Held that the addition is made on account of change in the head of income for assessing the rental income. The assessee had offered rental income under the head “Income from house property”, but the Assessing Officer had assessed it under the head “Income from business“. The standard deduction at 30 per cent. allowable under section 24(a) while computing income under the head “Income from house property” would not be available when it is assessed under the “Income from business“. Thus, it was not a case where the assessee had suppressed or under-reported any income. The addition had arisen on account of computational methodology prescribed in the Act. This kind of addition would not give rise to under-reporting of income. The Assessing Officer should have exercised his discretion not to initiate penalty proceedings under section 270A of the Act in the facts and circumstances of the case. The assessee had offered an explanation why it reported the rental income under the head “Income from house property” and the explanation was not found to be false. Accordingly, the case of the assessee was covered by clause (a) of sub-section (6) of section 270A of the Act. The penalty is deleted.(AY.2017-18)