GROWELL CONSULTANTS PRIVATE LIMITED,MUMBAI vs. ITO 3(1)(3), MUMBAI

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ITA 3891/MUM/2026Status: DisposedITAT Mumbai24 August 2026AY 2012-135 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a mere difference in the head of income under which a disclosed receipt is assessed does not amount to furnishing inaccurate particulars. The receipt was disclosed, and the dispute was about legal characterization, not concealment.

What were the facts?

The assessee offered licence/rental income under 'Profits and Gains of Business or Profession'. The Assessing Officer reassessed the income and assessed it under 'Income from House Property', leading to an addition. Subsequently, penalty proceedings under Section 271(1)(c) were initiated.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the dispute is only about the head of income under which a disclosed receipt should be assessed.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI PAWAN SINGH

For Appellant: Shri Rajgopal Parthasarathi– SR DR
For Respondent: Shri Rajgopal Parthasarathi– SR DR
Pronounced: 24/08/2026

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against the order dated 26.02.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short, “the learned CIT(A)”], for Assessment Year 2012-13, whereby penalty of Rs.1,90,344/- levied under section 271(1)(c) of the Income-tax Act, 1961 [in short, “the Act”] has been sustained. The sole ground raised by the assessee is reproduced as under:

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1.

On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in the Ld. CIT(A) erred in confirming the penalty of Rs.1,90,344 under Section 271(1)(c) of the Act for confirming the penalty of Rs.1,90,344 under Section 271(1)(c) of the Act for confirming the penalty of Rs.1,90,344 under Section 271(1)(c) of the Act for furnishing inaccurate particular of income. furnishing inaccurate particular of income. 2. The appellant craves leave to add further grounds or to amend or alter the The appellant craves leave to add further grounds or to amend or alter the The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or existing grounds of appeal on or before the date of hearing. 2. Briefly stated, the assessee filed its return of income on Briefly stated, the assessee filed its return of income on Briefly stated, the assessee filed its return of income on 30.09.2012 declaring a loss of 30.09.2012 declaring a loss of Rs.9,51,374/-. The assessee is . The assessee is engaged in financial activities, dealing in securities and rendering engaged in financial activities, dealing in securities and rendering engaged in financial activities, dealing in securities and rendering professional and advisory services. Pursuant to reopening of the professional and advisory services. Pursuant to reopening of the professional and advisory services. Pursuant to reopening of the assessment, the reassessment was completed under section 143(3) assessment, the reassessment was completed under section 143(3) assessment, the reassessment was completed under section 143(3) read with section 147 of the Act on 02.1 read with section 147 of the Act on 02.12.2019, wherein the 2.2019, wherein the Assessing Officer assessed the total income at Assessing Officer assessed the total income at Rs.60,090/ Rs.60,090/-, after making making an an addition addition of of Rs.6,16,000/- by by assessing assessing the the licence/rental income under the head “Income from House licence/rental income under the head “Income from House licence/rental income under the head “Income from House Property” instead of “Profits and Gains of Business or Profession”, Property” instead of “Profits and Gains of Business or Profes Property” instead of “Profits and Gains of Business or Profes under which head it had been offered by the assessee. Penalty under which head it had been offered by the assessee. Penalty under which head it had been offered by the assessee. Penalty proceedings under section 271(1)(c) were consequently initiated. proceedings under section 271(1)(c) were consequently initiated. proceedings under section 271(1)(c) were consequently initiated. Thereafter, the Assessing Officer issued sho Thereafter, the Assessing Officer issued show-cause notice to the cause notice to the assessee and levied penalty. The learned CIT(A) sustained the assessee and levied penalty. The learned CIT(A) sustaine assessee and levied penalty. The learned CIT(A) sustaine penalty principally on the ground that the impugned income had penalty principally on the ground that the impugned income had penalty principally on the ground that the impugned income had not been offered under the head ultimately adopted by the not been offered under the head ultimately adopted by the not been offered under the head ultimately adopted by the Assessing Officer and that the addition had been detected during Assessing Officer and that the addition had been detected during Assessing Officer and that the addition had been detected during reassessment proceedings. T reassessment proceedings. The learned CIT(A) upheld the penalty he learned CIT(A) upheld the penalty order, observing as under: order, observing as under: “6.1.2 In this case the addition was not disclosed by assessee suo 6.1.2 In this case the addition was not disclosed by assessee suo-moto but 6.1.2 In this case the addition was not disclosed by assessee suo detected during proceedings u/s 143(3) read with section 147 of the I.T. Act, detected during proceedings u/s 143(3) read with section 147 of the I.T. Act, detected during proceedings u/s 143(3) read with section 147 of the I.T. Act, 1961. It is clear that these particulars were not furnished income in the return as 1961. It is clear that these particulars were not furnished income in the return as 1961. It is clear that these particulars were not furnished income in the return as

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per the provisions of the Act during filing of return, but were detected by the per the provisions of the Act during filing of return, but were detected by the per the provisions of the Act during filing of return, but were detected by the Assessing officer after action u/s 143(3) read with section 147 of the I.T. Act, officer after action u/s 143(3) read with section 147 of the I.T. Act, officer after action u/s 143(3) read with section 147 of the I.T. Act, 1961 by the department during the assessment proceedings. These grounds of 1961 by the department during the assessment proceedings. These grounds of 1961 by the department during the assessment proceedings. These grounds of appeal raised by the assessee are unsubstantiated and vague. The order has appeal raised by the assessee are unsubstantiated and vague. The order has appeal raised by the assessee are unsubstantiated and vague. The order has been passed as per procedure presc been passed as per procedure prescribed in the Act and the order passed by ribed in the Act and the order passed by Assessing Officer is justified and ample opportunities were provided during Assessing Officer is justified and ample opportunities were provided during Assessing Officer is justified and ample opportunities were provided during assessment and penalty proceedings to substantiate its claim but appellant failed assessment and penalty proceedings to substantiate its claim but appellant failed assessment and penalty proceedings to substantiate its claim but appellant failed to do so, hence the ground raised is hereby dismissed bei to do so, hence the ground raised is hereby dismissed being devoid on merit. The ng devoid on merit. The appellant has not furnished any evidences to substantiate his claim. Further, it is appellant has not furnished any evidences to substantiate his claim. Further, it is appellant has not furnished any evidences to substantiate his claim. Further, it is noted that the appellant's quantum appeal has been dismissed vide order noted that the appellant's quantum appeal has been dismissed vide order noted that the appellant's quantum appeal has been dismissed vide order ITBA/NFAC/S/250/2023 ITBA/NFAC/S/250/2023-24/1062457845(1) dated 12/03/2024. The case laws 24/1062457845(1) dated 12/03/2024. The case laws quoted by the assesse has been parused and found not applicable as the facts by the assesse has been parused and found not applicable as the facts by the assesse has been parused and found not applicable as the facts are distinguishable. are distinguishable. 6.1.3 In view of above, I am of the considered opinion that the Assessing Officer 6.1.3 In view of above, I am of the considered opinion that the Assessing Officer 6.1.3 In view of above, I am of the considered opinion that the Assessing Officer has properly reached the conclusion that the appellant has concealed the has properly reached the conclusion that the appellant has concealed the has properly reached the conclusion that the appellant has concealed the particulars of his income and has rightly imposed penalty u/s 271(1)(c) of the IT ars of his income and has rightly imposed penalty u/s 271(1)(c) of the IT ars of his income and has rightly imposed penalty u/s 271(1)(c) of the IT Act of Rs. 1,90,344/ Act of Rs. 1,90,344/-.” 3. Before us, the learned counsel submitted that there was no Before us, the learned counsel submitted that there was no Before us, the learned counsel submitted that there was no concealment of income or furnishing of inaccurate particulars. The concealment of income or furnishing of inaccurate particulars. The concealment of income or furnishing of inaccurate particulars. The entire licence fee was duly r entire licence fee was duly recorded in the books, reflected in the ecorded in the books, reflected in the audited financial statements and disclosed in the return. According audited financial statements and disclosed in the return. According audited financial statements and disclosed in the return. According to him, the only dispute was the appropriate to him, the only dispute was the appropriate ‘head of income head of income’ under which the admittedly disclosed receipt was assessable. It was under which the admittedly disclosed receipt was assessable. It was under which the admittedly disclosed receipt was assessable. It was submitted that the assessee had bona fide treated the receipt as submitted that the assessee had bona fide treated the receipt as submitted that the assessee had bona fide treated the receipt as business income on the basis of commercial exploitation of its business income on the basis of commercial exploitation of its business income on the basis of commercial exploitation of its leasehold rights. Reliance was placed, inter alia, on the decision of leasehold rights. Reliance was placed, inter alia, on the d leasehold rights. Reliance was placed, inter alia, on the d the Hon'ble Supreme Court in the Hon'ble Supreme Court in CIT v. Reliance Petroproducts Pvt. CIT v. Reliance Petroproducts Pvt. Ltd., (2010) 322 ITR 158 (SC) Ltd., (2010) 322 ITR 158 (SC).

4.

We have considered the rival submissions and perused the We have considered the rival submissions and perused the We have considered the rival submissions and perused the material available on record. The assessment record does not material available on record. The assessment record does not material available on record. The assessment record does not suggest that the assessee had suggest that the assessee had suppressed the receipt of suppressed the receipt of

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Rs.6,16,000/- or furnished any factually false particulars thereof. or furnished any factually false particulars thereof. or furnished any factually false particulars thereof. The receipt was disclosed; the dispute arose only because the The receipt was disclosed; the dispute arose only because the The receipt was disclosed; the dispute arose only because the Assessing Officer considered it assessable under a different head of Assessing Officer considered it assessable under a different head of Assessing Officer considered it assessable under a different head of income. Thus, the controversy income. Thus, the controversy is one of legal characterisation of an legal characterisation of an admittedly disclosed receipt admittedly disclosed receipt, and not of concealment of income or and not of concealment of income or falsification of particulars. falsification of particulars.

CIT CIT v. v. Reliance Reliance 5. The The Hon'ble Hon'ble Supreme Supreme Court Court in in Petroproducts Pvt. Ltd., ( Petroproducts Pvt. Ltd., (Supra) has held that making an has held that making an unsustainable claim in law, by itself, does not amount to furnishing aim in law, by itself, does not amount to furnishing aim in law, by itself, does not amount to furnishing inaccurate particulars where the particulars furnished by the inaccurate particulars where the particulars furnished by the inaccurate particulars where the particulars furnished by the assessee are neither false nor inaccurate. The mere fact that a claim assessee are neither false nor inaccurate. The mere fact that a claim assessee are neither false nor inaccurate. The mere fact that a claim made by the assessee is not accepted in assessment cannot, made by the assessee is not accepted in assessment cannot, made by the assessee is not accepted in assessment cannot, without more, attract penalty under section 271(1)(c). , attract penalty under section 271(1)(c). , attract penalty under section 271(1)(c).

6.

Applying the aforesaid principle, the mere change in the head Applying the aforesaid principle, the mere change in the head Applying the aforesaid principle, the mere change in the head under which the disclosed licence fee is assessed cannot, in the under which the disclosed licence fee is assessed cannot, in the under which the disclosed licence fee is assessed cannot, in the facts of the present case, be equated with furnishing inaccurate facts of the present case, be equated with furnishing inaccurate facts of the present case, be equated with furnishing inaccurate particulars of income. The Revenue has not brought on record any come. The Revenue has not brought on record any come. The Revenue has not brought on record any material to establish that the particulars furnished by the assessee material to establish that the particulars furnished by the assessee material to establish that the particulars furnished by the assessee regarding the receipt were false, inaccurate or suppressed. The fact regarding the receipt were false, inaccurate or suppressed. The fact regarding the receipt were false, inaccurate or suppressed. The fact that the assessee's legal claim regarding its taxability under the that the assessee's legal claim regarding its taxability under the that the assessee's legal claim regarding its taxability under the head “Profits and Gains of Business or Profession” was not accepted d “Profits and Gains of Business or Profession” was not accepted d “Profits and Gains of Business or Profession” was not accepted does not, by itself, satisfy the statutory requirement for levy of does not, by itself, satisfy the statutory requirement for levy of does not, by itself, satisfy the statutory requirement for levy of penalty under section 271(1)(c). penalty under section 271(1)(c).

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7.

We, therefore, find that the penalty imposed under section We, therefore, find that the penalty imposed under section We, therefore, find that the penalty imposed under section 271(1)(c) is not sustainable. 271(1)(c) is not sustainable. The order of the learned CIT(A) is The order of the learned CIT(A) is accordingly set aside set aside and the penalty of Rs.1,90,344/ Rs.1,90,344/- is cancelled. The sole effective ground raised by the assessee is . The sole effective ground raised by the assessee is . The sole effective ground raised by the assessee is accordingly allowed.

8.

In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on ounced in the open Court on 24/ /08/2026.

Sd/- Sd/- (PAWAN SINGH PAWAN SINGH) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/08/2026 /2026 Kunal Kr. P.S.

Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai

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