Income Tax Appellate Tribunal

Shyam Sunder Duseja Vs. Income Tax Officer

MANU/IJ/0021/2021

15.02.2021

Direct Taxation

Where the value declared in the return of income has been accepted by the Assessing officer, there cannot be any basis for levy of penalty for concealment of income

Present is an appeal filed by the assessee against the order of Learned CIT(A). The only effective ground of appeal relates to levy of penalty under Section 271(1)(c) of Income Tax Act, 1961 (IT Act) on difference between actual sale consideration and DLC value of immovable property sold by the assessee.

It is submitted that, during the financial year relevant to impugned assessment year, the assessee had sold a shop for a consideration of Rs. 3,50,000 value of which was adopted by the stamp duty authority at Rs. 6,10,313. It was submitted that in order to avoid any litigation, the assessee in his return of income declared the capital gains by applying the provisions of Section 50C by taking the sale consideration of Rs. 6,10,313 as adopted by stamp duty authority as against actual sale consideration of Rs. 3,50,000 received by the assessee resulting in the additional tax liability which has been duly paid, however, the same has been made the basis for levy of penalty under Section 271(1)(c) of IT Act and which is the subject matter of present penalty proceedings.

When the addition has been made by the Assessing officer by invoking the provisions of Section 50C of IT Act without bringing any evidence on record that, the assessee actually received any amount over and above the declared sale consideration as per sale deed, penalty under Section 271(1)(c) of IT Act is not justified. In the present case also, no evidence has been brought on record by the Assessing officer that, any money over and above the sale consideration as per the sale deed was received by the assessee. It is a case of self declaration and self adoption of value as adopted by stamp duty authorities while filing the return of income by the assessee and which has been accepted in entirety by the Assessing officer. Where the value so declared in the return of income has been accepted by the Assessing officer, there cannot be any basis for levy of penalty for concealment of income.

There was a reasonable cause with the assessee for not filing the return originally within prescribed time as he holds a belief that his taxable income was below the taxable limit and no tax liability arises thereon considering the actual sale consideration received by the assessee on sale of shop amounting to Rs. 3,50,000. The bona fide of such belief has not been challenged by the Revenue. There was a reasonable cause for the assessee for not filing the return of income originally within prescribed time. Therefore, given the reasonable cause for non-filing the return of income, one of the essential conditions for invocation of Explanation 3 to section 271(1)(c) of IT Act is not satisfied and thus, the case of the assessee doesn't fall within the meaning of deemed concealment as so defined in the said explanation and the contentions so advanced by the Revenue cannot be accepted.

Where the value so declared in the return of income has been accepted by the Assessing officer and infact, the returned income has been accepted, there cannot be any basis for levy of penalty under Section 271(1)(c) of IT Act for concealment of income. In the result, the penalty so levied is hereby directed to be deleted and the matter is decided in favour of the assessee. The appeal of the assessee is allowed.

Tags : Penalty Levy Legality

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