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2014 (3) TMI 616 - AT - Income TaxPenalty u/s 271(1)(c) of the Act Inaccurate particulars furnished Held that - The assessee had given his premises on rent and the income therefrom was shown as subscription fees in the P&L A/c - penalty cannot be imposed where issue is debatable or where the AO and the assessee have difference of opinion - As far as disallowance in quantum appeal is concerned it should not result in automatic levy of penalty - For invoking provisions of section 271(1)( c) of the Act, AO has to mention as which particulars were inaccurate the decision in COMMISSIONER OF INCOME TAX Versus AMIT JAIN 2013 (1) TMI 340 - DELHI HIGH COURT followed - if amount in question, which forms the basis for the AO to levy penalty, is truthfully reported in the returns and the AO chooses to treat the income under some other head them it cannot be held that the assessee has filed inaccurate particulars or has suppressed the facts - by claiming rental income as business income cannot be held to be furnishing of inaccurate particulars of income - the order of the FAA reversed Decided in favour of Assessee.
Issues:
1. Confirmation of penalty imposed under section 271(1)(C) of the Income Tax Act. 2. Allegations of concealment of income and inaccurate particulars. 3. Interpretation of rental income as business income. 4. Applicability of legal precedents and judgments in the case. Issue 1: Confirmation of Penalty: The Appellate Tribunal ITAT Mumbai dealt with the challenge against the order confirming a penalty imposed under section 271(1)(C) of the Income Tax Act. The assessee contested the penalty amounting to Rs. 4,40,940 based on the circumstances of the case and legal grounds. Issue 2: Allegations of Concealment: The case involved an assessment completed under section 143(3) of the Act, where the AO determined the total income of the assessee higher than the returned income due to the treatment of income from property lease. The AO alleged concealment of income under section 271(1)(C), initiating penalty proceedings. The First Appellate Authority initially allowed the appeal, but the Tribunal reversed the decision, leading to the imposition of the penalty. Issue 3: Interpretation of Income: During the appeal proceedings, the assessee argued that there was no concealment of income, highlighting that the rental income was fully disclosed in the Profit & Loss account. The FAA found discrepancies in the disclosure of income, leading to the confirmation of the penalty by the AO. Issue 4: Applicability of Legal Precedents: The Authorized Representative argued that in subsequent years, the income from rented premises was accepted as business income by the AO, citing legal judgments to support the claim. The Tribunal considered the debatable nature of the issue, the difference of opinion between the AO and the assessee, and the reporting of income truthfully in the returns. Relying on legal precedents, the Tribunal reversed the FAA's decision and ruled in favor of the assessee, allowing the appeal. In conclusion, the Tribunal found that the issue of treating rental income as business income was debatable, and the assessee's reporting of income truthfully did not constitute inaccurate particulars. Therefore, the order confirmed the reversal of the FAA's decision and allowed the appeal filed by the assessee.
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