Addition under Deeming Provision of S. 50C cannot Attract Income Tax Penalty for ‘Concealment of Income’: ITAT [Read Order]

In an assessee-favouring ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the addition under section 50C, being a deeming provision cannot be a sole ground to attract penalty under section 271(1)(c) of the Income Tax Act, 1961.

A search under Section 132 of the Act was conducted on 22.09.2015 in Akshar Group of cases including the case of the assessee, Smt. VarshabenVipulbhaiBhalani and consequently, notice under Section 153A of the Act on 24.05.2016 was issued.During the course of the assessment proceedings, the case of the assessee was referred to the DVO under section 50C of the Income Tax Act, 1961 and the total income of the assessee was determined at Rs.4,26,400/-. Following this, the penalty proceeding under Section 271(1)(c) of the Income Tax Act was further initiated on the assessee on the ground of addition made of Rs.2,07,180/- on account of LTCG for furnishing of inaccurate particulars of income.

A two-Member bench of Shri Waseem Ahmed, Accountant Member & Ms. Madhumita Roy, Judicial Member, while granting relief to the assessee, held that “Before the authorities and the Tribunal, the assessee contended that the addition to the income of the assessee with the aid of Section 50C of the Act is only under deeming condition which may vary in the event a reference is made to be District Valuation Officer under Sub-Section (2) to Section 50C of the Act. Under these circumstances, the assessee cannot be held to be liable for concealment of income or furnishing inaccurate particulars of income.”

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.