TMI Blog2023 (10) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... r the head Income from house property will not be available when it is assessed under the Income from business. Thus, it is not a case that the assessee has suppressed or under reported any income. The assessee has not under reported any income. The addition has arisen on account of change in head of income. We notice that the assessee has offered an explanation as to why it reported the rental income under the head Income from House property and the said explanation is not found to be false. Accordingly, we are of the view that the case of the assessee is covered by clause (a) of sub. sec. (6) of sec. 270A of the Act. We notice that as held in the case of S Saroja [ 2023 (5) TMI 1262 - ITAT CHENNAI] that bonafide mistake committed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer noticed that the assessee had declared the rental income from very same property under the head income from business in an earlier year, i.e., in A.Y. 2013-14. However, in the instant year, the assessee has declared rental income under the head income from house property and also claimed various other expenses against its business income. He further noticed that there was no business income during the year under consideration. 4. The assessee submitted that it has reduced its business substantially and all the expenses claimed in the profit and loss accounts are related to the business only. It was submitted that the rental income was rightly offered under the head income from house property during the year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of inaccurate particulars of income would have gone undetected, if the return of income of the assessee was not taken up for scrutiny. He also took the view that the claim of statutory deduction as well as expenses in the Profit and Loss account under two different heads of income would tantamount of under reporting of income under section 270A of the Act. Accordingly, he levied penalty of Rs. 1,83,550/- under section 270A of the Act. The learned CIT(A) also confirmed the same. 6. Learned counsel appearing for the assessee submitted that the assessee did not under report any income, i.e., it has disclosed full details of income both in the profit and loss account and in the return of income. He submitted that it was true that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 270A of the Act, the Ld A.R submitted that the said provision uses the expression that the Assessing Officer may direct , meaning thereby, a discretion is given to the Assessing Officer not to initiate penalty proceedings under section 270A of the Act. He submitted that the sub. Sec. (2) of sec. 270A lists out the instances which are considered to be under reporting of income and clause (g) of it covers the case, when loss is converted into income. However, sub-section (6) of section 270A lists out exceptions to sub. Sec (2), i.e. the instances which will not be considered as under reporting of income. He submitted that clause (a) of sub. Sec. (6) specifically states that the amount of income in respect of which the assessee offers an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under section 270A of the Act. 9. The Learned DR, on the contrary, submitted that the Assessing Officer has given proper reasoning for levying penalty under section 270A of the Act. She submitted that the assessee has changed the head of income for offering rental income, even though the very same rental income was offered as business income in the earlier years. She submitted that the assessee has claimed expenses in the Profit and loss account and the expenses relating to rental income have not been disallowed. It has offered rental income under the head House property in order to avail statutory deduction @ 30% of rental income, which would not be available if it was offered as business income. She contended that it would amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogy prescribed in the Act. In our view, this kind of addition will not give rise to under reporting of income. Accordingly, we are of the view that the AO should have exercised his discretion not to initiate penalty proceedings u/s 270A of the Act in the facts and circumstances of the case. 11. As submitted by Ld A.R that sub. Sec. (2) of sec. 270A lists out the instances which are considered to be under reporting of income and clause (g) of it covers the case, when loss is converted into income. However, subsection (6) of section 270A lists out exceptions to sub. Sec (2), i.e., the instances which will not be considered as cases of under reporting of income. Clause (a) of sub. Sec. (6) specifically states that the amount of income i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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