TMI Blog2021 (10) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had sought to suppress its true income by offering the rental receipts under the head house property as against business income , we are of a strong conviction that the said unsubstantiated allegation cannot justify levy of penalty u/s 271(1)(c) . Merely for the reason that a claim raised by an assessee, which is thereafter found by the revenue to be not sustainable in law, by itself cannot justify levy of penalty u/s 271(1)(c) of the Act. Our aforesaid view is supported by the judgment of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] . - Decided in favour of assessee. - ITA No. 1771/MUM/2020 - - - Dated:- 27-9-2021 - SHRI PRAMOD KUMAR (VICE PRESIDENT) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by : Ms. Shruti Agarwal, A.R Revenue by : Shri Tharian Oommen, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-2, Mumbai, dated 03.02.2020, which in turn arises from the order passed by the A.O u/s 271(1)(c) of the Income Tax Act, 1961 (for short Act ), dated 29.06.2017 for A.Y 2014-15. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from house property . Elaborating on the reason leading to the subsequent offering of the rental receipts for tax under the head business income , it was submitted by the assessee that they were suggested by their tax consultant not to deviate from the view that was taken by the department qua assessing of the rental receipts in the immediate preceding years and on the same line offer the same for tax under the head business income . However, the bonafides demonstrated by the assessee which had led to filing of the revised return of income did not find favour with the A.O. Observing, that filing of the revised return of income by the assessee was backed by a malafide intent the A.O declined to take cognizance of the same, for reasons, which are culled out as under: Assessee has declared rental income as Profits Gains from Business or Profession during AY 2013-14 which has been accepted by department. Return of AY 2013-14 was filed on 30-09-2013 by assessee. Assesses filed original return of income for AY 2014-15 on 26-11-2014 treating income from rental as income from house property To reduce its taxable income. Return of AY 2014-15 was selected for scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office. This office took into consideration returned income as per original return of income and total income was computed as ₹ 1,74,71,065/-Thus, there is difference between returned income and assessed income of assessee. Assessee has been offering rental income as income from business/profession since the time it started earning rental income. Only during the year under consideration, it changed its stance while filing original return of income. By doing so, assesse took a chance to evade tax. Once case was selected for scrutiny assessee revised its return of income. If no penalty is levied for malafide action, assessee can venture to furnish wrong information with a hope of positive outcome. Reliance is placed on SC judgement in case of Dharmendra Textiles Processors wherein it was held that penalty u/s 271(1) (c) is a civil liability and that 'Wilful concealment and mens rea are not essential ingredients for attracting the civil liability. Reliance is placed on SC judgment in case of MAK Data P. Ltd vs. CIT wherein it was held that explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was liable to be dismissed. 8. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the records, the assessee had in its original return of income duly disclosed the rental receipts in question under the head house property . However, on being advised by their tax consultant that as the said rental receipts were in the immediate past offered by the assessee and assessed by the department under the head business income , therefore, a deviation from the same was not suggested, that the assessee had revised its return and offered the aforesaid rental receipts under the head business income . On a perusal of the records, we find that the bonafides of the assessee in initially offering the rental receipts for tax under the head house property in its original return of income is fortified by the fact that as per the order of the Tribunal in its case for A.Y 2003-04., A.Y 2004-05 A.Y 2007-08 the rental receipts were assessed under the head house property . Although, the assessee had filed the revised return of income within the prescribed time limit conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nviction that as the assessee had validly filed a revised return of income, therefore, there was no justification on the part of the A.O to have brushed aside the same and saddled the assessee with the rigors of penalty u/s 271(1)(c) of the Act. Be that as it may, in our considered view a mere dislodging of the assessee s claim and re-characterization of the head of income under which the rental receipts were to be brought to tax can by no means justify levy of penalty u/s 271(1)(c) of the Act. As observed by us hereinabove, it is a matter of fact to which we cannot be oblivion i.e the assessee had duly disclosed the rental receipts in question in its original return of income. In fact, it is not even the case of the revenue that there is any suppression of the rental receipts by the assessee in its original return of income. Apropos, the claim of the revenue that the asessee had sought to suppress its true income by offering the rental receipts under the head house property as against business income , we are of a strong conviction that the said unsubstantiated allegation cannot justify levy of penalty u/s 271(1)(c) of the Act. At this stage, we may herein observe that merel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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