9911796707
TMI Blog2011 (7) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... sq. ft. to M/s Parle International 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 all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. noted that the assessee has made claim of the expenditure which has not been substantiated in the assessment proceedings. Therefore, the same amounts to furnishing of inaccurate particulars of income as per provisions of section 271(1)(c) read with explanations thereto. Therefore, it is proved that the assessee has furnished inaccurate particulars of income. Relying on the decision of Hon ble Supreme Court in the case of Union of India Ors vs. Dharmendra Textile Processors Ors. reported 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling, leasing and letting out of Business Centre, office premises, apartments etc. are one of the main objectives of the assessee company. Referring to a few decisions filed in the paper book, the ld. Counsel for the assessee submitted that cases of business centres/malls have been decided in favour of various assessees as business income by the ITAT and various High Courts as against house property income treated by the A.O. It is the settled proposition of law that in case of debatable issues, penalty u/s 271(1)(c) cannot be levied. He submitted 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 simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As per the MOU, the assessee has to provide various facilities as set out in the agreement such as electricity, telephone, secretarial service, providing chairs, tables, cabinet, computer and Xerox machine etc. The genuineness of the expenses are not disputed by the Revenue. Therefore, merely because the claim of the assessee has been disallowed the same, in our opinion, do not call for levy of penalty u/s 271(1)(c) especially when full particulars were given. Further, no penalty proceedings u/s 271(1)(c) of the Act were initiated under identical facts and circumstances in the proceeding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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