2023 (8) TMI 1517 - AT - Income Tax

ITAT dismisses appeal on section 56(2)(viii) addition and section 147 reassessment, rules RFCTLAAR Act exemption inapplicable for pre-enactment compensation

Azizuddin Latiphoddin Kazi, L/h of Deceased Latiphoddin Ajimoddin Kazi Versus The Income Tax Officer, Ward-4, Latur

The ITAT Pune rejected the assessee's appeal regarding addition under section 56(2)(viii) and reassessment under section 147. The assessee claimed ... Addition u/s 56(2)(viii) r.w.s 145A(b) - interest income carries exemption from assessment u/s 96 of the Right to Fair Compensations and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLAAR) Act, 2013 as well as in light of the CBDT landmark circular no.36 of 2016 dated 25.10.2016 clarifying the position in very terms - HELD THAT:- We find no merit in assessee’s instant vehement arguments since the assessment year herein A.Y.2013-14 and the assessee’s land stand acquired much earlier and he had received his enhanced compensation very well before the enactment of “RFCTLAAR” law. This tribunal’s recent decision in [2023 (4) TMI 1323 - ITAT PUNE] has already concluded the issue in the Revenue’s favour thereby holding Aurangabad bench of hon'ble jurisdictional high court has rejected the identical contentions of the concerned assessee. Reopening of assessment u/s 147 - Initiating section 148 action despite the fact that his regular return was pending for assessment and no section 143(2) notice stood issued during the course of reassessment in question framed by the AO on 15.12.2016. These twin arguments/grounds deserve to be rejected only once it has come on record that the assessee’s original return dated 10.02.2014 stood processed on 05.03.2015 followed by the AO’s section 148 notice 25.05.2015. And that had also not filed any return in response to section 148 which could trigger section 143(2) show cause at the AO’s behest. Accordingly reject assessee’s all the forgoing arguments in light of hon'ble high court’s jurisdictional bench’s judgment which is squarely applicable herein once the AO had framed his re-assessment at Latur. Decided against assessee. Issues Involved:1. Violation of principles of natural justice by NFAC-Delhi.2. Non-consideration of written submissions by NFAC-Delhi.3. Disallowance of exemption claim on interest received under Section 28 of the Land Acquisition Act, 1894.4. Applicability of CBDT Circular regarding exemption under Section 10(37) of the Income Tax Act.5. Binding nature of benevolent circulars issued by CBDT.6. Confirmation of ex-parte assessment by NFAC-Delhi.7. Justification of interest levied under Sections 234A, 234B, and 234C.Detailed Analysis:1. Violation of Principles of Natural Justice by NFAC-Delhi:The assessee argued that NFAC-Delhi did not consider the written submissions made before it, thereby violating the principles of natural justice. The tribunal, however, did not find merit in this argument and upheld the order of the lower authorities.2. Non-Consideration of Written Submissions by NFAC-Delhi:The assessee contended that NFAC-Delhi passed the appeal order without properly considering the subject matter of grievances placed before it. The tribunal reviewed the case file and found no merit in this argument, thereby upholding the lower authorities' decision.3. Disallowance of Exemption Claim on Interest Received Under Section 28 of the Land Acquisition Act, 1894:The assessee challenged the correctness of the lower authorities' action in assessing his interest income received under Section 28 of the Land Acquisition Act, 1894, as taxable under Section 56(2)(viii) r.w.s 145A(b) of the Income Tax Act. The tribunal referenced its recent decision in ITA No.235/PUN/2023 and concluded the issue in the Revenue's favor, holding that the interest income is taxable under the head 'Income from Other Sources.'4. Applicability of CBDT Circular Regarding Exemption Under Section 10(37) of the Income Tax Act:The assessee argued that the CBDT Circular No.36 of 2016 clarified that such interest income is exempt from assessment. The tribunal, however, found that since the assessment year was 2013-14 and the land was acquired much earlier, the CBDT circular was not applicable. The tribunal upheld the lower authorities' decision, referencing the statutory amendment to Section 56(2) inserting clause (viii) w.e.f. 01-04-2010.5. Binding Nature of Benevolent Circulars Issued by CBDT:The assessee argued that benevolent circulars issued by CBDT are binding on all authorities and should be considered. The tribunal, however, emphasized that statutory amendments and jurisdictional High Court decisions take precedence over such circulars. The tribunal upheld the lower authorities' decision in this regard.6. Confirmation of Ex-Parte Assessment by NFAC-Delhi:The assessee contended that NFAC-Delhi should not have confirmed the ex-parte assessment done by the Assessing Officer. The tribunal found that the original return was processed, and a Section 148 notice was issued. Since the assessee did not file any return in response, the tribunal upheld the reassessment framed by the Assessing Officer.7. Justification of Interest Levied Under Sections 234A, 234B, and 234C:The assessee argued that the levy of interest under Sections 234A, 234B, and 234C was not justified. The tribunal did not find merit in this argument and upheld the lower authorities' decision to levy interest.Conclusion:The tribunal dismissed the assessee's appeal, upholding the lower authorities' actions in assessing the interest income as taxable and confirming the ex-parte assessment. The tribunal emphasized the precedence of statutory amendments and jurisdictional High Court decisions over CBDT circulars and benevolent interpretations. The order was pronounced in the open Court on 18th August, 2023.