In a recent ruling, the Mumbai bench of the ITAT observed that penalty under section 271(1)(c) of the Income Tax Act cannot be levied on the assessee when the addition is made by invoking section 50C of the Income Tax Act and no incriminating material is found.
The Revenue approached the Appellate Tribunal praying for a direction to restore the penalty order deleted by the first appellate authority on ground that the addition has been made invoking the deeming provisions of section 50c of the Act.The authority found that no penalty under s. 271(1)(c) can be levied since there is no finding that the actual sale consideration is more than that mentioned in the sale agreement. The Revenue contended that the assessee has suppressed its income by not considering specific provisions of section 50C of the Act for computation of capital gains and the Ld. CIT(A) had earlier confirmed the additions of Rs.1,74,36,000/- u/s. 50c of the Income Tax Act.
The bench noted that the assessee has furnished the registered sale deed. The assessing officer has made the addition by invoking deeming provisions of section 50 C and there were no allegation of any incriminating document being found. “In such situation assessee cannot be held guilty of furnishing of inaccurate particulars of income or concealment of income. Further more the conduct of the assessee cannot be held to be contumacious so as to warrant levy of penalty. This proposition is also supported by the decision rendered by the larger bench of Hon’ble apex court in the case of Hindustan steel Ltdvs state of Orissa 83 ITR 26.”
Read the full text of the order below.