TaxTMI 
TaxTMI 
2025 (6) TMI 1308
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.... penalty of Rs. 20,10,01,733/- u/s 271(1)(c) for concealment of income. 2) The Learned CIT(A) erred in confirming penalty of Rs. 20,10,01.733/-u/s 271(1)(c) for concealment of income on the addition of Rs. 43,08,61,042/- as income from other sources and Rs. 22,49,01,802 as income from capital gains being amounts received on account of compensation for acquisition of land without appreciating that there is no concealment of income as Assessee has made all bonafide disclosures w.r.to the addition and in fact reopening was done on the basis of information given by the Assessee about said income and that penalty is not automatic and hence penalty u/s 271(1)(c) of Rs. 20,10,01,733/- may be deleted. 3) The Learned CIT(A) erred in confirming penalty of Rs. 20,10,01,733/-u/s 271(1)(c) for concealment of income without appreciating that in the facts of the present case there was a bonafide dispute w.r.to the year of taxability and said issue is a legal and debatable issue and thus there is no concealment of income and hence penalty u/s 271(1)(c) of Rs. 20,10,01,733/- may be deleted." ITA NO. 4662/Mum/2024 1) The Ld CIT(A) erred in not condoning the delay in filing appeal with appreci....
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....on received by the assessee and interest on additional compensation u/s. 56(2)(viii) which according to the assessee was received on account of interim order by the Hon'ble High Court of Bombay in the appeal filed by the State Government of Maharashtra not accepting the award passed by the Civil Court. 4. Brief facts of the case are that assessee is a non-resident and a senior citizen residing in Australia as an Overseas Citizen of India (OCI). Assessee owned a land admeasuring 2,76,500 sq. mtrs at village Panaje, Taluka Uran, District Raigad. These lands were acquired by the Special Land Acquisition Officer (SLAO) during the year 1986 for which an order was passed u/s. 11 of the Land Acquisition Act (LAA), 1894, awarding compensation of Rs. 14,49,531/-. Aggrieved by the order of SLAO, assessee made a reference u/s. 18 of the LAA before the Court of Civil Judge, Senior Division, Raigad at Alibag on 25.07.1990 bearing Land Acquisition Reference No. 620/2000 (old L.A.R. No.2661 of 1990). Against the said reference made by the assessee, the Court of Civil Judge, Senior Division, Raigad at Alibag, pronounced its order on 01.04.2014 enhancing the compensation by awarding additional....
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....ommitted an error in holding that the compensation awarded by S.L.A.O. to the claimant is inadequate and improper. 2) That the Reference Court erred in partly allowing the reference preferred by the claimant u/s. 18 of the Land Acquisition Act. 3) That the Reference Court erred in coming to the conclusion that the claimant is entitled to get market value of the acquired land @ Rs. 500/-PSM and all other statutory benefits." 4.4. In the said application filed by the State of Maharashtra, in para-3 it mentioned about the uncertainty of getting back of the excess payment if the applicant succeeds in its appeal. It prayed that in order to avoid multiplicity of proceeding in execution and restitution, the order passed by the Civil Court be stayed for its operation, execution and implementation until the hearing and final disposal of the appeal so filed. The submission so made in this respect is reproduced as under: "3. In the event of the Applicant-State succeeding in the First Appeal, it would be absolutely difficult to get back the excess payment that would be received by the claimants under the impugned Judgment and Award. Besides, there would be multiplicity of the proceeding....
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....ation received by him in view of proviso to section 45(5)(b). However, he intimated the details of the said transaction to the concerned Assessing Officer by way of a submission dated 09.08.2016. This letter formed the basis for initiating re-assessment proceeding by issuing notice u/s.148, dated 26.03.2019. Ld. Assessing Officer recorded the reasons to believe for invoking the re-assessment proceedings referring to the amount of additional compensation received by the assessee not offered to tax in the return filed by him. 5.1. Assessee made various submissions before the ld. Assessing Officer contending that additional compensation received by him during the year is not taxable since the order passed by the Hon'ble High Court of Bombay is not the final order but an interim one. Further, it was submitted that Hon'ble High Court of Bombay had stayed the operation, execution and implementation of the order of ld. Civil Court and therefore proviso to section 45(5)(b) comes into play making the amount taxable in the year in which the final order is passed. After considering the submission made by the assessee, ld. Assessing Officer completed the assessment by making an additi....
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....s that the delay is not condoned and the appeal is liable to be dismissed, however, on the other hand he took up the appeal for adjudication on merit which he has done so by passing a speaking order on the grounds raised by the assessee on the merits of the case sustaining the addition made by the ld. Assessing Officer. 6.2. In this respect, we take note of section 249 of the Act. To address the issue in hand before us, we need to delve into the understanding of the expression "sufficient cause". Sub-section 3 of Section 249 contemplates that the CIT(A) may admit an appeal after expiry of relevant period, if he is satisfied that there was a "sufficient cause" for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally. 6.3. We may make reference to the following observations of the Hon'ble Supreme Court from the decision in the case of Collector Land Acqu....
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....itigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay....
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....her, by way of sub section (4) of section 249, no appeal shall be admitted unless prescribed conditions are fulfilled. Sub section (3) of 249 provides for admitting the appeal even if the appeal is filed after the prescribed limitation, if assessee is able to demonstrate sufficient cause for not presenting it within the prescribed period to the satisfaction of the Appellate Authority. It is only after the admission of the appeal, that the procedure in appeal as prescribed u/s.250 are followed with. This section provides for fixing of day and place for the hearing of the appeal among other procedures. Thereafter, section 251 lists down the powers of the Appellate Authority in disposing of the appeal. 6.9. In the present case, ld. CIT(A) has despite holding that the appeal is dismissed on account of delay has proceeded to adjudicate upon the merits of the case by resorting to provisions of section 250 and 251 which in itself suggests that the delay in filing the appeal has been impliedly condoned as section 249 uses the word "admit" the appeal. It is upon appeal having admitted only that ld. CIT(A) can proceed to adjudicate on the same and dispose it off as prescribed in section 251....
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....subject to providing the bank guarantee of 60% of the said amount and an indemnity bond for the balance 40%. Assessee had to keep 60% of the said compensation in the bank to obtain bank guarantee and thus asserted that he did not have access to the entire amount of compensation so awarded. The compensation so awarded is not final as assessee may be required to bring back the amount if he loses the appeal, which in the present scenario is subjected to furnishing of bank guarantee and indemnity bond. 7.2. Further, it was strongly submitted that order of Hon'ble High Court of Bombay is an interim order as the stay of the award is till the final disposal of the appeal filed by the Government of State of Maharashtra. Having considered the submissions of the assessee, ld. CIT(A) placed reliance on the decision of Hon'ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) [2009] 315 ITR 1 (SC) which had held that additional amount of compensation or enhanced compensation are taxable u/s. 45(5)(b) in the year of receipt. Ld. CIT(A) took similar view in respect of interest received on compensation by holding it taxable in the year of receipt u/s. 56(2)(viii) as 'income from other....
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....Tribunal or other authority shall be deemed to be income chargeable under the head "Capital gains" of the previous year in which the final order of such court Tribunal or other authority is made] [(c) where in the assessment for any year, the capital gain arising from the transfer of a capital asset is computed by taking the compensation or consideration referred to in clause (a) or, as the case may be, enhanced compensation or consideration referred to in clause (b), and subsequently such compensation or consideration is reduced by any court, Tribunal or other authority, such assessed capital gain of that year shall be recomputed by taking the compensation or consideration as so reduced by such court, Tribunal or other authority to be the full value of the consideration] Explanation-For the purposes of this sub-section, - (i) in relation to the amount referred to in clause (b), the cost of acquisition and the cost of improvement shall be taken to be nil, (ii) the provisions of this sub-section shall apply also in a case where the transfer took place prior to the 1st day of April, 1988, (iii) where by reason of the death of the person who made the transfer, or for any oth....
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.... the income chargeable of the previous year in which such amount is received by the assessee. There is uncertainty about the year in which the amount of compensation received in pursuance of an interim order of the court is to be charged to tax, due to court orders. Accordingly, it is proposed to provide that the amount of received in pursuance of an interim order of the court, Tribunal or other authority shall be deemed to be income chargeable under the head 'Capital gains' in the previous year in which the final order of such court, Tribunal or other authority is made. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent assessment years." [emphasis supplied by us by bold] 8.5. From the above, it is to be noted that reasons for introduction of proviso to clause (b) to section 45(5) refers to the aspect of uncertainty which prevails for bringing to tax the amount of compensation received pursuant to an interim order. It is for mitigating this uncertainty, the said proviso was brought on the statute, making the aforesaid amount of compensation taxable in the year when the final o....
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.... of a situation which may arise requiring the Department to refund the amount of tax upon the final outcome in the appeal by the State of Maharashtra if it is unfavourable to the assessee. It is a situation where the assessee does not have full access to the entire amount for his use and enjoyment and at the same time, going by the stand taken by the authorities below, he is required to cough out money from his coffers to meet the tax liability on the said amount. Provisions of the Act discussed above does not envisage putting assessee in such a situation. 9.1. Reference was made to section 144 of the Code of Civil Procedure, 1908 which provides for restitution. According to this, where an order of Court is modified in appeal then, the parties would be placed in the same position as if the order was not passed. Section 53 of the LLA was also referred which provides that provisions of Code of Civil Procedure will apply. Appeal filed by the State Government against the award of additional compensation awarded by the Court of Civil Judge, Senior Division, Raigad at Alibag (supra) is under the provisions of LLA. Thus, on harmonious reading of the Code of Civil Procedure, LLA and provi....
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....he glasses of the statute maker provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place..." 9.5. In view of the above deliberation, stand taken by the authorities below that even after the insertion of proviso to clause (b) of Section 45(5), additional compensation paid on account of an interim order of the High Court will be taxed in the year of receipt makes the letter and spirit of the proviso otiose and a nullity. 9.6. Further, on the reliance placed by the ld. CIT(A) on the decision of Ghanshyam (HUF) (supra), it is noted that the issue before the Hon'ble Court in this case pertained to the interpretation of section 45(5) as it stood prior to 01.04.2004, wherein it is held....
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....e of E.D. Sassoon and Co. Ltd. [1954] 26 ITR 27 (SC), whereby it observed that there was no absolute right to receive the amount at the time of withdrawing the sum because if the appeal of the State Government was allowed in its entirety, the right to payment of the enhanced compensation would fall altogether. Further, Hon'ble Supreme Court referred to the observation of the Hon'ble Andhra Pradesh High Court in the case of Khan Bahadur Ahmed Alladin and Sons vs. CIT [1969] 74 ITR 651 (AP) whereby it held that "Income-tax is not levied on a mere right to receive compensation; there must be something tangible, something in the nature of debt, something in the nature of an obligation to pay an ascertained amount. Till such time, no income can be said to have accrued". It was thus held that since the right to receive itself was in dispute, no income accrued to the assessee in that case. 11. Considering the facts on record and judicial precedents referred above and the deliberation on applicable provisions to the issue in hand, we find that the taxability of additional compensation along with interest thereon received by the assessee falls in the proviso to section 45(5)(b) mak....