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2015 (12) TMI 32 - ITAT AHMEDABAD

2015 (12) TMI 32 - ITAT AHMEDABAD - TMI - Penalty 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 .....

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es 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 b .....

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COUNTANT MEMBER For The Assessee : Shri S.B. Vaidya For The Revenue : Shri D.V. Singh, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The assessee is in appeal before us against the order of the ld.CIT(A)-I, Surat dated 8.8.2013 for Asstt.Year 2005-2006. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the penalty of ₹ 1,13,083/- imposed under section 271(1)(c) of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee was co-owner alon .....

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1 declaring total income of ₹ 82,810/-. The AO has passed assessment order on 16.12.2011 under section 143(3) r.w.s section 147 of the Act. The AO has confronted the assessee as to why value on which stamp duty was paid ought not to be considered as sale consideration. It appears that on a reference made under sub-section 2 of section 50C, the Valuation Officer has reported the value of the land at ₹ 46,82,000/-. The share of the assessee on the sale consideration comes to ₹ 4, .....

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ughly. She further contended that she had never any taxable income, and therefore, nor subjected to income tax. Her impression was that her income is below taxable income, and therefore, did not file return. The learned AO observed that the assessee has concealed particulars of income by furnishing inaccurate particulars. He further observed that the assessee sought to evade the tax of ₹ 1,13,083/- on income of ₹ 4,56,219/-. He, accordingly, imposed penalty of ₹ 1,13,083/-. 4. .....

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Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay .....

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f the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disa .....

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rate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inacc .....

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Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any expla .....

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xplanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the incom .....

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