Penalty cannot be Imposed if there is a difference of Opinion over the Head of Income: ITAT Mumbai [Read Order]

no penalty

In a recent ruling, the ITAT, Mumbai bench, confirmed that penalty is not leviable where there is a difference of opinion between the assessee and the Revenue as to the head of income under which the income is assessable.

Coming to the facts of the case, the assessee-Company is engaged in the business of real estate. The building of the company was given on licence. The assessee, while filing return for the relevant assessment year, shown the consideration for the same was as business income on the ground that the assessee’s business was of real estate and expenses such as administrative and depreciation were claimed accordingly. The assessing officer initiated penalty proceedings against the assessee on ground that the rental income was deliberately shown as business income and thereby they have wronglyclaimed deduction in respect of various exepnses.

The Commissioner of Income Tax (Appeals) while allowing the first appeal preferred by the assessee,held that the penalty is not justifiable since it was a case of difference of opinion and the issue was debatable one.

Concurring with the findings of the CIT(A), the Tribunal held that “In our opinion the ld conclusion drawn by the FAA was correct as the assessee has shown full particulars of income in the return of income itself and mere fact the income shown under one head of income was assessed by the AO under the other head could not be taken as tantamount to filing inaccurate particulars. Therefore the order of FAA is correct and does not required to be disturbed or interfered with. Accordingly we uphold the same by dismissing the appeal of the revenue.”

Read the full text of the order below.

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