BHIKHABHAI VALABHAI SONANI HUF,SURAT V. DCIT, NFAC, DELHI

ITA 713/SRT/2025

AI Insights

The case revolves around a penalty imposed on Bhikhabhai Valabhai Sonani, HUF, by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961, following an addition made under Section 50C due to a discrepancy between the sale consideration and the stamp duty value of a property transaction. The AO added Rs.20,03,000 as deemed income and imposed a penalty of Rs.6,18,927 for alleged inaccurate particulars of income. The First Appellate Authority upheld the penalty, leading the assessee to appeal to the Income Tax Appellate Tribunal. The Tribunal, referencing several precedents, concluded that the application of Section 50C alone does not lead to the conclusion of inaccurate particulars of income, thereby allowing the appeal and deleting the penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 823039 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 28-06-2025
• Other Referred Cases: CIT Kolkata V/s Madam Theatres Ltd, Chimanlal Manilal V/s ACIT, Renu Hingorani V/s ACIT Mumbai, ACIT V/s Mrs N Meenakshi, Kantibhai Mohan Bhai Kheni v/s Asst. Commissioner of Income Tax, Vijaybhan Singh Rajput v/s I.T.O., Ward-2(3)(4), Surat
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: TINISH MODY
• Keywords: Capital asset; Sale consideration of property below Jantri Value; Valuation report; Deemed to accrue or arise in india
• Section: 143(3); 271(1)(c); 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SURAT” BENCH, SURAT [Conducted through E-Court at Ahmedabad] BEFORE SHRI SANJAY GARG, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 713/Srt/2025 (िनधाŊरण वषŊ / Assessment Year : 2012-13) Bhikhabhai Valabhai Sonani, HUF 7, Vaibhav Bunglows, Near Radiant School, Piplod, Surat, Gujarat- 395007 बनाम/ Vs. DCIT NFAC, Delhi, New Delhi ᭭थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACHB8314A (Appellant) .. (Respondent) अपीलाथŎ ओर से /Appellant by : Shri Tinish Mody, CA ŮȑथŎ की ओर से/Respondent by : Shri Ajay Uke, Sr. DR Date of Hearing 09/12/2025 Date of Pronouncement 22/12/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 16.06.2025 for the Assessment Year 2012-13 in the proceeding under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’). 2. Brief facts of the case are that the assessee had filed his return of income for A.Y. 2012-13 on 20.10.2012 declaring income of Rs.79,34,510/-. The assessee had disclosed long term Printed from counselvise.com ITA No. 713/Srt/2025 [Bhikhabhai Valabhai Sonani HUF vs. DCIT] A.Y. 2012-13 - 2 – capital gain of Rs.75,54,388/- on sale of an immovable property with other co-owners. In the course of assessment, the AO found that the sale deed was executed on 30.03.2012 for a consideration of Rs.4,66,66,000/-. However, the stamp duty was paid on jantri value of Rs.5,83,26,531/-. The AO, thus, found that there was short disclosure of sale proceeds to the tune of Rs.1,16,60,531/- being the difference between the jantri value and the sale deed amount. The difference was treated as deemed income u/s.50C of the Act and proportionate amount of Rs.20,03,000/- was added in the hands of the assessee. The AO has also initiated penalty proceedings u/s.271(1)(c) of the Act in this respect for furnishing of inaccurate particulars of income. Thereafter, a separate penalty order was passed on 31/12/2021 whereby penalty of Rs.6,18,927/- was imposed u/s.271(1)(c) of the Act. 3. Aggrieved with the penalty order, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal: “[1] On the facts and in the circumstances of the case as well as law on the subject, the penalty notice issued u/s.274 rws 271(1)(c) of the Act is bad in law and without jurisdiction. [2] On the facts and in the circumstances of the case as well as law on the subject, the Ld. CIT(A) - NFAC Delhi erred in confirming the penalty of Rs.6,18,927/- u/s.271(1)(c) of the Act levied by the Ld. A.O. Circle 2(1)(1) Surat on the basis of addition made u/s.50C of the Act amounting to Rs.20,03,000/- while framing the Assessment Order passed u/s. 143(3) r.w.s.147 of the I.T. Act, 1961. Printed from counselvise.com ITA No. 713/Srt/2025 [Bhikhabhai Valabhai Sonani HUF vs. DCIT] A.Y. 2012-13 - 3 – Your appellant therefore prays that looking to the facts and circumstances of the case, the penalty levied by the Ld. A.O. to the tune of Rs.6,18,927/- u/s.271(1)(c) and confirmed by the Ld. CIT(A) NFAC is required to be deleted.” 5. Shri Tinish Mody, Ld. AR of the assessee submitted that the assessee had accepted the addition of Rs.2,00,300/- made u/s.50C of the Act in order to avoid litigation. However, there was neither concealment of income by the assessee nor any inaccurate particulars of income was furnished in the return of income. All the facts relevant to the transactions were duly disclosed. Merely because the difference between the sale consideration as per sale deed and the stamp duty value was treated as deemed income of the assessee u/s.50C of the Act, this does not attract any penalty u/s.271(1)(c) of the Act. According to the Ld. AR, no penalty u/s.271(1)(c) of the Act can be imposed on the deeming provision where the addition is made u/s.50C of the act. In this regard, he has placed reliance on the following decisions: 1. CIT Kolkata V/s Madam Theatres Ltd (2013) 88DTR 217 2. Chimanlal Manilal V/s ACIT (ITA No. 508/Ahd/2010) 3. Renu Hingorani V/s ACIT Mumbai (ITA No. 2210/Mum/20-10) 4. ACITV/s Mrs N Meenakshi 29 DTR 475 ITAT Chennai Bench. 5. Kantibhai Mohan Bhai Kheni v/s Asst. Commissioner of Income Tax. (ITA 1831/Ahd/2014 (Ahmedabad ITAT) 6. Vijaybhan Singh Rajput v/s I.T.O., Ward-2(3)(4), Surat (ITA No.03/Srt/2023) Printed from counselvise.com ITA No. 713/Srt/2025 [Bhikhabhai Valabhai Sonani HUF vs. DCIT] A.Y. 2012-13 - 4 – 6. Per contra, Shri Ajay Uke, Ld. Sr. DR supported the order of the lower authorities. 7. We have considered the submission of the assessee. The short controversy in this appeal is levy of penalty u/s.271(1)(c) of the Act in respect of addition made under deemed provision of Section 50C of the Act. The stamp duty value of the property being adopted as sale consideration u/s.50C of the Act by itself does not amount to furnishing of inaccurate particulars of income by the assessee so as to levy penalty u/s.271(1)(c) of the Act. It is not the case that the stamp duty value of the property was not disclosed or was under reported by the assessee. The Co-ordinate Bench of Ahmedabad Tribunal in the case of Kantibhai Mohanbhai Kheni vs. ACIT in ITA No. 1831/Ahd/2014, dated 20.03.2017 had held on this issue as under: \"5. We have heard both the sides and perused the material on record. On the perusal of the of details it is observed that on the basis of the reference made to the valuation officer for valuation of property u/s 50C(2), the AO made an addition of Rs. 20130880/-u/s 50C of the act on the basis of valuation officer report, the assessing officer determined long term capital gain after reducing Rs. 67,58,003/-which the assessee has already disclosed as long term capital gain. On the analysis of the provisions of section 50C, we observed that section 50C is a deeming provision to tax the difference as capital gain where the consideration received as a result of transfer of capital assets, being land or building or both if less than the value adopted by the stamp valuation authority. It is only on account of deeming provisions of section 50C, the AO has made the addition after considering the valuation report of the valuation officer u/s 50C(2) of the act and determined the long term capital gain. The fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings under Section 271(1)(c) of the act has been started. The revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him. We observed that in terms of deeming provisions of section 50C, higher sales consideration of property determined by the DVO did not by itself Printed from counselvise.com ITA No. 713/Srt/2025 [Bhikhabhai Valabhai Sonani HUF vs. DCIT] A.Y. 2012-13 - 5 – amount to furnishing inaccurate particulars of income so as to levy penalty under section 271(1)(c) of the act The revenue has also not shown as to how the assessee could be held to have actually received this amount which is in excess of the amount of mentioned in the sale deed, It has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. We further notice that the addition was made totally by invoking the provision contained in section 50C of the act, therefore, penalty cannot be imposed on the income determined on the basis of deeming provision of section 50C as this solitary does not lead to concealment of income or furnishing of inaccurate particulars of income, therefore, we find ld. CIT(A) is not justified in sustaining the penalty levied by the assessing officer. In the circumstances, the appeal of the assessee is allowed.\" 8. An identical view was taken by the Co-ordinate Bench of this Tribunal in the case of Vijaybhan Singh Rajput vs. ITO, ITA No.03/Srt/2023, dated 28.07.2023. Respectfully following the decisions of the Co-ordinate Benches of the Tribunal on this issue, we direct the AO to delete the penalty levied u/s.271(1)(c) of the Act in the present case. The grounds taken by the assesse are allowed. 9. In the result, the appeal of the assessee is allowed. This Order pronounced on 22/12/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 22/12/2025 S. K. SINHA True Copy आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. By order/आदेश से, Deputy/Asstt. Registrar/DDO ITAT, Surat Printed from counselvise.com "