Tribunal grants appeals for reassessment of business income, deletes penalty under section 271(1)(c).

The tribunal allowed the appeals in ITA No.868 and 2699/Ahd/2004, directing reassessment under 'Income from business' for proper determination of income. The penalty imposed under u/s 271(1)(c) in ITA No.2701/Ahd/2004 was deleted due to the reassessment outcome. The AO was granted the option to re-initiate penalty proceedings based on the reassessment.

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Issues involved: Assessment of income under different heads, disallowance of expenses, denial of deductions, penalty under u/s 271(1)(c).

ITA No.868/Ahd/2004 (A.Y.2000-2011):
The assessee appealed against the assessment of income under the head 'income from other sources' instead of 'income from business'. The contention was that even though the National Housing Bank rejected the registration application, the assessee continued housing finance business. The tribunal held that carrying out finance business, despite lack of registration, warrants assessment under 'Income from business'. The matter was remanded to the AO for proper assessment under the correct head, allowing opportunity for the assessee to be heard.

ITA NO.2699/Ahd/2004 (A.Y.2001-2002):
Similar to ITA No.868/Ahd/2004, the tribunal set aside the assessment order and directed reassessment under 'Income from business' for proper determination of income, with adequate consideration of the expenditure claimed by the assessee.

ITA No.2701/Ahd/2004 (A.Y. 2000-2001):
The appeal was against the penalty imposed u/s 271(1)(c), which was confirmed by the CIT(A). As the assessment orders in other appeals were set aside for reassessment under 'Income from business', the penalty was deleted. The AO was given the option to re-initiate penalty proceedings based on the reassessment outcome.

In conclusion, the appeals in ITA No.868 and 2699/Ahd/2004 were allowed for statistical purposes, while ITA No.2701/Ahd/2004 was also allowed.

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