Income Tax Appellate Tribunal - Chandigarh
Rani Kamla Devi , Panchkula vs Assessee on 12 December, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B' CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI T.R. SOOD, ACCOUNTANT MEMBER
ITA No. 869/Chd/2009
Assessment Year: 2006-07
Smt. Rani Tara Devi, Vs. The ITO, Ward-2,
#1075, Sector 2, Panchkula
Panchkula
PAN No. AANPD4045P
ITA No. 1098/Chd/2010
Assessment Year: 2007-08
Smt. Rani Tara Devi, Vs. The AC IT, Circle,
#1075, Sector 2, Panchkula
Panchkula
PAN No. AANPD4045P
ITA No. 1099/Chd/2010
Assessment Year: 2007-08
Smt. Rani Shakuntala Devi, Vs. The AC IT,
#1075, Sector 2, Circle,
Panchkula Panchkula
PAN No. AFAPD3739C
ITA No. 870/Chd/2009
Assessment Year: 2007-08
Smt. Rani Shakuntala Devi, Vs. The AC IT,
#1075, Sector 2, Panchkula Circle,
Panchkula Panchkula
PAN No. AFAPD3739C
ITA No. 160/Chd/2009
Assessment Year: 2006-07
Shri Purjit Singh (HUF), Vs. The AC IT, Circle 4(1),
Chandigarh Chandigarh
(Appellant) (Respondent)
Appellant By : Shri Alok Mittal
Respondent By : Dr. Amarveer Singh
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ITA No. 868/Chd/2009
Assessment Year: 2006-07
Smt. Rani Kamla Devi, Vs. The AC IT,
#1075, Sector 2, Panchkula
Panchkula
PAN No. AGKPD2401N
ITA No. 716/Chd/2006
Assessment Year: 2003-04
Smt. Rani Kamla Devi, Vs. The AC IT,
VPO Ramgarh, Panchkula Circle,
Panchkula Panchkula
PAN No. AGKPD2401N
ITA No. 952/Chd/2009
Assessment Year: 2006-07
The DC IT, Vs. Smt. Rani Kamla Devi,
Panchkula Cirlce, VPO Ramgarh, Panchkula
Panchkula
PAN No. AGKPD2401N
Appellant By : Shri Tej Mohan Singh
Respondent By : Dr. Amarveer Singh
ITA No. 316/Chd/2011
Assessment Year: 2006-07
Smt. Prabha Singh, Vs. The AC IT, Panckula Circle,
Panchkula Panchkula
PAN No. AIQPS2103P
ITA No. 684/Chd/2007
Assessment Year: 2004-05
The AC IT, Circle, Vs. Smt. Prabha Singh
Panchkula Panchkula
PAN No. AIQPS2103P
ITA No. 827/Chd/2009
Assessment Year: 2006-07
Shri Tulvinder Singh, Vs. The AC IT,
Vill. Khangesra,PO Kot, Panchkula
Panchkula
PAN No. AIQPS9025F
&
3
ITA No. 1102/Chd/2011
Assessment Year: 2007-08
Shri Varinder Singh & Others, Vs. The DC IT,
L/H of Late Yoginder Singh, Panchkula Circle,
Vill Khangesra, PO Kot, Panchkula
Panchkula
PAN No. AKOPS2088N
Appellant By : Shri Neeraj Jain
Respondent By : Dr. Amarveer Singh
Date of hearing : 18/11/2014
Date of Pronouncement : 12/12/2014
ORDER
PER BENCH The bunch of 11 appeals filed by the different assessees and Revenue are directed against the separate orders of C IT(A) .
2. Since the issues involved in all the appeals are identical and correlated, therefore, all the appeals were heard together and are being disposed of by this consolidation order. First we shall deal with the appeal of the assessee in ITA No. 869/Chd/2009 for assessment year 2006-07 in the case of Smt. Rani Tara Devi.
ITA No. 869/Chd/2009 - assessment year 2006-07
3. In this appeal the assessee has raised the following modified grounds:-
1. That the CIT(A) erred on facts and in law in upholding the action of the assessing officer in assessing compensation of Rs. 13,67,958/- and enhanced compensation of Rs. 4,89,53,990/- arising on account of acquisition of land situated at Bana Madanpur and Jhuriwala as taxable 'capital gains' under the provisions of the Income Tax Act, 1961 ('the Act').
1.1 That the CIT(A) erred on facts and in law in
not appreciating that land in question being
agricultural land within the meaning of clause (iii) of 4 sub-section (14) of section 2, no capital gains were chargeable to tax under the provisions of the Act.
1.2 That the CIT(A) erred on facts and in law in upholding the finding of the assessing officer that the land in question was situated within the prescribed limits of Panchukula as on date of acquisition, without appreciating that Panchukula Municipality was not even formed on that date.
2. That the CIT(A) erred on facts and in law in not appreciating that since the original compensation was accepted to be not liable to tax under the provisions of the Act, it was not open to the Income Tax Department to bring to tax compensation of Rs. 13,67,958/- and enhanced compensation of Rs. 4,89,53,990 received during the year on account of the very same acquisition of land.
3. That on facts and circumstances of the case, the CIT(A) has erred in upholding taxation of interest on enhanced compensation of Rs. 18,15,585/-
3.1 That the CIT(A) failed to appreciate that as per the decision of the Supreme Court in the case of CIT, Faridabad v. Ghanshyam (HUF: 182 ITR 368, interest of Rs. 18,15,585/- was in the nature of capital receipt not liable to tax.
4. That the CIT(A) erred on facts and in law in enhancing the income of the appellant by denying exemption of Rs. 1,13,91,750/- claimed and allowed under section 54F of the Act.
4. At the outset Ld. Counsel for the assessee submitted an application for admission of additional evidence which reads as under:-
"BEFORE THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH CHANDIGARH In the matter of : Rani Shakuntla Devi 5 Assessment year : 2006-07 ITA No. : 869/Chd/09 Sir, Re: Request for admission of additional evidence - Rule 29 of the Income-tax (Appellant Tribunal ) Rules, 1963.
It is respectfully submitted as follows:
The appellant craves leave to furnish copy of the certificate from Patwari alongwith detail for usage of land placed at pg. no. 96-98 of the paper book, as additional evidence for the reasons stated hereunder:
The brief facts are that the applicant had inherited agricultural land situated in village Bana Madanpur and Jhuriwala from her father in 1971. Part of the said land was compulsorily acquired by the Haryana Urban Development Authority (HUDA) under section 4 of the Land Acquisition Act on the following dates:
- 26.06.89- Ist Acquisition
- 04.05.95- IInd Acquisition
- 11.07.95 IIIrd Acquisition
Since the aforesaid land was agricultural land, compensation (including enhanced compensation) received on compulsory acquisition of land was claimed to be not liable to tax under the provisions of the Income Tax Act, 1961('the Act'). In the assessment years 1997-98 (Ist Acquisition ) and assessment year 2003-04 (2 n d Acquisition), compensation received has been accepted to be not taxable since the land so acquired was agricultural land under section 2(14) of the Act.
During the year under consideration, the applicant received enhanced compensation and interest thereon on account of land compulsorily acquired in the year 1995, referred as 2 n d Acquisition. The enhanced compensation was claimed to be capital receipt not liable to tax by the applicant.
In the impugned assessment order dated 22.12.2008, the assessing officer did not accept the aforesaid and brought to tax the compensation so received under the head 'capital gains'. The assessing officer held the that land so transferred was not an agricultural land, inter alia, on the ground that actual agricultural operations were not carried out by the applicant on the above land. The assessing officer, however, failed to appreciate that:
(a) the aforesaid land was accepted to be agricultural land in the earlier year(s), particularly in the year of receipt of original compensation, and therefore, there was no warrant to reject the claim of the applicant in the year under consideration;
(b) the applicant was actually carrying on agriculture on the same land, which is evident from the fact that agricultural income was duly disclosed and accepted in the returns of income;6
(c) in the award order itself, the Land Acquisition Officer gave permission to the farmers to harvest their crop after riping;
(d) the applicant, in the various submissions, highlighted that the land is recorded as agricultural land in the Revenue records, which is also evident from the written statement filed on behalf of Land Acquisition Collector, Panchkula, in the case before the Court of District Judge, Panchkula;
(e) the applicant has never applied for permission to convert the agricultural land into non-agricultural land.
All the aforesaid facts clearly highlight that the aforesaid land was agricultural land on the date of transfer / compulsory acquisition. Despite the aforesaid, the assessing officer held that the aforesaid land was not agricultural land since the applicant was not doing any agricultural activity, which has been confirmed by the CIT(A). In order to rebut the aforesaid findings of the assessing officer / CIT(A) that the land was agricultural land and in support of the repeated / consistent contention of the applicant that the land was actually used for agricultural activity, certificate dated 24.01.2010 has recently been obtained from Patwari along with the detail for usage of land, which is placed at page no. 96-98 of the paper book. Since the aforesaid certificate was not available with the applicant earlier, the same could not be filed before the lower authorities and is therefore, being filed before the Tribunal as additional evidence in order to rebut the findings of the assessing officer/CIT(A). The additional evidence so placed by the applicant is crucial for the judicious disposal of the appeal. In absence of any malafide motives for not producing the above evidence before the assessing officer, the aforesaid evidence may kindly be taken into account by the Hon'ble Bench for disposing the appeal.
In the interest of equity and justice, it is respectfully prayed that the above additional evidence, may kindly be admitted and taken into consideration while adjudicating the appeal under Rule 10 read with Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The applicant trusts that the request shall merit sympathetic consideration.
Place: Delhi Date: April 6,2010 (Applicant)"
5. Ld. Counsel for the assessee referred to this application and submitted that certificate from Patwari which are sought to be admitted now could not be obtained earlier and since the same goes to the root of the matter, therefore, they may be admitted now.
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6. On the other hand, Ld. DR pointed out that the issue whether the said land is agricultural land or not cropped up in the earlier years also. It was pointed out that in earlier year onl y interest received was taxed by the Assessing Officer which was deleted by the C IT(A) and the order of CIT(A) was confirmed by the Tribunal. However, on further appeal by the Revenue before the Hon'ble High Court the matter was again remanded back to the Tribunal to decide the same in the light of latest decision of Hon'ble Supreme Court in the case of C IT Vs. Ghanshyam (HUF) 315 ITR 1. Earlier Compensation was not taxed but later on an order u/s 263 was passed through which Assessing Officer was directed to bring to tax the compensation also. Here again, the order u/s 263 was quashed by the Tribunal and on appeal by the Revenue the Hon'ble High Court of Punjab & Haryana vide order dated 27.10.2010 set aside the order of the Tribunal and remanded the same back to the file of Tribunal to decide the issue afresh in the light of the decision of Hon'ble Supreme Court in the case of C IT Vs. Ghanshyam (HUF) (supra). Against this order of the Hon'ble Punjab & Haryana High Court the assessee filed a Special Leave Petition before the Hon'ble Supreme Court and contended that decision of C IT Vs. Ghanshyam (HUF) (supra) was not applicable because the land in question was agricultural land. On the basis of this contention, the Hon'ble Supreme Court directed the Tribunal to give finding of fact whether the land in question was agricultural land or not. The Tribunal vide detailed note dated 7.6.2012 rendered a finding that land which was acquired was not agricultural land. After considering this finding the Hon'ble Supreme Court dismissed the Special Leave Petition of the assessee and remanded the matter to the file of Hon'ble High Court. The Hon'ble High Court has considered these issues in detail including the issue whether the land is situated within the area notified by the Central Government and ultimatel y held that land was not agricultural land and it was a capital asset u/s 2(14) in assessee's own case reported at 355 ITR 457(P&H).
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7. In the above background he contended that once the issue has been decided by the Hon'ble Punjab & Haryana High Court against the assessee then there was no need to admit fresh evidence because identical issue has already been decided by the Hon'ble High Court.
8. After considering the rival submissions we find that Hon'ble High Court of Punjab & Haryana in assessee's own case reported in 355 ITR 457 considered the following question of law.:-
"1. Whether, on the facts and the additional information made available to this court and in the circumstances of this case, the land acquired is not an agricultural land and, therefore, compensation shall be assessed in the year of receipt and not as and when the matter is finally resolved ? "
After considering the various issues it was held that the said land was not agricultural land and was a capital asset as defined in clause (iii) of section 2(14), therefore, in our opinion this issue stands already decided by the decision of Hon'ble High Court of Punjab & Haryana and there is no need to admit the above additional evidence and accordingly we decline to admit the additional evidence.
9. Ground No.1: After hearing both the parties we find that assessee has not offered to tax the enhanced compensation received on acquisition of land but after detailed discussion the same was held to be taxable by Assessing Officer and the action of the Assessing Officer has been confirmed by the Ld. CIT(A).
10. Both the parties were heard.
11. Before us it was fairly admitted by the Ld. Counsel for the assessee that the issue now stands covered against the assessee in view of the decision of Hon'ble High Court of Punjab & Haryana in assessee's own case as reported at 355 ITR 457. Some arguments were made that Haryana Urban Development Authorit y (HUDA) cannot be construed as Municipality. However, these 9 contentions were also considered by the Hon'ble High Court in the case and in any case a notification of SO 9447 was issued by Government of India on 6.1.1994 u/s 2(14)(iii)(b) through which Panchkula was notified for the purpose of sub class (b) of clause (3) to section 2(14) of the Income-tax Act. Section 2(14) of the list pertaining to Haryana State reads as under:-
44. Areas up to a distance of 5 kms. (Distt. Ambala) from the municipal limits in all Panchkula directions.
Therefore, it becomes clear that Panchkula was notified and land was within the distance notified and has been rightl y subjected to tax. Therefore, in our opinion, the Ld. CIT(A) has correctl y confirmed the addition of enhanced compensation and we uphold his order. Respectfull y following the decision of Hon'ble High Court we decide this ground against the assessee.
12. Ground No. 2 Through this ground the onl y dispute raised by the assessee is that enhanced compensation is not taxable because the land which has been acquired was agricultural land. This issue is now been finall y decided by the Hon'ble High Court of Punjab & Haryana in assessee's own case reported in 355 ITR 457 wherein it has been held that the land which has been acquired from the assessee is a capital asset and is not agricultural land. The second contention is that since compensation has not been finalized and the matter is still disputed, therefore, it cannot be taxed. However, this situation stands changed because of the amendment to section 45 wherein sub section (5) has been inserted making such enhanced compensation taxable on the receipt basis and this position was confirmed by Hon'ble Apex Court in the case of CIT Vs. Ghanshyam (HUF) (supra). Further, we find that this issue raised before us through this ground was never raised before C IT(A), therefore, it does not emanate from the impugned order. Further, now the land has been held to be a capital asset, therefore, in any case the issue stands covered against the assessee 10 by the decision of Hon'ble High Court. Therefore, respectfull y following the decision of Hon'ble High Court we decide this ground against the assessee.
13. Ground No. 3 : After hearing both the parties we find that interest received by the assessee on enhanced compensation has been taxed on receipt basis by the Assessing Officer and the action of the Assessing Officer has been confirmed by Ld. CIT(A).
14. Before us, Ld. Counsel for the assessee did not make any arguments on his issue.
15. On the other hand, Ld. DR submitted that this issue is also covered against the assessee by the decision of Hon'ble Punjab & Haryana High Court in the case of CIT v Smt. Parkash Kaur and Others 330 ITR 332, CIT v Smt. Burfi 331 ITR 1 and CIT Vs. Karambir Singh 337 ITR 159. He further submitted that even the Chandigarh Bench has followed this decision in the case of AC IT v Avinash Singh Grewal in ITA No. 460/Chd/2008.
16. After considering the rival submissions we find that Hon'ble High Court of Punjab & Haryana in the case of C IT v Karambir Singh (supra) has clearl y held that interest on enhanced compensation is required to be taxed on the receipt basis in view of the decision of Hon'ble Supreme Court in CIT Vs. Ghanshyam (HUF) (supra). This decision was followed in the case of CIT v Smt. Burfi (supra) and CIT v Smt. Parkash Kaur (supra), therefore, in view of the various decision of Hon'ble jurisdictional High Court we set aside this issue against the assessee.
17. Ground No.4: After hearing both the parties we find that assessee has made claim u/s 54F for following properties.
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a) Flat at Uppals (Manimajra) - Rs. 1,13,91,750/-
b) Flat at Zirakpur - Rs. 49,41,862/-
According to Assessing Officer the exemption could be allowed onl y in respect of one asset, therefore, he allowed exemption onl y in respect of a flat at Uppals (which was higher amount).
18. On appeal, the Ld. CIT(A) found that deduction u/s 54F was allowable against purchase of a house or construction of a house. Since assessee has merel y booked a flat, therefore, exemptions were not allowable and asccrdingl y he issued a notice for enhancement by asking the assessee that why deduction u/s 54F should not be denied.
19. The Ld. C IT(A) referred to the provisions of section 54F and observed that it is clear that exemption could be allowed onl y if assessee had purchased a house. In this case assessee has merel y booked a flat, therefore, assessee was denied the deduction u/s 54F. In respect of this ground no contentions were advance before us.
20. On the other hand, Ld. DR strongl y supported the order of C IT(A) .
21. After considering the rival submissions we find that no evidence was adduced before CIT(A) during appeal proceedings even after issue of enhancement notice to prove tat assessee has reall y purchased the flats. Even before us neither any contentions were raised nor any evidence were filed to show that assessee has reall y purchased the flat against which exemption has been claimed, therefore, we are constrained to confirm the findings of Ld. CIT(A).
22. In the result, appeal of the assessee is dismissed. 12 ITA No. 1098/Chd/2010 - assessment year 2007-08
23. In this appeal, various grounds have been raised but through these grounds the onl y issue raised is regarding action of the Ld. C IT(A) in confirming the addition amounting to Rs. 5,07,69,576/- on account of enhanced compensation received by the assessee.
24. This issue has been adjudicated by us while adjudicating appeal No. 869/Chd/2009 for assessment year 2006-07 vide para 11 and, therefore, following the same, we decide this appeal against the assessee.
25. In the result, appeal of the assessee is dismissed. ITA No. 870/Chd/2009 - assessment year 2006-07
26. In this appeal the assessee has raised the following modified grounds:-
1. That the CIT(A) erred on facts and in law in upholding the action of the assessing officer in assessing compensation of Rs. 13,67,958/- and enhanced compensation of Rs. 4,94,45,708/- arising on account of acquisition of land situated at Bana Madanpur and Jhuriwala as taxable 'capital gains' under the provisions of the Income Tax Act, 1961 ('the Act').
1.1 That the CIT(A) erred on facts and in law in
not appreciating that land in question being
agricultural land within the meaning of clause (iii) of sub-section (14) of section 2, no capital gains were chargeable to tax under the provisions of the Act.
1.2 That the CIT(A) erred on facts and in law in upholding the finding of the assessing officer that the land in question was situated within the prescribed limits of Panchukula as on date of acquisition, 13 without appreciating that Panchukula Municipality was not even formed on that date.
2. That the CIT(A) erred on facts and in law in not appreciating that since the original compensation was accepted to be not liable to tax under the provisions of the Act, it was not open to the Income Tax Department to bring to tax compensation of Rs. 13,67,958/- and enhanced compensation of Rs. 4,94,45,708/- additional compensation and enhancement received during the year on account of the very same acquisition of land.
3. That on facts and circumstances of the case, the CIT(A) has erred in upholding taxation of interest on enhanced compensation of Rs. 18,33,801/-
3.1 That the CIT(A) failed to appreciate that as per the decision of the Supreme Court in the case of CIT, Faridabad v. Ghanshyam (HUF: 182 ITR 368, interest of Rs. 18,33,801/- was in the nature of capital receipt not liable to tax.
4. That the CIT(A) erred on facts and in law in enhancing the income of the appellant by denying exemption of Rs. 1,13,91,750/- claimed and allowed under section 54F of the Act.
In this case also an application for admission of additional evidence has been filed before us. This application is identical to the application moved in the case of Rani Tara Devi in ITA No. 869/Chd/2009 for assessment year 2006-07. In this case also, same contentions were made by both the parties.
27. This issue has been adjudicated by us while adjudicating the appeal of Smt. Rani Tara Devi in ITA No. 869/Chd/2009 vide paras 4 to 8 and following the same we decline to admit the additional evidence. 14
28. Ground No. 1 to 3 : Both the parties submitted that the issues raised vide ground Nos. 1 to 3 are identical to the issues raised in ITA No. 869/Chd/2009 for assessment year 2006-07. We have already adjudicated the issues in question vide adjudicating ground Nos. 1 to 3 or our above order in paras 9 to 16 in ITA No. 869/Chd/2009. Therefore, our findings will appl y mutatis- mutandis to these grounds also and, therefore, these grounds are dismissed.
29. Ground No.4: Since the issue raised in this ground is also similar as raised in ITA No. 869/Chd/2009 which we have adjudicated vide para 21, therefore, following the same we decide this issue against the assessee.
30. In the result appeal of the assessee is dismissed ITA No. 1099/Chd/2010- assessment year 2007-08
31. In this appeal, various grounds have been raised but through these grounds the onl y issue raised is regarding action of the Ld. C IT(A) in confirming the addition amounting to Rs. 5,12,79,509/- on account of enhanced compensation received by the assessee.
32. This issue has been adjudicated by us while adjudicating appeal No. 869/Chd/2009 for assessment year 2006-07 vide para 11 and, therefore, following the same, we decide this appeal against the assessee.
33. In the result, appeal of the assessee is dismissed. ITA No. 160/Chd/2000 - assessment year 2006-07
34. Both the parties submitted that the issues raised vide ground Nos. 1 to 3 of this appeal is identical to issue raised vide ground No.1 in ITA No. 869/Chd/2009 in the case of Rani Tara Devi Vs. ITO Panchkula. We find that the issue raised vide ground in question is similar which we have adjudicated in paras 9 & 11 in ITA No. 869/Chd/2009 in the case of Smt. Rani Tara Devi v 15 ITO. Following our findings given above, we uphold the order of Ld. CIT(A) and appeal of the assessee is accordingl y dismissed. ITA No. 868/Chd/2009 - assessment year 2006-07
35. In this appeal though various grounds have been raised but onl y two issues have been raised namel y:-
a) Charging of tax on the amount of enhanced compensation.
b) Enhancement by denying deduction u/s 54F
36. As regards the issue raised vide (a) above i.e. relating to charging of tax on the amount of enhanced compensation, the same is covered by our decision rendered in ground No. 01 (para 11) in ITA No. 869/Chd/2009. Following that decision referred to hereinabove, we uphold the order of Ld. CIT(A) on this issue and accordingly this ground is decided against the assessee.
37. Similarl y, the issue raised vide (b) above i.e. Enhancement by denying deduction u/s 54F is also covered by our decision rendered while adjudicating ground No.4 in ITA No. 860/Chd/2009 in para 21 above. Following the same, this issue is decided against the assessee.
In the result, appeal is dismissed.
ITA No. 716/Chd/2006 - assessment year 2003-04
38. In this appeal the assessee has raised various grounds but at the time of hearing Ld. Counsel submitted that onl y two disputes are involved namel y -
(i) reopening of assessment.
(ii) taxation of capital gain
39. First issue:- In this case originall y the return was processed us 143(1). Later on it was noticed that issue regarding enhanced compensation and 50% of the interest has escaped assessment, therefore, assessment was reopened b y 16 issuing notice u/s 148.. The action of reopening of assessment was confirmed by Ld. CIT(A) by observing that Assessing Officer has recorded proper reasons for the same.
40. Before us it was submitted that no fresh material has come to the possession of Assessing Officer, therefore, reopening was bad.
41. On the other hand Ld. DR submitted that originall y return was processed u/s 143(1), therefore, reopening is valid in view of the decision of Hon'bl e Supreme Court in the case of ACIT V Rajesh Jhaveri Stock Brokers P. Ltd in 291 ITR 500.
42. We have considered the rival submissions carefull y. We find that issue of reopening had been considered in detail by the jurisdictional Punjab & Haryana High Court in the case of Arun Kumar Goyal v C IT & Anr in ITA No. 54 of 2012(O&M). After considering the latest decision of Hon'ble Supreme Court in the case of ACIT V Rajesh Jhaveri Stock Borkers P. Ltd (supra) , it was observed at paras 11 to 14 as under:-
"(11) With reference to the scope of jurisdiction exercisable under Section 147 as it stood prior to 01.04.1989, it was ruled that the Assessing Officer was required to satisfy the twin test that (i) he has 'reason to believe' that income, profits or gains chargeable to Income Tax have escaped assessment; and (ii) that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year.
(12). There is, however, a sea-change after the amendment is Section 147 for determining jurisdictional scope for re-
assessment of the escaped income. The Hon'ble Supreme Court in Rajesh Jhaveri's case (supra) has explained and 17 laid down that under the substituted Section 147 "existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to re-open the assessment." It was further held that "so long as the ingredients of Section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under Section 147 and failure to take steps under Section 143(3) will not render the Assessing Officer powerless to initiate re-assessment proceedings even when intimation under Section 143(1) had been issued."
(13) The expression "reason to believe" thus cannot be restrictively construed to say as if the AO is obligated firstly to finally ascertain the factum of escaped income on the basis of admissible evidence and then only to issue show cause to the assessee. The Supreme Court held that the final outcome of the proceedings initiated under Section 147 is not relevant and what is of relevance is the existence of reasons to make the AO believe that there has been under assessment of the assessee's income for a particular year.
(14) It is explicit from the post-amendment decisions cited above that once there are reasons for the AO to believe, whether such reasons originate out of the record already scrutinized or otherwise, he shall be within his competence to initiate the re-assessment proceedings. The formation of belief by the AO must always be tentative and not a firm or final conclusion as the latter will negate the very object of giving an opportunity of hearing to the assessee as it will amount to post-decisional hearing."
From the above it is clear that once the Assessing Officer has reasons and even if they are emanating out of the scrutiny of the records which had already been scrutinized even then the reassessment is valid. Therefore, following this decision, we decide this issue against the assessee. 18
43. 2 n d issue: Ld. Counsel for the assessee submitted that onl y dispute here is that this issue pertains to assessment year 2003-04 and, therefore, the amended provisions of section 45(5) were not applicable.
44. On the other hand, Ld. DR submitted that originall y the Tribunal decided the appeals in favour of the assessee by following the decision of Special Bench in the case of DCIT Vs. Shri Padam Parkash (HUF) in ITA No. 2964/D/2002 (Delhi)( Special Bench). The Special Bench has followed the decision of Hindustan Housing & Land Development Trust Ltd in 161 ITR 524. However, when the Revenue filed appeal before the Hon'ble High Court of Punjab & Haryana, the Court remanded the matter to the file of Tribunal by directing the Tribunal to follow the order in case of CIT v Prabha Singh in ITA No. 897. Then he referred to the decision in the case of CIT Vs. Prabha singh in ITA No. 897 of 2008 wherein the Tribunal was directed to decide the issue on the basis of CIT v Ghans yman (supra). Further the Hon'ble High Court in the case of C IT v Smt. Rani Shakunlala Devi in ITA No. 955 of 2008 has held that for assessment year 2003-04, the decision of C IT v Ghanshyam (HUF) (supra) is applicable.
45. We have considered the rival submissions carefull y. We find that Hon'ble High Court has decided the issue in the appeal by the Revenue in ITA No. 966 of 2008 vide order dated 22.10.2009 which reads as under:-
"In view of the order passed today in ITA 897 of 2008 (the Commissioner of Income Tax, Panchkula Vs Smt. Prabha Singh), this appeal is disposed of in the same terms."
46. Further in the case of CIT Vs. Smt. Prabha Singh in ITA No. 897 of 2008 vide order dated 22.10.2009 the Hon'ble High Court remitted the matter back to the Tribunal to be decided in the light of C IT v Ghanshyam (HUF) (supra). . Section 45(5) was introduced by Finance Act 1987 w.e.f 1.4.1988 which means 19 the enhanced compensation become taxable w.e.f 1.4.1988. We further find that in case of CIT v Rani Shakuntla Devi in ITA No. 955 of 2008 order dated 27.10.2010, the Hon'ble Court was seized the issue for assessment year 2003-04 which becomes clear from the following para 1 at page 1 of the order:-
"This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act") has been filed by the Revenue against the order dated 7.7.2008, passed by Income Tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh (in short "the Tribunal") in ITA NO. 990/CHANDI/2007 in respect of assessment year 2003-04, raising the following substantial questions of law for determination by this Court."
Ultimatel y the issue was decided as under;-
"The issues is no longer res Intergra. The said question came up before the Hon'ble Supreme Court in Commissioner of Income-tax v. Ghanshyam (HUF) [2009] 315 ITR 1 (SC and the same was decided in various of the Revenue by holding that irrespective of the fact whether litigation with regard to award of compensation had attained finality or not, under section 45(5)(b) of the Act, which was inserted retrospectively w.e.f 1.4.1998, taxability of income shall be in the year of receipt.
In view of the above, the CIT rightly invoked revisional jurisdiction u/s 263 of the Act. Accordingly, we set aside the order of Tribunal and answer question No.1 in favour of the Revenue and remit the matter to the Tribunal for passing orders in accordance with law. Question No.2 has been rendered academic in view of answer to question No.1"
47. Thus, from the above it becomes clear that Hon'ble High Court clearl y held that even in assessment year 2003-04, the principles laid down in the case of C IT v Ghanshyam (HUF) (supra) are applicable. We have further decided this issue while adjudicating ground No.1 in ITA No. 869/Chd/2009 vide paras 9 to 11 and following the same we decide this issue against the assessee.
In the result, appeal of the assessee is dismissed.
20ITA No. 952/Chd/2009- assessment year 2006-07
48. In this appeal the Revenue has raised the following ground:-
Whether on the facts and in the circumstances of the case and whether in view of the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF) in Civil Appeal No. 4401 of 2009, Ld. CIT(A) was right in law in deleting the addition of Rs. 19,58,276/- on account of inters ton enhanced compensation by holding that the interest received by the assessee will be assessable to tax on accrual basis when the litigation regarding the quantum of enhanced compensation and interest thereon is finally settled.
49. After hearing both the parties we find that identical issue for taxabilit y on interest received on enhanced compensation has been decided in this consolidated order while adjudicating ground No.3 in the case of Rani Tara Devi in ITA No. 869/Chd/2009 and following the same we decide this issue in favour of the Revenue and against the assessee.
In the result, appeal is allowed.
ITA No. 316/Chd/2011- assessment year 2006-07
50. In this appeal various grounds have been raised but the same involves the following three issues:-
a) Taxation on enhanced compensation on receipt of basis.
b) Denial of deduction u/s 54F by way of enhancement
c) Levy of interest u/s 234B and 234D
51. As regards the issue (a) which relates to taxation on enhanced condensation on receipt basis is concerned, the same is covered by our decision given in para 11 to ground No. 1 in ITA No. 869/Chd/2009. Following the same, we uphold the order of Ld. CIT(A) and accordingl y this ground is decided against the assessee..
21
52. Similarl y, the issue raised in (b) above regarding denial of deduction u/s 54F is also covered by our decision rendered in ITA No. 869/Chd/2009 vide para 21 above and following the same this issue is also decided against the assessee.
53. This issue is consequential in nature and Assessing Officer is directed to charge interest as per the provisions of the law.
54. In the result, the appeal of assessee is dismissed. ITA No. 684/Chd/2007 - assessment year 2007
55. In this appeal the Revenue has raised the following grounds:-
1. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition made on account of enhanced compensation and interest on enhanced compensation, whereas the Hon'ble High Court in the land acquisition case of the assessee has held that the enhanced compensation already paid shall not be recovered till the fresh adjudication of the compensation by the District Judge. The assessee has thus received the compensation, which cannot be recovered. It is a Revenue Receipt liable to be taxed for Capital gain u/s 145(5).
56. The above issue is covered by the decision given in ITA No. 869/Cdh/2009 in respect of ground Nos.1 and 3 in paras 10 to 16 hereinabove.. Therefore, following the same, the issues are decided in favour of the Revenue and against the assessee.
In the result appeal is allowed ITA No. 827/Chd/2007 - assessment year 2006-07
57. In this appeal the assessee has raised the following grounds:-
1. That the Ld. CIT(A) is not justified in upholding the land acquired under compulsory acquisition as capital asset 2(14) of the I.T. Act, 1961.22
2. That the Ld. CIT(A) is not justified in upholding the addition on account of enhanced compensation on compulsor y acquisition of land.
3 That the Ld. CIT(A) is not justified in not allowing the exemption u/s 10(37) of the I.T. Act, 1961.
58 Grounds Nos.1 & 2: The issues raised in these grounds are covered by our decision given in ITA No. 869/Chd/2014 vide paras 11 hereinabove. Accordingl y these grounds are decided against the assessee.
59. Ground No. 3 : This issue was decided by Ld. C IT(A) against the assessee.
60. Before us Ld. DR strongl y supported the order of Ld. CIT(A).
61. On the other hand, Ld. Counsel for the assessee did not make any submissions before us.
62. After considering the rival submissions we find that this issue has been decided by Ld. C IT(A) vide para 9.4 which is as under:-
"9.4 The last and final argument taken up by the appellant is that the enhanced compensation received by the appellant is not taxable and is exempt u/s 10(37) which has been inserted w.e.f 1.04.2005 and as per which any agricultural land belonging to any individual or HUF if it falls within the definition of capital asset as given in section 2(14) and has been acquired compulsorily, then the capital gains of such transfer is exempt u/s 10(37) of the Act. The appellant has argued that since the enhanced compensation has been received during the financial year 2005-06 and such land has been used for agricultural purposes during the period of two years immediately preceding the date of transfer, the 23 enhanced compensation is exempt u/s 10(37) of the Act. I have carefully considered argument of the appellant. A bare reading of section 10(37) shows that the argument of the appellant is not correct. The provisions of section 10(37) are applicable to cases where the agricultural land has been compulsorily acquired after 1.4.2004. In the present case the land was acquired vide land acquisition collector's order dated 9.3.1988 which is much earlier than 1.4.2004. Hence the appellant's case is not covered by the provision of section 10(37) and the enhanced compensation is not exempt u/s 10(37). This argument is also rejected."
63. In our pinion Ld. C IT(A) has correctl y decided the issue because section 10(37) of the Act very clearl y mentions that "any income chargeable under the head capital gain arising from the transfer of agricultural land". In the case before us, income would arise on the acquisition of land by the government and not on the date of receipt of compensation. Moreover the land which has been acquired is not agricultural land and therefore, this provision is not applicable. Therefore, we find nothing wrong with the order of Ld. C IT(A) and we confirm the same.
64. In the result, assessee's appeal is dismissed.
ITA No. 1102/Chd/2011 - assessment year 2007-08
65. In this appeal the assessee has raised the following grounds:-
1. That the Ld. CIT(A) is not justified in not giving the proper opportunity of hearing which is against the natural justice and the order of Ld. CIT(A) be set aside.
2. That the claim of the A.O. that the notice u/s. 143(2) was served to the assessee on 27.09.2008 is not correct as the assessee expired on 08.04.2008 and the notice issued u/s. 143(2) is invalid.24
3. That without prejudice to above, the notice u/s. 143(2) served to assessee on 27.09.2008 is barred by limitation and consequent assessment completed u/s. 143(3) of the I.T. Act is bad in law and be quashed.
4. That the notice u/s.143(2) issued to legal heirs on 15.12.2009 is barred by limitation and the consequent assessment completed u/s. 143(3) of the I.T. Act is bad in law and be quashed.
5. That the Ld. CIT(A) is not justified in applying the provisions of Section 292BB of the I.T. Act.
6. That the Ld. CIT(A) is not justified in holding that the land acquired under compulsory acquisition is an capital asset u/s.2(14) of the I.T. Act.
7. That the Ld. CIT(A) is not justified in holding that the enhanced compensation received subsequently is chargeable to tax, when the land acquired under compulsory acquisition was not treated as capital asset at the time of receipt of original compensation.
8. That the Ld. CIT(A) has erred in applying provisions of section 45(5)(b) and 45(5)(c) of the Income-tax Act, 1961.
9. a) That the Ld. CIT(A) is not justified in confirming the addition of Rs. 7,53,20,932/- on account of interest on enhanced compensation.
b) That without prejudice to above, the appellant disputes the quantum of addition.
10. That without prejudice to above grounds of appeal:
a) That the Ld. CIT(A) is not justified in not granting the exemption u/s. 10(37) of the I.T. Act.
b) That the Ld. CIT(A) is not justified in not granting the deduction u/s. 54-B of the I.T. Act.
66. Out of the above grounds, ground No.1 was not pressed before us; therefore, the same is dismissed as not pressed.
25
67. Ground Nos. 2, 3, 4 & 5:- After hearing both the parties we find that notice u/s 143(2) was served on assessee on 27.9.2008 in response to which Shri Mukesh Aggarwal, Chartered Accountant appeared. Later on, it came to the knowledge of Assessing Officer that assessee has expired and following legal heirs were there:-
i. Smt. Sumitra Devi, wife
ii. Sh. Varinder Singh, Son
iii. Sh. Naresh Singh, Son
iv. Sh. Pardeep Singh, Son
v. Smt. Sushma Devi, Daughter
Accordingl y, fresh notice u/s 143(2) and 142(1) along with detailed
questionnaire was issued to the legal heirs on 15.2.2009
68. The representatives of the legal heirs raised objections before C IT(A) regarding service of notice by pointing out that assessee Shri Yoginder Singh had expired on 8.4.2008, therefore, notice could not have been served on him on 27.9.2008. The Ld. CIT(A) after examining these details rejected the objections by observing that since the assessee has appeared before Assessing Officer and has not raised any objections, the notice is treated as valid as per provisions of section 292 BB.
69. Before us Ld. Counsel for the assessee referred to the assessment order and pointed out that first notice u/s 143(2) is said to have been served on assessee on 27.9.2008 whereas Shri Yoginder Singh had expired on 8.4.2008, therefore, no notice could have been served on him. Further, the Revenue came to know about the death of the assessee and legal heirs were brought on record onl y on 15.12.2009, therefore, notice could not have been served within the time 26 prescribed even on the legal heirs. In any case notice has been served beyond the time prescribed us/ 143(2)(ii). He also relied on the following decisions:-
i) CIT Vs. Suresh Chandra Jaiswal 325 ITR 563 (All.)
ii) Smt. Kesar Devi Vs. CIT 321 ITR 344 (Raj.)
70. On the other hand, Ld. DR submitted that no objection has been raised before the Assessing Officer, therefore, service of notice is deemed to be valid in terms of section 292BB. In this regard he strongl y relied on the decision of Hon'ble Punjab & Haryana High Court in the case of C IT Vs. Pachwati Motors Limited 243 CTR 189. Further, notice has been served within the time as per section 143(2).
71. We have considered the rival submissions carefull y and do not find any force in the contentions of Ld. Counsel for the assessee. Perusal of the assessment orders clearl y shows that first notice was served on the assessee on 2 7.9.2008. Section 143(2)(ii) reads as under:-
"143(2(ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not under stated the income or has not computed excessive loss or has not under paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return :
Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.
72. The proviso has been inserted to the above provision by Finance Act 2008 w.e.f 1.4.2008. Since this is a procedural or machinery provision and it would be applicable to all the pending assessments. In this case return has been filed 27 on 31.7.2008 i.e. for financial year 2007-08 and notice was required to be served within this month from the end of the financial year i.e. before 30.09.2008 and notice has been correctly served before that date on 27.9.2008 and, therefore, it cannot be said that notice is time barred. As far as the contention that valid notice was not served on the assessee is concerned, the same is also devoid of any merit because of section 292BB. The section reads as under:-
" 292BB. Where an assessee has appeared in any proceeding or co- operated in any inquiry relating to an assessment or reassessment, it shall be deemed that nay notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in any improper manner;
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment."
73. The above provision came up for interpretation before the Hon'ble jurisdictional High Court in the case of CIT v Panchvati Motors Ltd (supra) and after referring to the section, it was observed in paras 11 & 13 as under:-
11. A presumption has been raised under the said provision relating to service of notice upon the assessee in respect of assessment or reassessment proceedings. According to this provision, where an assessee appears in any proceedings or cooperates in any enquiry relating to assessment or reassessment proceedings, it shall be presumed that the assessee has been validly served and it shall not be open to the assessee to object that the notice was not served upon him or was not served in time or was served upon him in an improper manner. However, an exception to the aforesaid presumption has been made in a case where such 28 objection has been raised before completion of assessment or reassessment. The provisions has been made effective from 1 s t April, 2008 and therefore, shall apply to all pending proceedings.
The CBDT issued Circular No. 1 of 2009 dt. 27 th March, 2009 [(2009) 222 CTR(St)69; (2009) 310 ITR(St) 42] giving Explanatory Notes on the provisions relating to direct taxes contained in Finance Act, 2008. Clause 42.7 is relevant which relates to applicability of this provision and reads thus;
13. It is not disputed that in the return which was filed by the assessee, it was mentioned that the same was filed in response to notice under s. 148 of the Act. No objection regarding valid service of notice under s. 148 of the Act was raised before the AO. Once that is so, the argument of the assessee that there was no valid service of notice under s. 148 of the Act fails. The Tribunal was, thus, in error in concluding otherwise and holding the proceedings to be invalid.
74. The above paras clearl y show that once no objection has been raised before the Assessing Officer then no objection can be raised later on. Further, the provisions of section 292BB are applicable to all the pending assessments. Therefore, respectfull y following this decision, we uphold the validit y of service of notice.
75. Though Ld. Counsel for the assessee has relied on the decisions in the case of CIT Vs. Suresh Chandra Jaiswal (supra) and Smt. Kesar Devi Vs. CIT (supra) wherein it has been held that notice served on dead person is not valid but both the decisions are distinguishable because both decisions have not considered the provision of section 292BB. The amended provisions of section 292BB makes it clear that no objection can be taken later on if assessee or representative appears before Assessing Officer and does not raise any objection against notice.. Since the issue has been decided by the Hon'ble jurisdictional High Court in the case of CIT v Panchvati Motors (supra), we are bound to follow the same.
29
76. Ground Nos. 6 to 9 : The issue regarding taxabilit y of capital gain has already been discussed by us while adjudicating the issue in ITA No. 869/Chd/2009 where following the decision of Hon'ble Punjab & Haryana High Court in the 355 ITR 457, the issue was decided against the assessee . Following that decision, we decide this issue against the assessee so these grounds are decided against the assessee.
77. Ground No. 10 : The issue regarding exemption u/s 10(37) was rejected by the Assessing Officer by observing that provisions of section 10(37) is applicable onl y on acquisition of agricultural land whereas in the case of the assessee land acquired was not agricultural land. Moreover, the land has been acquired in 1998 whereas the section provides that onl y income arising out to the capital gain would be exempt, therefore, income has arisen in earlier years and not on receipt of compensation.
78. We have already dealt with this issue vide paras 62 & 63 while adjudicating ITA No. 827/Chd/2007 in the above noted pars and following the same we set aside this issue against the assessee.
79. Ground No. 10. The last issue raised vide this ground is regarding exemption u/s 54B. This exemption was denied because the assessee has not sold any agricultural land. The action of the Assessing Officer was confirmed by Ld. C IT(A).
80. Before us, Ld. Counsel for the assessee did not raise any contention and on the other hand Ld. DR strongl y supported the order of C IT(A). 30
81. After considering rival submissions we find that section 54B reads as under:-
54B. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.--(1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by *the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,--
(i) & (ii) .................
82. The reading of the above provision clearl y shows that the same is applicable if land sold or acquired by the government has been used for agricultural purpose in the two years immediatel y preceding the date on which transfer took place. Since the land acquired in the case before us has been held to be not an agricultural land, therefore, exemption under this section is not applicable. Accordingl y, we decide this issue against the assessee.
83. In the result, appeal is dismissed.
Order pronounced in the Open Court on 12/12/2014 Sd/- Sd/-
(BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12 t h December, 2014 rkk
Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR 31