Penalty can’t be Levied for Applying Deemed Provisions of Sec 50C: ITAT [Read Order]

While dismissing an appeal of revenue, Delhi bench of ITAT recently proclaimed that penalty cannot be imposed after making addition by applying deemed provisions of Section 50C of the Income Tax Act, 1961.

The assesse in the instant case has sold an industrial plot and declared a short term capital gain of Rs.19, 59,668 and a sale consideration amounted to Rs.1, 27, 50,000 through a sales deed. The AIR shows a difference of amount due to stamp fee paid against sale consideration. Therefore provisions of Section 50C of the Income Tax Act were found attracted in this case. Simultaneously, the AO levied penalty under section 271(1)(c) of the Income Tax Act.

The assessee explained before the CIT (A) that the A.O. has applied deeming provisions of Section 50C and made addition being difference between sale consideration as per sale deed and valuation made by the Stamp Valuation Authority.

The counsel of revenue relied upon the judgment of Delhi High Court in the case of Zoom Communications and submitted that even by applying deeming provisions under section 50C of the I.t. Act, penalty is leviable.

After hearing the rival contentions, the bench held that the A.O. has not brought any concrete evidence of concealment of income in the order. The A.O. at the stage of assessment, simply applied the deeming provisions of Section 50C of the I.T. Act without bringing any evidence on record for concealment of income or furnishing inaccurate particulars by the assessee.

Finally the bench comprising of Judicial Member Bhavnesh Saini and Accountant Member L.P. Sahu upheld the order of the CIT(A).

To Read the full text of the Order CLICK HERE