The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has observed that mere changes of heads of income would not attract any penalty under Section 271(1) (a) of the Income Tax Act.
The Assessee is a resident HUF earning share trading income and also earns income from other sources.
In the opinion of the AO the Assessee showed his long term capital loss and short term capital loss under the head capital gain instead of showing under business income during the assessment year. The AO imposed penalty against this activity of the assessee. According to him, the assessee tried to avoid his tax liability by changing the heads of income.
But the bench clearly mentioned that there was no concealment of income and mere change of head of income do not justify imposition of penalty.in fact the assesse had changed the heads of income , but there is no change in the loss figures reflected by the assessee. And also added that furnishing of inaccurate particulars /concealment of particulars of income to attract the provisions u/s 271(1)(c) still remain unfulfilled. In this view it is clear that the assessee doesn’t have any intention to avoid his tax liability. Hence there is no penalty levied against the assessee.
Finally the Bombay bench of ITAT dismissed the appeal of the Revenue by declaring that mere changes of heads of income would not attract any penalty.
Read the full text of the Order below.
