TaxTMI 
TaxTMI 
2008 (2) TMI 204
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....er the Hon'ble ITAT was right in law in deleting the penalty levied u/s 271(1)(c) of Income Tax Act,1961 whereas it had already confirmed the addition made u/s 45(5) of the Income Tax Act on account of enhanced compensation received during the previous year relating to Assessment Year 1998-99? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in holding that the view of assessee regarding non-taxability of enhanced compensation was bonafide particularly in view of provisions of section 45(5) of Income Tax Act ?" 2. The brief facts of the case are that the respondent-assessee is an agriculturist whose agriculture land was acquired by the Haryana Urban Development Authority (HUDA) and the assessee was a....
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....le Supreme Court in the said judgment has held that right to receive the compensation would accrue only after final determination by the Court and the decision was rendered in the context of deciding the issue on accrual of compensation. However, the Assessing Officer completed the assessment under section 143(3) on 8.1.2001 and accordingly capital gain on enhanced compensation and interest on enhanced compensation was taxed. Against the order of the Assessing Officer, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) set aside the assessment order of the Assessing officer and directed him to verify the issue of HUF and claim of deduction under Sections 54B and 54F if admissible. As per the direction, the Assessing Offi....
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....ncome by appending a note and placing a bona fide reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524, Moreover, there is an ongoing litigation on the issue of taxability of enhanced compensation and interest thereon whether it will be taxed on the actual receipt basis or on accrual basis. In this case since the matter is pending before the Hon'ble Punjab & Haryana High Court as observed by the Hon'ble ITAT, the right of the appellant has not become final. The AO in this case has taxed the interest on enhanced compensation on receipt basis whereas the Hon'ble Jurisdictional High Court of P & H in an unquoted case of this charge in CIT Vs. Dilbagh Sin....
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....sis by placing reliance on the decision of the Supreme Court. Since, both the elements of bona fide belief and ambiguity in law are present in this case; the penalty u/s 271(1)(c ) is not justified. Hence, the action of AO can not be upheld." 7. The revenue filed the appeal before the Income Tax Appellate Tribunal, Delhi Bench, New Delhi against the order of the Commissioner of Income Tax (Appeal) dated 4.1.2006 whereby he canceled the penalty imposed by the Assesssing Officer under Section 271(1)(c). The said appeal filed by the Revenue was dismissed by the Tribunal. While dismissing the appeal of the Revenue, the Tribunal after noticing the contentions of the parties held as under:- " As is evident from the aforesaid observations re....
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.... by the assessee. Though the same was taxable and had the return, was accepted as correct income, the Revenue would have suffered loss on account of tax and, therefore, explanation offered by the assessee in respect of the facts material to the computation of total income have been found to be false and therefore, the penalty under Section 271(1)(c) has been rightly imposed. 9. Learned counsel for the Revenue has been heard and record perused. 10. We find that the arguments raised by the counsel for the Revenue are without any merit and no substantial question of law arises from the order of the Tribunal. The Tribunal has given a finding of fact to the effect that the amount of enhanced compensation and interest on such enhanced compe....