EQUIPOISE INVESTMENTS P. LTD,MUMBAI vs. ITO 2(1(3), MUMBAI

This appeal u/s 253 of the Income-tax Act is directed by the assessee against the order of CIT(A)-4, Mumbai dated 14.08.2013, wherein penalty levied by Assessing Officer (AO) u/s 271(1)(c) of the Act was confirmed.

Brief facts of the case are that the assessee is a Private Limited Company carrying on the business of letting out of immovable properties. Assessment u/s 143(3) of the Act was completed on 16.11.2005 determining the total income of Rs. 12,67,810/-. In the return of income, the assessee claimed rental income as Income from Business and Profession. The AO while framing the assessment treated the rental income as “Income from House Property” instead of “Income from Business and Profession” and initiated penalty. The assessee filed appeal against the quantum assessment before the ld. CIT(A), wherein action of the AO was confirmed. The assessee further filed appeal before the ITAT and the matter was restored to the file of AO. The AO again treated the rental income as Income from House Property in the order passed u/s 143(3) r.w.s. 254 of the Act. Thereafter, the AO initiated penalty proceedings and issued show-cause notice u/s 271(1)(c) r.w.s. 271(4) of the Act. The assessee filed its reply contended therein that they have let out the property along with Fixed Fixtures, Air conditioners, Furniture & Plant & Machinery for a lump-sum compensation. And it was further contended that said compensation cannot be treated as “Income from House Property”. The reply of assessee was not accepted by AO holding that assessee failed to furnish the copy of lease agreement in respect of leased out property. Considering the income received by way of rent from letting out of property amounting to Rs. 18,00,000/- under the head “Income from House Property” and allowing the statutory deduction u/s 24, the AO levied the minimum penalty of Rs. 4,78,703/- being 100% of the tax sought to be evaded. The assessee further filed appeal before the CIT(A) but the same was dismissed vide order impugned in the present appeal. Hence, the present appeal is filed before us.

We have heard the Ld. Authorized Representative (AR) of the assessee and Ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ld. AR of the assessee argued that similar disallowance was made in the AY 2008-09 and AO levied the penalty. The assessee filed appeal before the CIT(A) wherein the penalty was deleted vide order dated 13.07.2015 and the Revenue has not filed any further appeal. The ld. AR of the assessee further argued that mere disallowance of income under one head and treating the same in other head of income will not tantamount to concealment of income. It was further argued that mere disallowance would not lead to draw a conclusion for concealment of income or for furnishing inaccurate particular. On the other hand, ld. DR for