In a recent decision, the Mumbai bench of the ITAT observed that change in the heads of income reported by the assessee would not automatically result in attracting penalty under section 271(1)(c) of the Income Tax Act.
In the instant case, the assessee M/s Jai Hind Oil Mills Co. is engaged in the business of warehousing. Initially, the assessee returned the income from the above business by showing it as “income from house property”. Subsequently, the assessee filed a revised return and conceding the income under the head “business income”. However, the AO rejected the return by finding that the same is time barred and the assessee had offered income from warehousing under ‘house property income’ to avail deduction u/s.24(a). Accordingly, penalty proceedings u/s 271(1)(c) were initiated against the assessee.
The first appellate authority deleted the order of penalty by relying upon the decision of the Bombay High Court in the case of Bennett Coleman & Co. Ltd.
The Single Member of the ITAT confirmed the appellate order and observed that “penalty has been levied with respect to the additions made by changing head of income so offered by the assessee. The CIT(A) has recorded a categorical finding to the effect that there was a full disclosure by the assessee on all the material facts and after applying the decision of jurisdictional High Court in case of Bennett Coleman & Co. Ltd., 259 CTR 383 deleted penalty so imposed.”
Read the full text of the order below.
