BADRIKESHWAR CO OP HSG SOC. LTD,MUMBAI vs. ITO WD 14(1)(3), MUMBAI

Rival contentions have been heard and record perused. The assessee is a housing cooperative society. The assessee has shown the receipt from mobile company, in income and expenditure account and surplus of this account has not been considered/offered as income on the principal of mutuality. The AO and also CIT(A) has treated the receipts from allowing the terrace to be used or installing telecommunications network as business income. The assessee’s contention is regarding treating the receipt as income from property and allowing the allowance 2 was declined by the lower authorities. For the change in head of income, the AO levied penalty u/s.271(1)(c) of the Act, which was confirmed by the CIT(A).

Ld. AR placed on record order of the coordinate bench of the Tribunal, wherein under similar circumstances, the penalty so levied for change of head of income was deleted by the Tribunal after observing that assessee has furnished its full particulars of income. The precise observation of the Tribunal in case of Jolly Highrise Co-op HSG Society Ltd., ITA No.6521/Mum/2009, dated 30-07-2010, was as under :- “5. In our opinion, nothing has been withheld by the assessee in respect of the particulars. At the first instant, the assessee tried to make out a claim that the entire rental income is exempt on the concept of mutuality. Thereafter, he made out a claim that the entire income is to be assessed as income from house property. But both the claims of the assessee have been negated. The A.O brought to tax the entire rental income/license fee under the head 'income from other sources'. As per the facts before us only controversy was in respect of the head of income under which the income is to be assessed. We do not find that any conscious act on the part of the assessee for concealing the particulars of income. In our opinion, there is no justification to support the penalty order passed by the A.O u/s 271(1)(c) of the Act levying penalty upon the assessee. Accordingly, the penalty order is cancelled and the penalty is deleted.

In the result, the appeal filed by the assessee is allowed.”

As the facts and circumstances of the instant case are similar to the facts considered by the Tribunal in the above case, respectfully following the order of the Tribunal, we direct the AO to delete the penalty so imposed.

In the result, appeal of assessee is allowed.