales deed. Thus no facts, evidence or transaction has even been concealed. Thus it is neither technical error nor intentional but is only a “bonafide belief” & does not tantamount to be furnishing of inaccurate particulars.
The AO arrived the findings that the assessed at Rs. 26,68,640/- including long term capital gain of Rs. 23,23,310/- on which separate rate of tax would be charges as per provisions of Act. Charged interest u/s 234A, 234B and 324C. Penalty notice u/s 271(1)(c) has been issued for furnishing of inaccurate particulars of income. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has reiterated its arguments in written submission in page Nos. 2 to 7 of the order. The CIT(A) for the reason stated in his aassessee order has rejected arguments and submissions made by the assessee. Aggrieved by the ld. CIT(A) order, the assessee is in appeal before the Tribunal. Before us, the assesee has reiterated his submissions, which were not taken on record by the ld. CIT(A). The ld. AR for the assessee submitted detailed written submissions dated 29.09.2021.
The Ld. DR, on the other hand strongly supporting the order of the CIT(A) submitted that there is no merit in arguments taken by the Ld. AR of the assessee and the AO has rightly taken has a fit case for imposition of penalty U/S 271(1)c.
Observation of the court
Court has heard both the parties, perused materials available on record. Court is of the opinion that the AO has considered the full value consideration U/s 50C as against the actual sale consideration declared by the assessee . The increased of value by the AO in the full value consideration does not amount either concealment of particulars of income or furnishing inaccurate particulars of income. Further we observed additions made on values of Dy. Registrar office being deemed value and even additions on such deemed value accepted by assessee it cannot be said furnishing of inaccurate particular for levy of penalty of concealment u/sec. 271(1)(c).
Court is relying on the principle laid down by the Hon’ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC), the penalty cannot be sustained. Therefore, court is of the opinion that said claim made under the provisions of the Act is disallowed by the AO would not attract the penalty provisions of Section 271(1)(c) of the Act. The Hon’ble Supreme Court in case of CIT vs. Reliance Petroproducts Pvt. Ltd. 322 ITR 158 has held that where the information given by the assessee is not found to be incorrect the assessee cannot be held guilty of furnishing inaccurate particulars of income for the purpose of levying the penalty U/s 271(1)(c) of the Act. The Hon’ble Supreme Court has also observed that merely making a wrong claim does not amount to furnishing inaccurate particulars of income in the absence of finding that any detail by the assessee is incorrect or false. Based on the ld. AR for the assesee has referred to various decisions of the High Courts and Coordinate Bench of the Tribunal on the point that penalty order passed by the AO based on different charges in the show cause notice is not valid. Accordingly, in view of the facts and circumstances of the case the penalty levied by the AO U/s 271(1)(c) of the Act is not sustainable and the same is deleted.
In the result, the appeal of the assessee is allowedVirendra-Singh-Verma-Vs-ITO-ITAT-Jaipur