2010 (7) TMI 1082 - AT - Income Tax

Summary

Issues involved:
The judgment involves the challenge to a penalty levied by the Assessing Officer (A.O) under section 271(1)(c) of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Justification of Penalty u/s 271(1)(c) of the Act
The assessee, a Co-operative Housing Society, declared income from compensation received for allowing companies to use a portion of the terrace of the Society building. The A.O assessed the income under the head 'income from other sources', which was challenged before the CIT(A). The CIT(A) directed the A.O to treat the rental income as 'income from house property'. After further relief from the Tribunal, the income was re-determined. The A.O levied a penalty under section 271(1)(c) for concealing income particulars. The Tribunal found no conscious act of concealing income and canceled the penalty, as the entire income was declared and recorded in the books of account.

Issue 2: Claim of Exemption under Mutuality Principle
The assessee initially claimed exemption on the basis of mutuality for the rental income received, which was later changed to be assessed as 'income from house property'. The A.O disallowed the claim of loss declared by the assessee, stating that contributions exceeding expenses do not attract Income Tax provisions. The Tribunal observed that there was no conscious withholding of particulars by the assessee and found no justification for the penalty under section 271(1)(c) of the Act.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, canceling the penalty imposed by the A.O under section 271(1)(c) of the Income Tax Act, 1961.