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S. 271(1)(c): Non-offering of stamp duty/DVO value as consideration for capital gains does not attract penalty if facts are on record
The assessee was the owner of office premises which were sold in AY 2004-05 for Rs. 2 crore. The AO noted that the stamp duty valuation of the property was Rs.3,72,42,000 and that the DVO had valued the property at Rs. 2,70,03,920. The value adopted by the DVO was taken as the consideration for sale of the property u/s 50C and capital gains was assessed on that basis. The assessee accepted the same. The AO levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. This was upheld by the CIT(A) though deleted by the Tribunal. Before the High Court, the department relied on Chuharmal vs. CIT 172 ITR 250 (SC) and argued that even though s. 50C created a liability for deemed income, still penalty u/s 271(1)(c) could be levied. HELD by the High Court dismissing the appeal:
The Tribunal finding that the case was not one of furnishing inaccurate particulars of income or of concealment inasmuch as there was a registered sale deed and the consideration was mentioned therein cannot be faulted. Also, the DVO determined the value at a figure from that of the stamp value. The larger question posed for consideration as to whether s. 271(1)(c) penalty can apply to deemed income is left open for consideration in an appropriate case.
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Judgement is good.
i have seen some AOs somehow attempt in order to make tax to touch a minimum threshold of RS.10 lacs try to use sec 271(1)(c), indeed a despicable attempt by revenue that need be discouraged;
10 lacs threshold is just to harass assesses the revenue does.
i would suggest that all income tax officials ROIs need to be put on government website; that would help us know hw much disproportionate assets are earned by them can be seen and such men need to be brought to justice.
Only talking about J Jayalalithas, Karunanidhis and so on cannot solve DAs issue as a whole holistically!
I would like revenue men better understand what is Jurisdiction, Limitation and Effluxe of time ; else the revenue becomes just archaic expression only.
i would suggest read a judgement in Dr.A.Lakshmanaswami mudaliar v LIC (1963)(2)suppli SCR 887 TO understand term s i mentioned above to better educate themselves!
without proper application knowledge of laws, laws just become a dead word; when so why people shd obey tax laws would be the question !