BISHAMBER DAYAL ,GURGAON V. ITO,WARD-2 , REWARI

ITA 4553/DEL/2024

AI Insights

The case involves Bishamber Dayal, an illiterate agriculturist, whose agricultural land was acquired by the State Government under compulsory acquisition. He received enhanced compensation and interest, which he initially declared as taxable income. Later, relying on a Supreme Court judgment, he revised his return to claim exemption for the interest income. After a notice under section 148, he declared the income again and paid the taxes. The Assessing Officer initiated penalty proceedings under section 270A for under-reporting income, which the assessee contested, arguing that he acted based on legal advice and Supreme Court judgments. The Tribunal found that the penalty was not applicable as the assessee had acted in good faith and met the conditions for immunity under section 270AA.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23550 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: CIT vs. Ghanshyam (HUF), Mahender Pal Narang Vs. Central Board of Direct Taxes (CBDT), Paramjeet Singh Vs ACIT, Circle Karnal, Surender Vs ITO Ward 4(3), Gurgaon, Jagmal Singh Vs ITO Ward 2(2), Gurgaon, Ramkishan Vs ITO Ward 60(5), New Delhi, Amarchand Gupta and others Vs ITOs, ITO Ward 2 Rewari Vs Manish Yadav
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: R.C. YADAV
• Keywords: Revised return
• Section: 147; 148; 139(1); 139; 115JB; 139(5); 270AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4553/Del/2024 (ASSESSMENT YEAR 2019-20) Bishamber Dayal C/o R.C. Yadav & Associates, H-3, Unit-2-FF, Vatika INXT Floors, Sector-82, Gurugram, Haryana-122004 PAN-AWKPD0537F Vs. ITO, Ward-2, Rewari. (Appellant) (Respondent) Assessee by Sh. R.C. Yadav, AR Department by Sh. Ashish Tripathi, Sr. DR Date of Hearing 17/02/2025 Date of Pronouncement 05/03/2025 O R D E R PER MANISH AGARWAL, AM: This is appeal filed by the Assessee against the order Ld. CIT, NFAC, Delhi in appeal No. NFAC/2018-19/10381000 dated 29/098/2024 for Assessment Year 2019-20. 2. Brief facts of the case are that the assessee is an individual and originally filed his return of income u/s 139(1) of the Income Tax Act, 1961 on 12/08/2019 declaring total income of Rs.4,96,38,080/- which included interest on enhanced the compensation of 2 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO Rs.4,94,29,200/- after claiming 50% deduction u/s 57 of the Act. Thereafter, the return was revised u/s 139(5) wherein the assessee has withdrawn the income declared on account of interest on enhanced compensation by claiming it exempt u/s 10(37) of the Act by placing reliance on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) reported in [2009] (8) SCC 412, Faridabad. The revised returned so filed by the assessee and was processed and the revision claimed by the assessee was allowed to him. Thereafter, a notice u/s 148 of the Act was issued on 30/03/2023 after the judgment of Hon’ble Supreme Court dismissing the SLP of the assessee in the case of Mahender Pal Narang Vs. Central Board of Direct Taxes (CBDT) reported in (2021) 279 Taxman 74 (SC) (2021). In compliance of the said notice u/s 148, the assessee filed return of income on 13/09/2023 declaring total income of Rs.4,98,14,700/- and paid taxes along with interest. The reassessment order was passed u/s 147 r.w.s 144B of the Act dated 06/11/2023 accepting the declared by the assessee in the return filed in response to notice u/s 148 of the Act. The Assessing Officer also initiated the penalty proceedings u/s 270A of the Act after observing that the assessee has declared income only after notice u/s 148 of the Act issued to him. As no appeal was filed by the assessee against the reassessment order thus the AO completed the pending penalty proceedings and vide order dated 20/05/2024 has levied the penalty of Rs.88,17,157/- u/s 270A of the Act by holding that the assessee has under reported his income. 3 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO 3. Aggrieved by the said order, the assessee is in appeal before us by way of following grounds of appeal: “The Ld. CIT(A) has erred in law in affirming the penalty u/s 270A imposed the penalty u/s 270A imposed by the Ld. AO on tax paid erroneously, after receipt of notice, on income which is exempt u/s 10(37) of the Act.” 4. Before us, the Ld. AR of the assessee argued that the assessee is an illiterate agriculturist and his agricultural land was acquired by the State Government under compulsory acquisition way back. During the year under appeal, assessee has received interest of Rs.9,88,58,400/- as enhanced the compensation which was offered for tax in the return of income filed u/s 139(1) of the Act after claiming deduction for expenses @ 50% as provided u/s 57(iv) of the Act. Thereafter, on the advice of some counsel, and relying upon the judgment of the Hon’ble Supreme Court in the case of Ghanshyam (HUF) (supra) the assessee claimed the interest income on enhanced compensation as exempted in the revised return filed. The Ld. AR submitted that when the assessee received the notice u/s 148 of the Act, it was advised to the assessee that the law has now been settled against the assessee in view of the recent judgment of Hon’ble Supreme Court in the case of Mahender Pal Narang (supra), therefore, assessee being a law abiding citizen of the country has declared the interest of enhanced of compensation after claiming deduction u/s 57 of the Act and paid the due taxes along with interest thereon. The Ld. AR further submitted that the claim of the assessee made in the revised return is bonafide and purely based on 4 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO the judgments of Hon’ble Supreme Court. Ld. AR further submitted that the assesse has paid the due taxes along with interest and no appeal was preferred against the reassessment order passed and, therefore, assessee was also eligible for immunity granted u/s 270AA of the Act, however, being an illiterate person the assessee could not avail this opportunities but since all the conditions of section 270AA of the Act for granting the immunity are fulfilled and looking to the present age of the assessee being 94 years of age, no penalty should be levied on the income so declared in the return filed u/s 148. The Ld. AR further argued that neither in the assessment order while initiating penalty proceedings u/s 270A nor in the penalty order, AO has specified which clause (a) to (g) of sub-section 2 of section 270A is invoked nor communicated to the assessee by virtue of which the income of the appellant could be held as under reporting of income. He thus contended that such failure on the part of the AO to show cause under which clause of 270A(2) of the Act he proceeded to levy penalty u/s 270A would render the entire penalty proceedings invalid and untenable in the eyes of law. He thus prayed that the penalty order passed u/s 270A is bad in law and deserves to be quashed. 5. On merits of issue, the Ld. AR argued that land acquired was the agricultural land in nature and any compensation received under compulsory acquisition after 01/01/2015 is exempted u/s 96 of the RFCTLARR ACT, 2013 and further submit that the issue of claiming exemption of interest on enhanced compensation is highly debatable issue where contrary judgment are available, therefore, the assessee 5 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO could not be punished when he acted bonafidely by relying one of the view expressed by the Hon’ble Supreme Court. The Ld. AR further submit that various benches of the ITAT have held that not only compensation on compulsory acquisition of agricultural land but also interest on enhanced compensation is exempt u/s 10(37) of the Act, some of which are as under: i) Paramjeet Singh Vs ACIT, Circle Karnal in ITA No. 1393/DEL/2017 (Α.Υ 2011-12), date of judgment 16.04.2021. ii) Surender Vs ITO Ward 4(3), Gurgaon in ITA No. 7589/Del/2018: A.Y. 2013-14, date of judgment 27.04.2020. iii) Jagmal Singh Vs ITO Ward 2(2), Gurgaon in ITA no. 2340/Del/2018; A.Y 2013-14, date of judgment 20.09.2018. iv) Ramkishan Vs ITO Ward 60(5), New Delhi in ITA no. 5391/Del/2017; Α.Υ. 2014-15, date of judgment 02.12.2020. v) Amarchand Gupta and others Vs ITOs (a bunch of thirteen appeals), New Delhi in ITA no.5367/Del/22018; date of judgment 14.08.2019. vi) ITO Ward 2 Rewari Vs Manish Yadav in ITA No.3836/Del/2016; Α.Υ.2012-13, date of judgment 09.08.2019. He, therefore, prayed that even on merits also, no penalty u/s 270A could be levied in the case of the assessee. 6. Per contra, the Ld. SR. DR vehemently supported the orders of the lower authorities and submit that in the instant case, assessee has revised the return of income and claim the refund of the tax paid on the interest on enhanced compensation in the return filed u/s 139(1). If the re-assessment proceeding u/s 148 of the Act were not 6 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO be initiated, assessee would not declare such interest and paid tax thereon. It is only after the notice u/s 148 of the Act, the assessee has offered such interest income for tax and paid the taxes and, therefore, the AO has rightly levied the penalty u/s 270A of the Act. With regard the immunity available to assessee u/s 270AA, the Ld. Sr. DR submitted that the assessee has not filed the application as envisaged u/s 270AA of the Act, therefore, the assessee was not entitled for immunity. 7. We have heard the rival submissions and perused the materials available on record. Before dwelling upon the issue, we first understand the charges for under reporting the income. The said charges are defined in sub-section 2 of section 270A of the Act which are as under: “2. A person shall be considered to have under-reported his income, if— (a)the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143; (b)the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; (c)the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d)the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143; (e)the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been 7 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO furnished or where return has been furnished for the first time under section 148; (f)the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessment; (g)the income assessed or reassessed has the effect of reducing the loss or converting such loss into income.” Further in clause (a) to sub-section 6 of section 270A, it is provided that if the AO is satisfied with the explanation after assessment that it is bonafide and assesse has disclosed all the material facts to substantiate the explanation offered, no penalty u/s 270A should be levied on such amount on account under reporting of income. In the instant case, it is seen that assessee has originally declared the interest on enhanced the compensation in the return filed u/s 139 of the Act and paid the due taxes thereon. Thereafter, based on some legal advise and by placing reliance upon the judgment of the Hon’ble Supreme Court in the case of Ghanshayam (HUF) (supra), the assessee claimed such interest as exempt u/s 10(37) of the Act. The assessee also placed reliance upon certain judgments of various benches of the Tribunal wherein it is held that interest received on enhanced compensation is exempt u/s 10(37) of the Act. When the assessee received the notices u/s 148 of the Act and also after obtaining legal advise, it was came to his notice that law has been changed in view of the judgment of Hon’ble Supreme Court in the case Mahender Pal Narang (supra). Thus as a law abiding citizen, he immediately included such interest in the total income in the return filed in response to notice u/s 148 of the Act and paid due tax along 8 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO with interest thereon. All the series of events clearly establish that assessee has acted bonafidely and never attempted to under report any income. Here, we also find that the immunity granted u/s 270AA of the Act is also available to the assessee as assessee has satisfied all the conditions of section 270AA as due taxes have been paid and no appeal is preferred against the re-assessment order so passed. Merely because assessee has failed to file the petition as prescribed U/s 270AA, he was denied to such immunity. Looking to the present age of the assessee of 94 years and also looking to the facts that he has no intention to ended tax and acted bonafidely. In our considered view the assessee should be granted immunity u/s 270AA of the Act and no penalty should be levied in the case of the assessee for under reporting of income u/s 270A of the Act. It is further seen that neither in the assessment order nor in the penalty order, the AO has recorded the satisfaction that as to which specific circumstances or instances as provided in clause (a) to (g) of sub-section 2 of section 270A by virtue of which, the income of the assessee could be held as under reported is invoked. Nor the same was not communicated to the assessee so as to allow him an opportunity to explain his case. Under these circumstances, the entire penalty proceedings are invalid and, thus, untenable in the eye of law. Consequently, the penalty imposed u/s 270A of the Act being bad in law is liable to be quashed, we ordered accordingly. On merits also, as observed above, the assessee has acted bonafidely and followed the judgments of the Hon’ble Supreme Court which was directly applicable and was in his favour, therefore, where the issue is highly debatable and assessee has opted 9 ITA No.4553 /Del/2024 Bishamber Dayal vs. ITO to choose one of the possible view, it cannot be said that assessee is having any intention to evade any tax by under reporting income. It is also relevant to state that no soon the assesse had knowledge that the law has been propounded by the Supreme Court against the assessee, he immediately offered the said income to tax by including the same in the return of income filed u/s 148 of the Act which action of the assessee was not found to be incorrect or malafide by the Assessing Officer. Under these circumstances, in our view, the assessee would succeed on the merits also. Accordingly, the penalty levied u/s 270A is hereby deleted. 6. In the result, the appeal of the assesse is allowed. Order pronounced on 05/03/2025. Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 05/03/2025 PK/Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "