Penalty not applicable for addition on account of deeming provisions of section 50C – Mumbai ITAT


ACIT v Sunland Metal Recycling (ITA NO.6454/Mum/2011 dated 10.12.2014) Mumbai ITAT

Background:

The assessee sold office premises to its sister concern for a sale consideration of Rs. 1.55 crores. The Assessing Officer considered the full sale consideration as per stamp duty authority valuation at Rs. 2,00,08,000/- in accordance with the provisions of section 50C of Income Tax Act. Accordingly, the Assessing Officer made an addition to the Short term Capital Gain. Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) for levy of penalty against the addition made to the Short term Capital Gain and levied a penalty of Rs. 22,12,069. The CIT(A) deleted the penalty by following the various decisions of Mumbai  Tribunal on the point and held that there is no concealment of any particulars of income on the part of the assessee

HELD:

  • In the assessment proceedings, the Assessing Officer has not given any finding that the sale consideration disclosed by the assessee is not actual amount received as per the agreement of sale. 
  • The addition was made by invoking the deeming provisions of section 50C whereby the full value of consideration was adopted as per the valuation of the stamp duty authority for levy of stamp duty.
  • All the particulars and material facts were furnished by the assessee either along with return of income and during the course of assessment proceedings. There is no concealment of any particulars on the part of the assessee.
  • The AO had not doubted genuineness and validity of the documents produced before him and sale consideration received by the assessee.
  • Even otherwise mere suspicion is not sufficient to levy penalty. There should be some material on record to establish that actual sale consideration received by the assessee was much more than the sale consideration shown in the sale agreement.
  • The facts and issue of the instant case are identical with the facts and issue of the case of Renu Hingorani Vs. CIT  (ITA no. 2210/Mum/2010)
  • Even otherwise the principles laid down by the Hon’ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt Ltd. are squarely applicable.

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