AI Drafter 
TaxTMI 
TaxTMI 
2022 (2) TMI 1344
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....ief are that the respective assessee had filed their original return u/s 139(4) of the Act for Assessment Year 2017-18 which was revised u/s 139(5) of the Act. The computation of income of the original return the assessee had shown interest on enhanced compensation of land at Harsaru, Gurugram, Haryana and claimed deduction on the same @50% u/s 57 of the Act while in the revised return the assessee has not shown this income of interest received on enhanced compensation during the year under consideration. The ld Revisional Authority observed that there was no entry of this amount either to show as income or to claim any deduction under any provisions in the revised return of income. It considered it as good as non-disclosure of income received. Ld. Revisional Authority observed that it is not the case of the assessee in the computation of income or in the revised income that the said interest is exempt u/s 10(37) of the Act or any other provisions of the Act. It believed that in accounting method the assessee had to show the receipts and then may claim deduction and exemption but non-disclosure amounts to concealing of particulars of income. 3. Further, the ld Revisional Authori....
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....r which is passed without inquiry and following the valid & applicable judgements of jurisdictional High Court of Punjab & Haryana, Supreme Court ignoring the statutory provisions and read with explanation 2 of section 263, can be held as erroneous and prejudicial to the interest of revenue by Principal Commissioner of Income Tax under section 263?" 6. It believed that the ld AO had not conducted enquiry to examine whether the conditions necessary for exemption u/s 10(37) were fulfilled. Accordingly, show cause notice issued u/s 263 was issued to the assessee. On behalf of the assessee written submissions were submitted before ld Revisional Authority. Primarily and grossly on following; First that the assessment order is not erroneous as the same was passed by the ld AO after conducting detailed enquiry and examination on the issue. In this context it was submitted that the interest u/s 28 of the Land Acquisition Act is allowed in view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF) (2009) 315 ITR 1(SC) and CIT-1, Gurgaon decision in case of co-owner Ashok Kumar Dhingra for Assessment Year 2016-17. Secondly it was also submitted on b....
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....o decidendi which has a binding force." 8. Ld Revisional Authority relied on the judgment of Hon'ble Supreme Court in case of Mehendra Pal Narang Vs. CBDT (2021) 279 taxmann 74 wherein, the assessee"s SLP was dismissed and the order of Punjab and Haryana High court was upheld. Ld Revisional Authority further referred to judgment of Punjab and Haryana High Court in case of Karta Manjeet Singh (HUF) Vs. Union of India (2016) 65 taxmann.com 160 (Punjab and Haryana) and observed in para 38 as follows:- "38, A writ was filed before Hon'ble Punjab and Haryana High Court claiming that the interest received on enhanced land compensation u/s 28 of the Land acquisition Act, 1894 does not fall for taxation under section 56 as income from other sources in view of judgment of the Apex Court in the case of CIT v. Ghanshyam (HUF) [2009] 315 ITR 1/182 Taxman 368. The Hon'ble High Court of Punjab and Haryana in the said case of Manjeet Singh (HUF) Karta Manjeet Singh v. Union of India reported in [2016] 65 taxmann.com 160 (Punjab & Haryana)/[2016] 237 Taxman 116(P&H) held that where assessee, a landowner, received interest under section 28 of Land Acquisition Act, 1894, said interes....
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.... of receipt. 20. However, by Section 27 of the 2009 Act, a new clause (iv) in Section 57 has been inserted w.e.f. 01.04.2010 which lays down that in the case of income of the nature referred to in Section 56(2)(viii), a deduction of a sum equal to 50% of such income would be allowable thereunder and no deduction would be allowed under any other clause of Section 57....... " 10. In the same context it relied on the judgment of Punjab and Haryana High Court Karnail Singh (2010) 326 ITR 501 and Sant Ram Vs. Union of India in (2010) 328 ITR 77, Tuhi Ram Vs. Land Acquisition Collector (1993) 66 taxman 127. Ld Revisional Authority was also referred to order of ITAT in Puneet Singh Vs. ACIT in ITA No. 141/Del/2017 decided on 11.10.2017 and observed that in this judgment it was held by the coordinate bench that the interest received on enhanced compensation is liable to taxed under the head "income from other sources". Ld. Pr. CIT then examined the judgment of Hon'ble Supreme Court in Union of India Vs. Hari Singh and observed in para 44 as follows:- "44. The Hon'ble Supreme Court of India in the case of Union of India v. Hari Singh reported in [2018] 254 Taxma....
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....e of Ghanshyam (HUF) is not taxable as income under Income Tax Act, 1961 is wrong and not tenable. Otherwise, also in the case of Hari Singh, the only question was deduction of TDS by the collector on the land being acquired. The Hon'ble Supreme Court very clearly and categorically held to follow the case of Nalini v. Dy. Collector, Land Acquisition 2006 (4) ILR Kerala 229 (para 6) wherein it has been laid down by Hon'ble Kerala High Court that the Land Acquisition Court has no jurisdiction to decide that issue and that is a matter to be decided by the Income- tax Officer, hence the order passed by the court below is correct and the remedy available to the petitioner is to get the TDC from the Land Acquisition Officer and claim refund from the Income Tax Officer." 11. Consequently, it observed in para 55 and 56 of its order that there was semblance of enquiry and that too, in a very slipshod manner by the ld AO. It will pertinent to reproduce relevant para no. 55 and 56 herein as follows:- "55. It is clear that Assessing Officer had done only a semblance of enquiry and, that too, in very slipshod manner and Assessing Officer had accepted version of assessee without ....
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....ate authorities. The Department will not have an opportunity if this wrong order has to be accepted although erroneous and prejudicial to the interest of revenue because the Assessing Officer has expressed his opinion although it may be on wrong assumption of facts and application of law." 12. Thus, the ld Revisional Authority observed that in the light of amended provisions of section 263 the order passed is erroneous and prejudicial to the interest of revenue and liable to interfered u/s 263 of the Act. Accordingly, referring to the various judicial citations to exercise powers of Revision u/s 263 of the Act in case of lack of enquiry, the ld Revisional Authority directed the ld AO to make further enquiry as per the observation of the ld Revisional Authority in the impugned order. 13. The assessee is in appeal raising following grounds of appeal as reproduced below from the lead case argued on behalf of the assessee and revenue in ITA No. 1063/Del/2022, assessee Subhash Chand Dhingra, for Assessment Year 2017-18:- "1. That on the facts and circumstances of the case and in law, the order dated 29.03.2022 by the Principal Commissioner of Income Tax ["PC IT"], under s....
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....risdiction under section 263 without appreciating the original assessment order was passed under the supervision of Commissioner, therefore, it cannot be re-stated by the PCIT that the assessment order passed was without any application of mind. [Hari Iron Trading v. CIT: 263 ITR 437 P&H] 8. That the PCIT erred on facts and in law in not appreciating the nature of receipt of interest received on enhanced compensation under section 28 of the Land Acquisition Act 1894, is of capital in nature and therefore not taxable as interest. Ergo, the PCIT erred in setting - aside the assessment order without recording the prima facie finding on merits. 9. That the PCIT erred on facts and in law in not appreciating that the requisite enquiry was conducted by the Assessing Officer while allowing the exemption under section 10(37) of the Act and also no error, in fact, was pointed out by the PCIT in the said order of assessment, 10. That the PCIT erred on facts and in law in not appreciating that even if the Assessing Officer has not specifically mentioned that he has examined/ verified a particular issue in the assessment order, that would not ipso facto mean that ther....
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....ce in this regard was placed on the judgment:- Malabar Industrial Co. Ltd. v. CIT : 243 ITR 83 (SC) CIT vs. Max India Limited: 268 ITR 128 (P&H) [affirmed in 295 ITR 282 (SC)] CIT vs. Kwality Steel Suppliers Complex: 395 ITR 1(SC) Hari Iron Trading Co. vs. CIT: 263 ITR 437 (P&H) Vimgi Investment (P) Limited: 290 ITR 505 (Del) CIT vs. Gabriel India Limited: 203 ITR 108 (Bom) 17. Ld Counsel submitted that merely because the ld AO has not specifically mentioned that he had examined/ verified particular issue in the assessment order would not ipso facto mean that there was none application of mind on the part of the Ld. AO on such issue and reference was made on following judgments:- Hari Iron Trading Co. vs. CIT: 263 ITR 437 (P&H), CIT vs. Eicher Limited: 294 ITR 310 (Del.), CIT vs. Anil Kumar Sharma: 335 ITR 83 (Del.), CIT vs. Gabriel India Limited: 203 ITR 108 (Bom)]. 18. It was further submitted that the ld Pr. CIT cannot substitute his opinion in place of that of the AO to invoke his exceptional powers u/s 263. Reliance was also placed in this regard on the following judgments:- ....
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....e if it is found that the compensation was received in respect of the agricultural land, the tax deposited with the Department shall be refunded to these depositors. 21. It was submitted that provisions of section 2(28)A read with section 56(2)(vii), 57(iv) and section 145A of the Act were not applicable as the assessee has received interest u/s 28 of the Land Acquisition Act, 1894. 22. It was specifically submitted that the judgment of P&H High Court in case of Mehendra Pal Narang V. CBDT (2020) 120 Taxman.com 400 (P&H) is dated 19.02.2020 while the assessment were concluded on 14.11.2019. Thus, the ld AO had rightly considered the provisions of law as applicable then and benefitted the assessee. 23. It was submitted even otherwise when the two view are possible and datable that cannot be basis for holding an order to be erroneous. Reliance in this regard was placed on the following judgments:- CIT v Kwality Steel Suppliers Complex: 395 ITR 1 (SC) CIT v. Kelvinator of India Ltd: 332 ITR 231 (Del) CIT v. DLF Limited: 350 ITR 555 (Del.) CIT v. Ansal Properties & India (P.) Ltd.: 315 ITR 225 (Del.) 24. Relying the Hon'ble Bombay High Co....
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....aon in the case of Virender Singh, S/o. Chattar Singh, Village Hassaru in appeal No. 460/2016-17 order dated 06.02.2018 for AY 2014-15. Hence, revised return was filed declaring interest income as exempt income. 28. Further in reply to the notice u/s 142(1) available at page no 14-17 of PB, again it was submitted as under:- "22.23 Regarding Difference in Income Tax Return and 26AS and reason for revising the return. The assessee received Interest on Enhanced Compensation to the tune of Rs. 35910400/- on which TDS was deducted to the tune of Rs. 3591040/-. The Income was claimed Exempt hence Difference in Total Income and 26AS-194A. Earlier while filing the Original Return, the Interest received on Enhanced Compensation was offered for taxation under section 56 (2)(viii) in income from other sources and 50% deduction was claimed as per Section 57(iv) but later on there was judgment of Hon'ble Supreme Court in the case of Union of India Vs. Hari Singh and others and also the decision of CIT(A), Gurgaon in the case of Sh. Vijender Singh S/o Sh. Chatter Singh in Appeal No. 460/16-17 order dated 06- 02-201 8. Hence, following the decision of Hon'ble Supreme Court an....
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....the case of co-owner. Hence, it is once again requested that assessment be framed on revise return and interest received on enhanced compensation be treated as exempt income." 29. There upon the assessment was concluded. The assessment order is somehow silent of the fact of what specific enquires were raised in regard to this claim and how they were addressed by the assessee or on what basis the same were accepted by the Ld. AO. Expeditious will be to reproduce the assessment order itself in lead case ITA No. 1063/Del/2022, assessee Subhash Chand Dhingra:- "Original return of the income for AY 2017-18 was electronically furnished on 31.01.2018 with Acknowledgement Number 381145450310118, declaring an income of Rs. 3,01,05,170/-. Further a revised return of the income for AY 2017-18 was electronically furnished on 29.09.2018 with Acknowledgement Number 312813340290918, declaring an income of Rs. 1,21,49,970/- The return was accordingly processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Subsequently, the case was selected for Limited Scrutiny by CASS. Notice u/s 143(2) was issued and served upon the assessee on 21.09.2019 by ....
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.... relied by Ld. AR, took notice of the same and after discussing the checkered history of litigation and judicial pronouncements, held as under:- "16. By the Finance Act (Number 2) Act 2009 with effect from 1 April 2010 there is an amendment Under the provisions of Section 56 (2) (viii) which provided that income by way of interest received on compensation or on enhanced compensation referred to in clause (B) of Section 145A is an income. A corresponding provision was also introduced u/s 57 (iv) providing for deduction of a sum equal to the 50% of the income chargeable to tax under the above provision. The provisions of Section 145A (B) was also introduced providing that interest received by the assessee shall be deemed to be the income of the year in which it is received. Subsequently with retrospective effect from 1.4.2017 The Finance Act 2018 provided that income by way of interest received on compensation or enhanced compensation is chargeable to tax as income from other sources Under the provisions of Section 56 (2) (viii) of the act. 17. Hon'ble High Court of Punjab and Haryana has taken a consistent view that interest received on delayed payment of compensat....
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.... 19. An interesting fact was noted by the Hon'ble Gujarat High Court that Hon'ble Punjab and Haryana High Court in case of Jagmal Singh versus State of Haryana in civil revision number 7740 of 2012 on 18 Jul 2013 has clearly held that the interest u/s 28 is part of the compensation unlike u/s 34 of the act which is income. This was the solitary judgment of the Hon'ble Punjab and Haryana High Court taking a view that interest on compensation u/s 28 of the land acquisition act is not an income chargeable to tax as interest but is part of compensation. However, in the latest decision of Hon'ble Punjab & Haryana High Court in the case Mahindra Pal Narang vs. CBDT (2020) 423 ITR 13 dated 19/2/2020 wherein the Hon'ble High Court considered the provisions of Section 10 (37), 56 (2) (viii), 57 (iv), 145A (b) of the income tax act. It rejected the reliance by the assessee on the decision of Hon'ble Supreme Court in Ghanshyam HUF. It further rejected the reliance by the assessee on the decision of the Hon'ble Gujarat High Court in Movaliya's case holding that the Hon'ble Gujarat High Court did not read properly the paragraph number 46.3 of the circular number 5 of 2010 where all ....
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....Supreme Court in the case of CIT vs. Ghanshyam (Supra) and also considering the fact that the Hon'ble Supreme Court has dismissed the SLP filed in the case of Manjit Singh (HUF) (Supra), it is held that the interest received u/s 28 of the Land Acquisition Act is not exempt under the act as it could not partake the character of compensation for acquisition of agricultural land. It is held that the interest received on enhanced compensation in the appellant's case is liable to tax under the head income from other sources. Accordingly, the grounds of appeal raised by the assessee are dismissed." 34. The bench is of considered opinion that certainly judicial decision subsequent to the assessment order may not be the valid basis for exercising the revisionary powers. However, in the case in hand the assessment order is infact silent as to the fact that if the Ld. AO had made any enquiry into the issue and if Ld. AO had taken into consideration the judicial pronouncements, relied on behalf of the assessee, then for what substantial reasons the judgments of jurisdictional High Court, i.e Hon'ble Punjab and Haryana High Court in favour of Revenue have not been relied. 35. Per....