TaxTMI 
TaxTMI 
2020 (2) TMI 256
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....on itself is exempt u/s 10 (37) of the Act. 3. The CIT (Appeal)-I has further erred in law & facts in confirming the taxation of interest of previous years by the Assessing Officer in the current year income without providing relief under section 89 of the Act. 4. The CIT (Appeal)-I has further erred in law & facts in confirming the addition of ? 31,93,000/- made by the Assessing Officer on account of cash deposit in bank account without verifying the genuineness of the case that the appellant has deposited the cash out of advance received for sale of agricultural land/gift from relatives. 5. The CIT (Appeal)-I has further erred in law & facts in confirming the addition of 31,93,000/- made by the Assessing Officer without appreciating that the Assessing Officer has not provided reasonable opportunity of being heard and accordingly the additions are made against the principle of natural justice. 6. The CIT(A) has erred in not accepting the additional evidences merely on the basis of Assessing Officer report wherein the AO has grossly erred while not granted any opportunity to be heard to the appellant and passed the remand report against the princ....
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.... of the Land Acquisition Act 1894 which is part of the amount of the Land therefore not taxable being exempt under section 10(37) of the Act. However, according to the Assessing Officer, in view of the amended provisions of the section 56(2)(viii) of the Act introduced by Finance Act, 2009 effective from assessment year 2010-11, the interest received on delayed compensation or enhanced compensation is taxable under the head 'income from other sources'. According to the section 145(A)(b) of the Act the interest received would be liable to tax in the year of the receipt and deduction to the extent of the 50% would be available to the assessee under section 57(iv) of the Act. Accordingly, the Assessing Officer rejected the contention of the assessee and after allowing 50% deduction, he made addition for the balance amount of Rs. 41,84,185/-. The Ld. CIT(A) after considering judicial precedents available on the issue in dispute dismissed the ground of the appeal of the assessee observing as under: "4.3 I have carefully considered the appellant's submissions. The only issue to be considered here is whether the interest received u/s 28 of the Land Acquisition Act is in the natur....
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....4. Payment of interest.- When the amount of such compensation is not paid aide posited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of nine per centum per annum from the time of so taking possession until it shall have been so paid or deposited. Provided that if such compensation or any part thereof is not paid or deposited within a period of one year from the date on which possession is taken, interest at the rate of fifteen per centum per annum shall be payable from the date of expiry of the said period of one vein- on the amount of compensation or part thereof which has not been paid or deposited before the date of such expiry. 9. The award of interest under Section 28 of the 1894 Act applies when the amount originally awarded has been paid or deposited and when the Court awards excess amount. In such cases interest on that excess alone is payable. Section 28 empowers the Court to award interest on the excess amount of compensation awarded by it over the amount awarded by the Collector. The compensation awarded by the Court includes the additional compensation awarded under Section 23(1 A) and t....
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....ages for the loss of the right to retain possession. It was noticed as rmder:- "As we have pointed out earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gels compensation for both the rights. Therefore, the interest awarded under s. 28 of the Act, just like under s. 34 thereof, cannot he a compensation or damages for the loss of the right to retain possession but only compensation payable by the Slate for keeping back the amount payable to the owner. " The principle of Dr. Shamlal Narula's case (supra) had subsequently been applied by three Judges Bench of the Apex Court in a later decision in T.N.K.Govindaraju C/iefty v. CIT, (1967) 66 ITR 465. 13. Further Section 2(28A) of the Act defines ''interest " and was inserted by Finance Act. 1976 to be effective from 1.6.1976. It reads thus:- "'interest' means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other simila....
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....in any manner in respect of any money borrowed or debt incurred including a deposit, claim or other similar right or obligation and includes any service, fee or other charges in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. It is seen that the word "interest" for the purpose of the Act was interpreted by the inclusive definition. A literal construction may lead to the conclusion that the interest received or payable in any manner in respect of any moneys borrowed or a debt incurred or enumerated analogous transaction would be deemed interest. That was explained by the Board in the circular referred to hereinbefore But the question is: whether the interest on delayed payment on the acquisition of the immovable property under the Acquisition Ad would not be eligible to income-tax? It is seen that this Court has consistently taken the view that it is a revenue receipt. The amended definition of "interest" was not intended to exclude the revenue receipt of interest on delayed payment of compensation from taxability. Once it is construed to be a revenue receipt, necessarily, unless there is an exemption under the approp....
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.... do not find any legal and valid grounds for interference. The Special Leave Petitions are dismissed." 4.7 The Hon'ble Punjab & Haryana High Court considered all the aforesaid cases, in the case of Sunder Lai & Anr. Vs. Union of India in CWP No. 2014 of 2015. In this order dated 21.09.2015 the Hon'ble Jurisdictional High Court held as under:- "9. In view of the above and also /he amendments made by I he Finance (No. 2) Act. 2009 w.e.f. 1.4.2010 noticed hereinbefore, no advantage can be derived by the petitioners from the judgment in Ghanshyam's case (supra). 10. Examining the issue of taxability of interest under Section 28 of the Act, in Commissioner of Income Tax v. Bir Singh (HUF), ITA No. 209 of 2004 decided on 27.10.2010, it was held by the Division Bench of this Court that the interest awarded by court on enhanced compensation under Section 28 of the Act was chargeable to tax as income from other sources in the year of receipt. Division Bench of this Court again in Commissioner of Income Tax, Panchkula v. Prem Singh decided on 16.12.201 (I while considering, identical issue recorded as under:- "11. In this view of the mutter, the intere....
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....er, on this issue, the Hon'ble Punjab & Haryana High Court has recalled the earlier decision in the case of Jagmal Singh and Ors. Vs. Slate of Haryana & Anr. vide its order dated 02.02.2016 in RA-CR No. 46 CII of 2014 in CR No. 7740 of 2012. 4.9 The Hon'ble High Court while recalling this order held as under:- "1. The applications for review-is sought by-the Union of India on the plea that the orders passed by this Court in the absence of any representation of Union, failed to take note of an amendment in the Income Tax Act. The said provision made interest component assessed on additional amount on land acquisition awards under Section 28 of the Land Acquisition Act as taxable. The amendment through Section 145-A (b) took effect from April 2010. I have relied on a judgment of the Supreme Court m Commissioner of Income-tax, Faridabad Versus Ghanshyam-(H UF) Civil Appeal No. 4401 of 2009 decided on 16.7.2009 reported in 2009 (9) JT 445 to hold that the interest awarded on enhanced compensation is not taxable. The effect of the judgment has been statutorily abrogated by virtue of the amendment. The award of the Collector itself has been passed subsequent to the amen....
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....ted 20/09/2018 and Sushma Gupta Vs ITO ward-1(3) in ITA No. 1823/Del/2016 and submitted that the assessee was awarded interest under section 28 of the Land Acquisition Act, 1894 on enhanced compensation paid for compulsory acquisition of the land and the said interest received is to be treated as being in the nature of the compensation not liable to tax. 4.3 On the contrary, learned Departmental Representative relied on the order of the lower authorities. 4.4 We have heard the rival submission and perused the relevant material on record. The issue in dispute before us is whether the interest received on enhanced compensation is exempted under section 10(37) of the Act as part of the land compensation or it is taxable under section 56(2)(viii) of the Act. We find that the Ld. CIT(A) has taken into consideration decision of the Hon'ble Jurisdictional High Court of Punjab and Haryana in the case of Sunderlal and Anr. (supra) and Jagmal Singh and Ors. (supra), where the decision of the Hon'ble Supreme Court in the case of CIT Vs Ghanshyam (HUF) has also been considered. Subsequent to the decisions of the jurisdictional High Court referred above, the Hon'ble Supreme Court in....
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....its claim of money received from agreement to sell of the land and money received from friends and relatives. The Ld. CIT(A) did not admit the additional evidence submitted by the assessee on the ground that the assessee did not satisfy the conditions provided under Rule 46A of Income Tax Rules, 1962 (for short 'the Rules') for admitting of the additional evidences. According to him, the explanation of the assessee of receipt of money from the relatives was only an afterthought and made by self-serving statement. In view of the Ld. CIT(A), the assessee failed to discharge his onus to prove the source of the cash deposited in the bank account. Accordingly, he dismissed the ground of the appeal of the assessee. 5.2 Before us, the learned Counsel of the assessee submitted that the lower authorities has ignored the facts and rejected the additional evidences. According to him, the cash withdrawal was duly reflected in the bank statement of the mother of the assessee as well as his uncle and same has been duly submitted in appeal proceedings. According to him the assessee was not able to find the bank statement during the course of the assessment proceeding. He submitted that entire ....
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....is reproduced as under: "5.6 It is evident from the fact's recorded/discussed above that in spite of repealed opportunities granted by the A.O and in spite of a specific show cause recorded in the note sheet on 24.11.2015, the appellant failed to furnish any explanation or evidence. In these circumstances the request of the appellant for admission of additional evidence cannot be accepted. The power of CIT(Appeal) to admit additional evidence is governed by the provisions of Rule 46A of Income Tax Rules, 1961 . As per Rule 46A, the CIT(A) can admit additional evidence only in the following circumstances:- i) Where the AO has refused to admit evidence which out to have been admitted. ii) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO. iii) Where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal, iv) Where the AO has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. 5.7 In the a....
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.... this background of the facts, we do not see what was the other material which the authorities below had collected or relied upon, about which the Appellate Tribunal observed that the assessee should have been provided a second opportunity of being heard. The generalized statement in the order of the Tribunal about the material collected had little bearing when in fact there was no such material collected. Primarily it were the statements furnished by the assessee himself which were made the basis for best judgment assessments in so far as the assets shown in them were concerned. All that was done was to ignore liabilities as the assessee had failed to substantiate them in spite of a large number of opportunities granted. In our opinion, therefore, the ratio of the Kerala High Court decision relied upon by the Tribunal was not, in any manner, attracted. The attitude of the assessee- was throughout to sit on the fence and contemptuously ignore the assessment proceedings and the notices issued by the WTO requiring him to furnish returns and other material in support of his wealth-lax statements. After all the assessment proceedings could not be converted into a farce of mock....
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.... One cannot, therefore, understand how the material gathered by the Income-tax Officer under sub-section (2) of section 142 could be put to the assessee and afford him an opportunity to say what, he may have to say in respect of the same. In fact, the very opening words of sub-section (3) of section 142, viz., "The assessee shall, except where the assessment is made under section 144, be given an opportunity", make it clear that it does not apply to an assessment under section 144, i.e., where the assessee does not co-operate with the department " (emphasis supplied). 5.13 Similarly. Hon'ble Madras High Court in the case of Rayala Corporation Pvt. Ltd., 215 ITR 883 (Mad) has not countenanced the non-cooperative attitude of the assessee. In that case the appeal of the Department was allowed by the Hon'ble High Court and the Hon'ble Court made the following observations after referring to the decision of Hon'ble Supreme Court in 176 ITRJ535 (SC) : "What has surprised us, however, in the instant case, is the way the Appellate Commissioner has ignored the defiance of the assessee that in spite of the repeated notices and letters it never appeared befor....
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....the taxing authorities, including the Appellate Assistant Commissioner have committed any error of law or of fact and on account of such error, the assessee has suffered. A greater protection is extended by the law to the Revenue in the sense that, in cases where tax is found to have been short-levied, discretion is given to the competent authority (Commissioner) to reopen the whole mailer, if it is in public interest to do so. The Tribunal has got to protect, on the one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what he is bound to pay, and on the other hand, it has a duty to protect the interests of the Revenue and to see that, no one dodged the Revenue and escaped without, paying the tax......... The Supreme Court also has pointed out that the assessee cannot be permitted to take advantage of his own illegal ads and that it was his duty to place all the fads truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence, the ....