B C HOUSE & GARDEN CONDOMINIUM ,MUMBAI V. ITO, WARD, 17(2)(1), MUMBAI

ITA 6271/MUM/2024

AI Insights

The case involves appeals by B C House & Garden Condominium against the penalties levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Years 2013-14 and 2015-16. The assessee, initially filing as an 'individual', was reclassified as an 'Association of Persons' (AOP) by the Central Processing Centre (CPC), Bengaluru, which led to a change in the tax rate and an increased tax liability, although the total income declared remained unchanged. The Tribunal examined whether the penalty for furnishing inaccurate particulars of income was justified, given that the income itself was not disputed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471394 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA H. PANDE
• Assessee Lawyers: S.V. JOSHI
• Keywords: Set aside; Maximum Marginal Rate
• Section: 271(1)(c)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B”, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA Nos. 6271 & 6272/Mum/2024 Assessment Years: 2013-14 & 2015-16 B C House & Garden Condominium, 17, Corinthan, Off Arther Bunder Road, Colaba, Mumbai PAN : AAAAB6032A vs. Income TaxOfficer-17(2)(1), Kautilya Bhavan, Bandra Kurla Complex, Bandra (East), Mumbai (Appellant) (Respondent) For Assessee : Shri S.V. Joshi For Revenue : Ms. Monika H. Pande Date of Hearing : 27-01-2025 Date of Pronouncement : 29-01-2025 O R D E R PER B.R. BASKARAN, A.M : Both the appeals filed by the assessee relate to the Assessment Years (AYs.) 2013-14 & 2015-16 and they are directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’], wherein he has confirmed the penalty levied by the AO u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’) in these two years. 2. The assessee is an Association of Persons (AOP). However, it filed its return of income of both the years under consideration declaring its status as “Individual’. The CPC, Bengaluru, while processing the return of income of both the years under consideration, treated the assessee as 2 ITA Nos. 6271 & 6272/Mum/2024 AOP and accordingly levied tax at maximum marginal rate. Accordingly, a tax demand was raised in both the years in view of change in the rate of tax. It is pertinent to note that the CPC did not modify the total income returned by the assessee. The assessee also accepted the intimation so issued by the CPC in both the years. 3. Since there was increase in the tax liability, the AO initiated penalty proceedings u/s.271(1)(c) of the Actin both the years and levied penalty equivalent to the enhanced tax liability. The same was confirmed by the Ld.CIT(A) in both the years and hence, the assessee has filed these appeals before us. 4. The contention of the Ld.AR is that the total income declared by the assessee did not undergo any change and increase tax liability has arisen on account of change in the status of the assessee from ‘individual’ to ‘AOP’. Accordingly, the Ld.AR submitted that there is no concealment of particulars of income or furnishing of inaccurate particulars of income within the meaning of sec.271(1)(c) of the Act. Accordingly, he submitted that the AO was not right in levying penalty u/s.271(1)(c) of the Act. 5. The Ld.DR, on the contrary, submitted that the assessee has furnished inaccurate particulars by wrongly declaring itself as an ‘individual’. 6. Having regard to the rival submissions, we are of the view that there is merit in the submissions made by the assessee. The question of levying of penalty u/s.271(1)(c) of the Act shall arise only if there is either concealment of particulars of income or furnishing of inaccurate particulars of income. In the instant case, the income declared by the assessee has been accepted by the CPC. Due to change in the tax rates applicable to individual and AOP, additional tax liability has arisen, for 3 ITA Nos. 6271 & 6272/Mum/2024 which the provisions of sec.271(1)(c), in our view, cannot be invoked. Accordingly, we set aside the order passed by the Ld.CIT(A) in both the years under consideration and direct the AO to delete the penalty levied u/s.271(1)(c) of the Act in both the years. 7. In the result, both the appeals filed by the assessee are allowed. Order pronounced in the open court on 29-01-2025 Sd/- Sd/- (SAKTIJIT DEY) (B.R. BASKARAN) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Date: 29-01-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "