TaxTMI 
TaxTMI 
2024 (4) TMI 646
X X X X Extracts X X X X
X X X X Extracts X X X X
....ause notice by Ld. PCIT, Rohtak is void ab initio therefore both initiation and consequent order u/s. 263 of the Act without jurisdiction and thus, deserves to be quashed as such. 4. That the Ld. PCIT has failed to appreciate that once the AO on examination of the fact on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the Ld. CIT had a different opinion and that too, without having established in any manner that, view adopted by the Ld. AO was an impossible or unsustainable view. 5. That the Ld. PCIT has failed to appreciate that action u/s. 263 of the Act is otherwise too inapplicable on the factual matrix of the facts of the instant case since it is not a case of "lack of enquiry" or "lack of investigation" and therefore the invocation u/s. 263 of the Act is not in accordance with law. 6. That further more the Ld. PCIT has proceeded to set aside the order on mere speculation, generalized observations, theoretical allegations and assertions, without there being any supporting evidence and is therefore not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cisions on taxability of interest on enhanced compensation, as envisaged under the said provision and requested the assessee to show cause as to why the assessment made for AY 2018-19 vide order dated 4.12.2020 u/s,. 143(3) r.w.s. 143(A), 143(B) & 143(3B) should not be envisaged by invoking the Provisions of Section u/s. 263 of the Act. Accordingly, show cause notice u/s 263 dated 16.1.2023; 07.2.2023 & 20.2.2023 were issued to the assessee and in response to the same the assessee filed its reply dated 27.2.2023 before the Ld. PCIT. The reply was not acceptable to the ld. PCIT who held in paras 5.1 to 7 of his order dated 27.3.2023 as under by setting aside the assessment order with a direction to AO to pass an order afresh, after due consideration of the facts and in accordance with law after requisite enquiries and proper verification with regard to issues mentioned above, in accordance with law. "5.1 I have carefully examined the facts of the case and it is evident that the assessee has received interest on enhanced compensation during the assessment year under consideration which ought to be treated as "income from other sources" and should have been taxed accordingly, under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rest received on compensation or enhanced compensation and also the amendments / provisions of Section 56(2)(viii) introduced through Finance Act, 2009 effective from the 01.4.2010 on the above issue, which he has clearly failed to do. 6.1 ......... .................................................. (ii) .......................................................... .......................................................... ........................................................... 7. Keeping in view of the facts and circumstances of the case as discussed above, I am of the considered opinion that the AO had passed the order dated 4.12.2020 in a very casual manner without due diligence and without conducting proper enquiries and verification which should have been made with respect to amended provisions of the Finance Act, 2015 and binding decision of Jurisdictional Hon'ble Punjab & Haryana High Court and Hon'ble Apex Court on the taxability of interest on enhanced compensation. Therefore, the assessment completed u/s. 143(3) r.w.s. 143(3A) & 143(B) of the Act is erroneous so far as it is prejudicial to the interest of the revenue in terms of Explanation 2 of section 263 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot in accordance with law. It was further submitted that Ld. PCIT has proceeded to set aside the order on mere speculation, generalized observations, theoretical allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. The findings of the Ld. PCIT that "the AO had passed the order dated 4.12.2020 in a very casual manner without due diligence and without conducting proper enquiries and verification which should have been made with respect of amended provisions of the Finance Act, 2015 and binding decision of Jurisdictional Hon'ble Punjab & Haryana High Court and Hon'ble Apex Court on the taxability of interest on enhanced compensation is factually incorrect, legally misconceived, contrary to the facts on record and wholly untenable. The conclusion that "interest on enhanced compensation during the assessment year under consideration ought to be treated as income from other sources u/s. 56(2)(viii) of the Act" is not based on correct appreciation of facts and therefore untenable. It was further submitted that Ld. PCIT has also failed to appreciate that, u/s. 263 of the Act, an order of assessment cannot be set aside to simpl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... PCIT, Rohtak 21.3.2023 28.3.202 ix) Decision of Hon'ble Income Tax Appellate Tribunal in Delhi benches in ITA No. 1676/Del/2023 dated 13.2.2024 (pages 256 - 257) of paper book) "16. Since the order of the AO is based on the decision of Hon'ble Supreme Court in Ghanshyam HUF (Supra) on the issue of interest received by the assessee under section 28 of Land Acquisition Act, it can be at best be said to be a debatable issue on which two views are possible and the AO accepts one of the views. In this view of the matter too, the ld. PCIT cannot assume revisional jurisdiction as held by the Hon'ble Delhi High Court in CIT vs. Hindustan Coca Ltd. Beverages Ltd. (2011) 331 ITR 192 (Del.) Under consideration In view of the aforesaid, Ld. AR has submitted that once issue has been decided in ITA No. 1676/Del/2023 by the Delhi bench of the Tribunal, wherein proceedings u/s. 263 of the Act has been quashed, facts being identical to the appellant-assessee herein, appeal of the assessee may also be allowed by following the aforesaid precedent. 6. The ld. CIT(DR) relied upon the order of the Ld. PCIT. 7. We have heard the rival contentions and perused the material available on re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld to be part of compensation by Apex Court in the case of CIT vs. Ghanshyam HUF reported as (2009) 315 ITR 1, the same being exempt under section 10(37) of the Act has not been included in the total income of the assessee while filing return of income. The Ld. AO accepted the explanation of the assessee. 12. The issue of amended provisions of section 56(2)(viiil by the Finance Act 2009 and the decision of Hon'ble P&H High Court in Mahender PaL Narang's case was raised by the Ld. PCIT in notice under section 263 on the basis of the proposal submitted by the Ld Successor AO Before the Ld. PCIT the assessee explained that the amended provisions were not in connection with the decision of Hon'ble Supreme Court in Ghanshyam HUF'S case but to make simple the taxation of interest income as earlier it was taxable on accrual/cash basis on the basis of accounting principles as held by the decision of Hon'ble Supreme Court in Rama Bai vs. CIT (1990) 181 ITR 400. It was also explained that insertion of section 145A, 145B, 56(2)(viii) and 57(iv) by the Finance (No.2) Act. 2009g did not change the character of interest under section 28 of the Land Acquisition Act from capital rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rama Bai case involved the taxability in the year of receipt. The facts and questions for determination in Rama Bai's Case were different from those of Ghanshyam HUF's case. The position in Ghanshyam HUF'a case has been affirmed by the Hon'ble Supreme Court in UOI VS Hari Singh (2013) 91 taxmann.com 20 (SC). 14. We have gone through the decision of the Hon'ble P & H High Court in the case of Mahender Pal Narang (supra). In that case the land of the assessee was acquired in AY 2007-08 and 2008-09. The enhanced Compensation was received on 21.03.2016. In his return filed for AY 2016-17 he treated the interest received under section 28 of the 1894 Act as income from other sources and claimed deduction for 50% as per section 57(iv) of the 1961 Act. The return was processed under section 143(1) of the Act. An application under section 264 was made claiming that by mistake the assessee treated the interest income as income from other Sources whereas the same is part of enhanced compensation. The revisional authority rejected the application under section 264 on 30.1.2019. It was in this factual matrix that the assessee filed writ petition before the Hon'ble P & H High Cour....