The Delhi bench of Income Tax Appellate Authority (ITAT) has recently held that the Income tax penalty could not be attracted for application of section 50C of Income Tax Act 1961.
Section 50C of Income Tax Act 1961 provides that computation of capital gain on sale of land or building or both which was held as capital gain also the sale consideration should not be less than the stamp duty.
Assessee Shailendra has sold agriculture land the above land is not a part of capital gain asset .Thereafter assessment was completed as per section 144 read with section 148 of the Income Tax Act, 1961. Thereby, the Assessing Officer (AO) made addition of Rs.24, 87,500/- on account of Long Term Capital Gain. The basis of computing capital gain was that the assessee paid stamp duty on market value of Rs.49,75,000/.Therefore the AO also initiated penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961. Against the order assesee filed an appeal before ITAT.
Before the bench assessee representative submit that “since the capital gain has been calculated on the basis of section 50C which is a legal fiction penalty is not leviable”
Further assessee submit that sale of the agriculture land was not taxable therefore, it is not a part of capital gain as define under section 2(14) of Income Tax Act, 1961.
Maimun Alam counsel for the revenue contented that the assessee has been thoroughly negligent also the case was re-opened on the basis of AIR information regarding sale of property.
After considering the material and records filed by the both parties single bench of the ITAT, Comprising Kul Bharat (Judicial Member) dismiss the appeal filed by the assessee.
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