TaxTMI 
TaxTMI 
2025 (1) TMI 1566
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....to the facts and circumstances of the case, the Ld. CIT (A) has erred in law and on facts in upholding the action of Ld. Assessing Officer in framing the impugned assessment order u/s 147/144B of the Act and that too without assuming jurisdiction as per law and without complying with the mandatory conditions of Section 147 to 151 of the Income Tax Act, 1961. 2.1 That the assessment order passed u/s 147/144B of the Act is bad in law as no tangible material has come to the knowledge of the Assessing Officer. 2.2 That the Ld. Assessing Officer has not recorded any reason by using his independent application of mind to show that he has a "reason to believe" that the income has escaped assessment and as such the same are not valid in the eyes of law. 2.3 That reasons recorded are based upon presumption and guess work and these are not more than reason to suspect and thus are not valid in the eyes of law as no belief can be formed on the basis of such reasons recorded. 2.4 That the re-opening of the assessment is bad in law for the reason that the sanction granted u/s 151 of the Act is not valid in the eyes of the law and the same is mechanical and has....
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....ness of the learned lower authorities' action treating the assessee's interest received u/s 28 of the Land Acquisition Act, 1984 amounting to Rs. 36,72,385/-, as liable to be assessed u/s 57(iv) read with section 145A(b) of the Act. 5. The Revenue's vehement contention before us is that such an interest amount deserves to be assessed u/s 57 hereinabove as income from other sources. And that case law Mahender Narang v. CBDT [2020] 423 ITR 13 (P&H); and [2024] 161 taxmann.com 301 (Delhi) PCIT v. Inderjit Singh Sodhi HUF has already settled this issue against the assessee and in department's favour. 6. We note in this factual backdrop that the very issue had arisen before the tribunal's recent coordinate bench in Pawan Kumar v. PCIT [2024] 206 ITD 53 (Delhi), wherein the foregoing case law in department's favour stands distinguished as under: "3. Briefly stated, the assessee is an individual. He filed his return for AY 2018-19 on 29.08.2018 declaring income of Rs. 6,35,470/-. His return was processed under section 143(1)(a) on 28.06.2019. His case was selected for complete scrutiny assessment under the e-assessment Scheme, 2019 on two issues, namely refund cla....
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....an integral part of enhanced compensation and exempt under section 10(37) of the Act in case of the assessee. 6.1 Elaborating the above contentions, the Ld. AR pointed out that in notice under section 142(1) of the Act dated 23.11.2020 (copy at Paper Book page 1-2), the Ld. AO required the assessee to furnish documentary evidence in support of claim that the amount of Rs. 6,86,17,767/- is received under section 28 of the Land Acquisition Act. The assessee responded vide letter (copy at pages 3-58 of Paper Book) that the assessee received enhanced compensation on compulsory acquisition of his agricultural land by Haryana Govt. of Rs. 6,86,17,767/- which included interest under section 28 of Land Acquisition Act of Rs. 3,97,56,460/- which was part of enhanced compensation as held by the Hon'ble Supreme Court in CIT vs. Ghanshyam HUF (2009) 315 ITR 1 (SC). It was claimed that the assessee was entitled to exemption under section 10(37) of the Act. The explanation of the assessee was accepted by the Ld. AO who passed the impugned assessment order dated 22.01.2021 without making any addition. The assessment was completed after carrying out proper enquiries whi....
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....ction 28 of Land Acquisition Act. Whereas interest under section 34 is payable for delay in making payment after taking possession of the acquired land, interest under section 28 is awarded for accretion in the value of land and is therefore part of enhanced compensation. 6.5 In Ghanshyam's case (supra), the Hon'ble Supreme Court held that interest under section 28, unlike interest under section 34 is an accretion to the value and hence it is a part of enhanced compensation or consideration which is not the case under section 34 of the 1894 Act. 6.6 As to the alleged non-consideration of the decision of Hon'ble P & H High Court in Mahender Pal Narang's case (supra) by the Ld. AO, it is submitted that the Hon'ble Supreme Court dismissed the SLP of the assessee filed against the said decision of Hon'ble P & H High Court in limine and it is a settled law that the dismissal of SLP in limine does not amount to affirmation of the view taken by the High Court. Unless the judgment of the High Court is affirmed, at least, with short reasoning, the same would not amount to binding precedent. 6.7 The Ld. AR elaborated that the insertion of se....
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.... assessee submitted that the amount received under section 28 of Land Acquisition Act is exempt from tax relying on the decision of Delhi Bench of the Tribunal in the case of Shri Puneet Singh, Karnal vs. ACIT pronounced on 08.12.2022 for AY 2011-12 wherein placing reliance upon the decision of Hon'ble Supreme Court in the case of Ghanshyam HUF (supra) decided in favour of the assessee. The submission of the assessee was not acceptable to the Ld. PCIT in view of the decision of Hon'ble P&H High Court in Mahender Pal Narang vs,. CBDT and dismissal of SLP filed against it by the Hon'ble Supreme Court. He, therefore, set aside the assessment order and directed the Ld. AO to pass an order afresh. 9. As to the issue of lack of necessary and proper enquiry during assessment proceeding, the Ld. AR demonstrated that in response to notice under section 142(1) of the Act issued by the Ld. AO the assessee submitted that interest of Rs. 3,97,56,460/- received by the assessee formed part of enhanced compensation as held by the Hon'ble Supreme Court in Ghanshyam HUF's case (supra) which the assessee claimed as exempt under section 10(37) of the Act. Pages 1 to 6....
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.... 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, 2009 did not change the character of interest under section 28 of the Land Acquisition Act from 'capital receipt' forming part of enhanced compensation as envisaged in section 45(5) of the Act to 'revenue receipt' chargeable to tax as 'income from other sources'. It was also explained to the Ld. PCIT that after analysing the provisions of section 28 and 34 of Land Acquisition Act the Hon'ble Supreme Court held in the case of Ghanshyam HUF that interest is different from compensation. However, interest paid on the excess amount under section 28 depends upon a claim by a person whose land is acquired whereas interest under section 34 is for delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under section 28 is part of the amount of compensation whereas interest under section 34 is only for delay in making payment after the compensation amount is determined. Interest under section ....
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.... 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 Court. The question for consideration was "whether after the insertion of section 56(2)(viii) and 57(iv) of the Act w.e.f. 01.04.2010, can the assessee claim that interest received under section 28 of the Land Acquisition Act, 1894 will partake the character of the compensation and would fall under the head "capital gain" and not "income from other sources" ? It was argued by the assessee that there is no amendment in section 10(37) and by insertion of sections 56(2)(viii) and 57(iv), the nature of interest under section 28 of the 1894 Act will remain that of compensation and decisions ....
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....nal jurisdiction as held by the Hon'ble Delhi High Court in CIT vs. Hindustan Coca Cola Beverages P Ltd. (2011) 331 ITR 192 (Del.) 17. Accordingly, on the facts and in the circumstances of the case as set out above, we hold that the order of the Ld. PCIT is not sustainable. Accordingly, we allow the appeal of the assessee and quash the impugned order of the Ld. PCIT." 6.1 Faced with this situation, we adopt the above extracted detailed discussion mutatis mutandis to conclude that both the learned lower authorities' action, inter alia, assessing the assessee's interest received u/s 28 of the Land Acquisition Act, has been wrongly treated as income from 'other' sources (supra). The assessee succeeds in his instant former substantive ground therefore. 7. Next comes the second issue between the parties wherein both the learned lower authorities have declined section 54 thereby holding him to have failed in proving reinvestment of the corresponding capital gains; by filing the requisite specific evidence, as under: "7.11 Ground no. 6 is raised against addition of Rs. 1,30,00,000/- on account of long- term capital gain. 7.12 The Ld. AO discussed ....
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.... to say in the matter:- 1. You have furnished two bank statements of Indian Bank and Axis bank but nowhere the credit of sale receipts of agricultural land is found. Therefore, you are requested to furnish the complete bank statement in which you have received the sale receipts of agricultural land during the Financial Year 2016-17. 2. You have claimed deduction u/s 54F of the I.T. Act vide which it is stated that you have invested in the construction of the property and the entire amount of sale consideration has been invested. You are therefore, requested to furnish the bills and vouchers of the material purchased or payments made to the contractors with documentary evidences. 3. You have claimed deduction u/s 54F of the I.T. Act in the computation of income. On perusal of your bank book of Axis bank with account No. 916010022884735, it is found that you have made cash withdrawal for house construction on the following dates which is before the date of sale receipt received i.e. 18.11.2016 (as per sale deed). S. No. Date Cheque No. Particulars Amount 1. 13.05.2016 133791 Cash withdrawal for house construction 6,0....
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....record, I am not inclined to agree with the contention of the appellant that he has fulfilled all the conditions to claim the deduction u/s 54F of the Act. It is an admitted fact that the immovable property sold was agricultural land within the municipal limit on 23.11.2016 and hence, it is capital asset liable for long term capital gain. Nothing has been submitted before the AO during the assessment proceedings and assessee had claimed deduction u/s 54F of the I.T. Act in the computation of income submitted during the appellate proceedings under Rule 46A of the I.T. Act, 1961. On perusal of copy of registered deed of property, it is found that the payment was made by the purchaser of Rs. 1,28,70,000/- vide cheque bearing No. 800381 dated 18.11.2016 and Rs. 1,30,000/- paid against TDS vide challan No. 6360218 dated 23.11.2016. On perusal of bank statement and bank book filed by the assessee during the remand proceedings, it is found that there is nowhere entry of payment received from the purchaser. Further, the payments made for construction of house was before the date of sale of property or date of cheques mentioned in the sale deed. The relevant portion of t....
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....of Rs. 1,28,70,000/- vide cheque bearing No. 800381 dated 18.11.2016 and Rs. 1,30,000/- paid against TDS vide challan No. 6360218 dated 23.11.2016. On perusal of bank statement and bank book filed by the assessee during the remand proceedings, it is found that there is nowhere entry of payment received from the purchaser. Further, the payments made for construction of house was before the date of sale of property or date of cheques mentioned in the sale deed. The relevant portion of the remand report submitted by the AO is reproduced as under:- II) Regarding addition of Rs. 1,30,00,000/- on account of Long Term Capital Gain, the assessee sold agricultural land (within Municipal Limit) for Rs. 1,30,00,000/- on 23.11.2016. On perusal of copy of registered deed of property, it is found that the payment was made by the purchaser of Rs. 1,28,70,000/- vide cheque bearing No. 800381 dated 18.11.2016 and Rs. 1,30,000/- paid against TDS vide challan No. 6360218 dated 23.11.2016. The assessee claimed deduction u/s 54F of the I.T. Act in the computation of income submitted during the appellate proceedings under Rule 46A of th....
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....ues mentioned in the sale deed. Therefore, appellant has failed to rebut the finding of the AO on factual footing. It was specifically asked by the AO during the remand proceedings to furnish the bills and vouchers of the material purchased or payments made to the contractors with documentary evidence in respect of the claimed deduction u/s 54F of the I.T. Act vide which it was claimed by the appellant that he has invested in the construction of the property and the entire amount of sale consideration has been invested. But no evidence was submitted by the appellant either during the remand proceeding or appellate proceedings in this regard. Hence, the Valuation Report uploaded by the appellant that too of 15.12.2022 is a self-serving document lacking any supporting evidence. 7.16 In view of the above discussion and analysis, I am not inclined to agree with of deduction u/s 54F contention of the appellant. Appellant is not entitled for claim the Act in view of the above facts and analysis brought on record by the AO which the appellant failed to rebut. Therefore, addition of Rs. 1,30,00,000/- on account of Long Term Capital Gain is confirmed and Ground no. 6 raised by....