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TMI Blog2011 (7) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational Pvt. Ltd., M/s Parle Sales & Services Pvt. Ltd., M/s Parle Agro Pvt. Ltd. and M/s Alnas Plastics Pvt. Ltd. @ ₹ 90/- per sq. ft. per month and received total compensation of ₹ 1,31,80,800/-. The assessee treated the same as business income and claimed various expenses out of the same amounting to ₹ 53,18,142/-. It also claimed depreciation on the premises amounting to ₹ 18,38,952/-. Rejecting the various explanations given by the assessee and distinguishing the various decisions cited before him, the A.O. treated the compensation as "income from house property". After allowing deduction u/s 24 of the I.T. Act at ₹ 37,97,245/- and Municipal Tax amounting to ₹ 5,23,315/-, he determined the income from house property at ₹ 88,60,240/-. 3.1 Similarly, the A.O. noted that the assessee has declared prior period income at ₹ 11,45,378/- and prior period expenditure at ₹ 5,59,747/- and net prior period income amounting to ₹ 5,85,631/- has been credited to the Profit & Loss Account. According to the A.O. in case of mercantile system of accounting, expenses of the relevant year are only allowable in that year. Earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in 306 ITR 277, the A.O. levied penalty of ₹ 39,05,601/-. 3.6 In appeal, the ld. CIT(A) deleted the penalty so levied. While doing so, she noted that the facts relating to the claim of income from business centre as business income has been disclosed by the assessee. The income was assessed under a different head i.e. income from house property. Relying on a couple of decisions cited by the assessee, she held that no penalty is leviable when the head of income as claimed by the assessee is changed by the A.O. resulting in addition to the total income. Further, it was a clear case of difference of opinion between the assessee and the A.O. as to whether the income was assessable as rental income under the head 'income from house property' or as 'business income' and therefore it is not a case of concealment of income as the expenses incurred by the assessee were genuine expenses and the same were not questioned by the Assessing Officer. 3.6 So far as the issue relating to penalty on prior period expenses, the ld. CIT(A) noted that the details of prior period expenses were made available in the copy of audited accounts and tax audit report. Further it was claimed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the nature of business has been disclosed in the tax audit report. Referring to the copy of the assessment order, he submitted that no penalty was levied on similar disallowance made by the A.O. for A.Y. 2003-04, 2005-06 and 2006-07. In the instant case, although the A.O. has treated the business centre income as income from house property and the assessee has not pressed this ground before the Tribunal that by itself will not attract levy of penalty u/s 271(1)(c) of the I.T. Act. Referring to a couple of decisions, he submitted that when no penalty proceedings were initiated in the preceding year and subsequent years on similar issue, it becomes a case of difference of opinion and there is no concealment of income so as to attract levy of penalty u/s 271(1)(c) of the Act. 5.1 So far as the levy of penalty on prior period expenses is concerned, he submitted that there was complete disclosure of the same in the computation of income as well as tax audit report. Referring to a couple of decisions, he submitted that no penalty is leviable u/s 271(1)(c) when the claim has been made by way of note in the computation of income/tax audit report. He submitted that no advantage ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding assessment year i.e. A.Y. 2003-04 or in the subsequent assessment year i.e A.Y. 2005-06. Therefore, the penalty so levied by the A.O. in the impugned A.Y. at best can be termed as due to change of opinion. Further, the co-ordinate benches of the Tribunal in a number of cases have held that no penalty is leviable due to disallowance of expenditure made only on account of change of head of income and when there is no allegation about the genuineness of the expenditure. It is the settled proposition of law that penalty proceedings are different from assessment proceedings and the assessee can always advance fresh arguments while arguing penalty matters. Since the assessee has furnished full details of the various expenses claimed by it and since the issue is a debatable one and since no penalty has been levied on account of similar disallowances in the preceding or subsequent assessment years, therefore, we find no infirmity in the order of the ld. CIT(A) deleting the penalty levied on account of disallowance of expenses of ₹ 53,18,142/- and disallowance of depreciation of ₹ 18,38,952/- by treating the business centre income as income from house property. 6.1 So fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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