ITAT cancels penalty on housing cooperative society for assessment year 2005-06

The ITAT Mumbai directed the AO to delete the penalty imposed on the housing cooperative society, as the Tribunal found no conscious act of concealing income particulars. The penalty under section 271(1)(c) of the I.T. Act for assessment year 2005-06 was set aside, following a previous tribunal decision with similar circumstances. The appeal of the assessee was allowed, and the penalty was canceled on December 16, 2015.

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Issues:
Appeal against imposition of penalty u/s.271(1)(c) of the I.T. Act for assessment year 2005-06 on the grounds of treating receipts as business income instead of income from property.

Analysis:
The appeal was filed by the assessee challenging the order of CIT(A)-Mumbai regarding the imposition of penalty u/s.271(1)(c) of the I.T. Act for the assessment year 2005-06. The assessee, a housing cooperative society, had shown receipts from a mobile company in the income and expenditure account. The surplus from this account was not considered as income on the principle of mutuality. The AO and CIT(A) treated the receipts from allowing the terrace to be used or installing telecommunications network as business income. The assessee contended that the receipt should be treated as income from property, but this argument was rejected by the lower authorities, leading to the imposition of the penalty by the AO, which was upheld by the CIT(A).

The assessee's representative referred to a previous order of the Tribunal in the case of Jolly Highrise Co-op HSG Society Ltd., where a penalty for a similar change in the head of income was deleted by the Tribunal. The Tribunal in that case observed that the assessee had not withheld any particulars of income and had made various claims regarding the nature of income, which were eventually negated by the AO. The Tribunal concluded that there was no conscious act of concealing income particulars by the assessee, leading to the cancellation of the penalty order.

Given the similarity of facts and circumstances between the instant case and the case considered by the Tribunal previously, the ITAT Mumbai directed the AO to delete the penalty imposed on the assessee. Consequently, the appeal of the assessee was allowed, and the penalty was set aside. The order was pronounced in the open court on December 16, 2015.

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