No concealment penalty can be levied for only change of head of income – ITAT

No concealment penalty can be levied for only change of head of income – ITAT deleted penalty for change head from capital gains to business income

ABCAUS Case Law Citation:
ABCAUS 2604 (2018) (11) ITAT

Important Case Laws Cited/relied upon:
M/s Crown Tradelink Pvt. Ltd. Vs. The ACIT (OSD)
Hiralal Doshi, Mumbai Vs. Department of Income Tax
CIT vs. BENNETT Coleman & Co. Ltd. High Court of Bombay (2013) 259 CTR 0383 (Bom)
CIT vs. M/s Link Locks (P) Ltd. ITA No.6 of 2011 (All)

The assessee’s appeal was against confirmation of penalty levied on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (the Act).

The assessee was sole proprietor engaged in the business of manufacturing and export of shoes. During the year, the assessee showed income under the head capital gains from the sale of flats.

However, the Assessing Officer (AO) held that the construction activity carried out by the assessee was with the motive of earning profit, and hence such activity fell under the head of business.

The CIT(A) has confirmed the addition and no further appeal was filed by the assessee.

Since the assessee was engaged in commercial activities of constructing flats and selling them, but at the same time showed such transactions as capital gain, the AO held that the assessee had filed inaccurate particulars of income and that accordingly, the assessee was liable to penalty of u/s 271(1)(c) of the Act.

The penalty was also confirmed by the CIT(A).

The Tribunal observed that in a plethora of decisions it has been held that where there is only a change of head of income, no concealment penalty can be levied. Also no decision to the contrary the same was advanced by the Revenue.

The Tribunal accordingly, deleted both the penalties

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