2015 (2) TMI 1308 - AT - Income Tax

Penalty u/s 271(1)(c) - change of head of income during the reassessment proceedings - rental income from warehousing premises was treated as business income OR Income from house properties - Reopening of assessment - HELD THAT - In the reopened assessment proceedings, the assessee fairly conceded to the change of head of income as proposed by the AO. There was neither furnishing of inaccurate particulars of income nor of concealment of income. We agree with the contention of the assessee that it was not a case of furnishing of inaccurate particulars of income or concealment of income. The assessee even had fairly agreed to the change of head of income during the reassessment proceedings. Every case where the claim of the assessee is not accepted cannot be said to be a case of concealment of income. The addition in this case has been made because of change of head of income and not because of furnishing of inaccurate particulars of income or concealment of income. It is not a case where the assessee had deliberately shown the income under a wrong head but under a bonafide belief that the income of the assessee was assessable as business income. We do not think it to be a case for levy of penalty under section 271(1)(c). The penalty levied by lower authorities is therefore ordered to be deleted. - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under section 271(1)(c) of the Income Tax Act for assessment year 2003-04.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the penalty imposed under section 271(1)(c) of the Income Tax Act. The assessee initially declared rental income as business income but later, during reassessment, the Assessing Officer charged it under "Income from house properties." The penalty was imposed by the AO, which was confirmed by the CIT(A), leading to the appeal before the Tribunal.

During the proceedings, the assessee contended that the change in the head of income was accepted in good faith based on legal precedent and was not an attempt to conceal or provide inaccurate particulars of income. The Tribunal agreed with the assessee, emphasizing that not every disagreement with the assessee's claim constitutes concealment. The addition in this case was due to a change in the head of income and not concealment or inaccurate reporting. The Tribunal noted that the assessee's actions were based on a genuine belief that the income was assessable as business income, not an intentional misrepresentation.

Ultimately, the Tribunal found that the penalty under section 271(1)(c) was not justified in this case and ordered its deletion. The appeal of the assessee was allowed, and the penalty levied by the lower authorities was set aside. The decision was pronounced in open court on 09.02.2015 by the Tribunal.