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2015 (12) TMI 32 - AT - Income TaxPenalty under section 271(1)(c) - wrong computation of long term capital gain - Held that:- As far as computation of long term capital gain is concerned, we find that the ld.AO has made this addition by invoking the provision contained in section 50C of the Income Tax Act. The section 50C is a deeming provision which empowers the AO to deem sale consideration equivalent to the amount on which the value has been adopted for the purpose of payment of stamp duty. To our mind, this fiction cannot be extended for visiting the assessee with penalty for concealment of income. It is pertinent to mention here that the stamp duty paid on a sum of ₹ 1,21,72,500/-. This section authorizes the AO to deem this amount as an actual sale consideration for the purpose of computing the long term capital gain. However, on a reference to the DVO, the value has been scaled down to ₹ 46,82,000/-. This drastic change in the value itself indicates that it is an estimated figure. The fiction created for computation of capital gain cannot be extended even for visiting the assessee with penalty under section 271(1)(c) of the Act. As far as the invocation of Explanation 1 and 3 attached to section 271(1)(c) is concerned, we find that the assessee has contended before the AO that she had never taxable income throughout her life. She was not well-conversant with the computation of capital gain and due to bona fide belief that her income is below taxable income, she did not file the return originally. The AO has also not exactly worked out the taxable income of the assessee on the basis of actual sale consideration received by her. Considering the explanation of the assessee, coupled with the fact that for the additions made with the help section 50C, penalty cannot be imposed upon the assessee. Decided in favour of assessee.
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