2014 (12) TMI 1294 - AT - Income Tax

Penalty levied u/s 271(1)(c) - change of head of income - Income From Property Or Business Income - Held that - There is no dispute about disclosure of relevant information in the return of income relating to the impugned receipts which were brought to tax under the head house property by the AO. Thus it is a case of change of head of income and there is no default so far as disclosure of relevant information in the return of income is concerned. In the instant case we find that the assessee is consistently furnishing relevant receipts under the head profits and gains of business and the claim of the assessee was consistently accepted by the Revenue. Assessee offered the same for these years also but the AO changed the head of income only in view of the subsequent judgement in the case of Shambhu Investment (P) Ltd. (2003 (1) TMI 99 - SUPREME Court ). Therefore there is nothing malafide from assessee s side. The AO has not information to demonstration that the claim of the assessee in the return of income is not boanafide. Case of Bennet Coleman in the absence of any facts that the claim of the assessee was not bonafide the penalty cannot be imposed u/s 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Appeals against penalty under section 271(1)(c) for assessment years 2004-05, 2005-06, and 2006-07 based on change of head of income from business to house property.

Analysis:
The appeals before the Appellate Tribunal ITAT Mumbai involved the Revenue challenging the penalty imposed under section 271(1)(c) for three assessment years due to a change in the head of income from business to house property. The assessee had previously offered certain receipts from property letting as business income, which was accepted in prior assessments but disallowed in the years under consideration based on a Supreme Court judgment. The CIT(A) deleted the addition for all three years, emphasizing that a mere change of head of income does not warrant concealment penalty. The Tribunal noted that there was no dispute regarding the disclosure of relevant information in the income tax returns, and the change in income head was the only issue. Citing legal precedents, the Tribunal concluded that in the absence of any malafide intent and with consistent disclosure of receipts, the penalty under section 271(1)(c) was not justified. The Tribunal highlighted the principle that if income is disclosed, and there is only a change in the head of income without any evidence of non-bonafide intent, the penalty cannot be imposed. Therefore, the Tribunal rejected the Revenue's appeal, stating it was not a suitable case for penalty imposition.

In summary, the Tribunal's decision revolved around the issue of penalty imposition under section 271(1)(c) for changing the head of income from business to house property. The Tribunal emphasized the importance of consistent disclosure of income and absence of malafide intent in determining the applicability of the penalty. By relying on legal precedents and considering the facts of the case, the Tribunal concluded that the penalty was unwarranted in this scenario, leading to the dismissal of the Revenue's appeal.