GANGUNAIDU SABBAVARAPU,VISAKHAPATNAM V. INCOME TAX OFFICER, WARD-2(5), VISAKHPATNAM

ITA 177/VIZ/2025

AI Insights

The case involves Gangunaidu Sabbavarapu, the appellant, who contested the taxability of compensation received from the compulsory acquisition of his agricultural land under the National Highways Act, 1956. The initial tax assessment included this compensation as income, leading to a revised return declaring Long Term Capital Gains (LTCG). The Central Processing Centre, Bangalore, recalculated these gains, which the appellant contested. The Commissioner of Income-tax (Appeals) dismissed his appeal, leading to this Tribunal appeal. The Tribunal considered additional evidence and legal provisions, ultimately directing a re-examination of the taxability of the compensation received.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669400 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2023-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Capital asset; Opportunity of being heard; Additional evidence; Revised return; Question of law; Salary income; Capital Gains; TDS; Source of fund; Right to appeal
• Section: 43B

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, ACCOUNTANT MEMBER, I.T.A. No.177/Viz/2025 (निर्धारण वर्ा/ Assessment Year : 2023-24) Gangunaidu Sabbavarapu, MVP Colony, Visakahaptnam. PAN : BSHPS5895P Vs. The Income Tax Officer, Ward – 2(5), Visakhapatnam. (अपीलधर्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Smt. Hema Latha, K. C.A. राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr.A.R. सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.06.2025 घोषणा की तारीख/ Date of Pronouncement : 27.06.2025 O R D E R प्रतत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Addl/JCIT(A)-1, Guwahati, dated 30.03.2024 which in turn arises from the intimation issued by the Central Processing Centre, Bangalore u/s 143(1) of the Income Tax Act, 1961 2 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu (for short, “Act”) dated 28.02.2024. The assessee has assailed the impugned order on the following grounds of appeal before us : “1. That under the facts and circumstances of the case, the orders passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (in short 'CIT(A)') u/s. 250 of IT Act dated 27-06-2024, dismissing the appeal, is not in accordance with the fact and provisions of law. 2. The Learned CIT(A) ought not to have dismissed the appeal filed by the assessee, when assessee placed a reasonable claim for exemption of capital gains, arising on account of compulsory acquisition, from Income-tax in view of section 96 of REFTLAR Act and Section 2(37) of Income-tax Act, 1961. 3. The Learned CIT(A) ought not to have appreciated that as per provisions of section 96 of REFTLAR Act and Section 2(37) of Income-tax Act, 1961, the land compulsorily acquired by the Government is exempt from income-tax and hence not taxable. 4. The Learned CIT(A) ought to have appreciated and followed the CBDT Circular No. 14 (XL-35) dated 11/04/1955, wherein it is clearly mentioned that ignorance of assessee cannot be taken advantage by officers and it is one of the duties of officers to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. Without prejudice to the above grounds: 5. Kind attention is drawn to the Hon'ble Tribunal to the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. V. CIT in [2006] 157 Taxman 1 (SC) wherein it was held that there is limitation is in the power of assessing authority to entertain a fresh claim otherwise than by way of filing a return and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961, in view of this decision, assessee prays that Ld.AO may kindly be directed to exclude the impugned capital gains from the preview of Income-tax in view of provisions of law. 6. For these and such other grounds, that may be urged at the time of hearing of subject appeal, the appellant prays that the Ld.AO may kindly be directed to exclude the impugned capital gains from the preview of Income-tax in view of provisions of law, or provide such other relief as the Hon'ble Tribunal deems fit.” 3 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu Thereafter, the assessee has modified ground nos.2 and 3 , which reads as under: “2. The Learned CIT(A) ought not to have dismissed the appeal filed by the assessee, when assessee placed a reasonable claim for exemption of capital gains, arising on account of compulsory acquisition, from Income-tax in view of section 10(37) of Income-tax Act, 1961, in addition to the provisions of section 96 of REFTLAR Act, 2013. 3. The Learned CIT(A) ought to have appreciated that the land in question which was subjected to compulsory acquisition under National Highways Act, 1956 was an agricultural land as per the revenue records and hence the subject transfer is not taxable as per the provisions of income-tax Act.” 2. Smt. Hema Latha K., C.A. the learned Authorized Representative (for short “ld. AR”) for the assessee, at the threshold of hearing of the appeal, had drawn our attention to the application filed by the assessee seeking condonation of the delay of 298 days involved in filing of the appeal along with a supporting “affidavit”, dated 25.03.2025. Elaborating on the reasons leading to the delay, the Ld. AR submitted that the same had occasioned because the assessee, being a salaried employee at the instance of his tax consultant – an Income Tax Practitioner (ITP), had in his revised return of income filed u/s 139(1) of the Act dated 15.09.2023, inter alia disclosed the “Long Term Capital Gains” (LTCG) of Rs. 1,01,740/- arising on the compulsory acquisition of his lands under the National Highways Act, 1956. The Ld. AR submitted that the CPC, Bangalore, vide its intimation issued u/s 143(1) of the Act dated 28.02.2024, had recomputed the subject “Long 4 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu Term Capital Gains” (LTCG) on the subject transfer transaction disclosed by the assessee in his return of income at Rs. 35,72,240/-. The Ld. AR submitted that thereafter the assessee as per the advice of his aforementioned tax consultant filed an appeal before the CIT(A)/NFAC wherein he had sought for exemption of the profit/income arising from the subject transaction of transfer of his land from levy of income-tax as per the provisions of the RFCTLARR Act, 2013 and u/s 10(37) of the Act. However, on dismissal of the appeal the assessee as per the advice of his tax consultant filed a rectification application through the grievance portal seeking withdrawal of the “capital gains” on the compulsory acquisition of the subject lands that was offered by him as his income in the return of income. In the meantime, the tax consultant advised the assessee to file another appeal before the CIT(A) assailing the impugned intimation passed u/s 143(1), dated 28.02.2023. Accordingly, the assessee filed another appeal before the CIT(A)/NFAC on 28.04.2024 against the intimation passed u/s 143(1) of the Act, dated 28.02.2023, wherein he sought exemption of the compensation received on compulsory acquisition of his lands u/s 96 of the RFCTLARR Act, 2013 and u/s 10(37) of the Income-tax Act, 1961. However, the CIT(A) dismissed the appeal vide his order dated 04.02.2025, stating that since the appeal had already been disposed of 5 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu by the JCIT, Appeal-1, Guwahati vide his order dated 30.03.2024, therefore, the appeal filed before him was not maintainable. The Ld. AR submitted that the assessee only after the dismissal of his second appeal by the CIT(A) gathered that he had approached the wrong forum for necessary redressal. The Ld. AR submitted that thereafter the assessee assailed the initial order passed by the CIT(A) dated 30.03.2024 before the Tribunal, but the same by the time involved a delay of 298 days. The Ld. AR submitted that as the assessee is a salaried employee and not conversant with the intricacies of Income-tax law had, acted upon the advice of his tax consultant and approached the wrong forums for necessary redressal, therefore, the same had resulted in the delay in filing the present appeal which in all fairness and in the interest of justice be condoned. 3. Per contra, Dr. Aparna Villuri, the Ld. Senior Departmental Representative (for short “Ld. DR”) objected to the seeking of the condonation of the delay in filing the present appeal. It was submitted by the Ld. DR that as the delay involved in filing the appeal is inordinate, therefore, the same does not merit to be condoned. 4. We have thoughtfully considered the facts leading to the delay in filing of the present appeal before us. After giving a thoughtful 6 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu consideration, we find substance in the assessee’s claim that there were bonafide reasons leading to the delay of 298 days in filing of the present appeal before us. As it is a matter of fact borne from the record that the assessee based on the wrong advice of his tax consultant had exhausted substantial time in seeking necessary redressal by approaching the wrong forums, which was the primary reason for the delay that had crept in filing the present appeal before us, therefore, the same in all fairness and interest of justice merits to be condoned. Our aforesaid view that a liberal approach should be adopted while considering an application filed by an appellant seeking condonation of the delay involved in filing the appeal is supported by the recent judgment of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025, wherein the Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay in filing the appeal. We thus, 7 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu in terms of our aforesaid observations, condone the delay involved in filing of the present appeal. 5. The assessee has filed with us an application for admission of certain additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963, which comprises of the following documents: (i). Order issued by NHAI for Award under compulsory acquisition of land from assessee dt. 04.02.2022. (ii). Purchase deed of the subject land that was subject to compulsory acquisition by NHAI. (iii). English translated version of the above purchase deed of the land that was subject to compulsory acquisition by NHAI. (iv). Land revenue records from State Government website evidencing the nature of land as agricultural land. (v). Revenue passbook issued to assessee for the above land. We are of the firm conviction that as the aforementioned documents will have a strong bearing on adjudicating the core issue involved in the present appeal i.e, as to whether or not the compensation received by the assessee on the compulsory acquisition of his land is exigible to tax, therefore, in all fairness and in the interest of justice, the same merits admission. 8 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 6. Succinctly stated, the assessee had filed his original return of income for A.Y 2023-24 on 20.06.2023, declaring his salary income. Subsequently, the assessee filed a revised return of income on 15-09- 2023, wherein, besides his salary income, he had declared Long Term Capital Gains (“LTCG”) of Rs.1,01,740/- on the compulsory acquisition of his land. The CPC, Bangalore processed the revised return of income filed by the assessee vide its intimation issued u/s 143(1) of the Act, dated 28-02-2024, wherein the capital gains declared by the assessee was redetermined at Rs. 35,77,240/-. 7. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee, inter alia, had claimed before the CIT(A) that the compensation received by him on the compulsory acquisition of his land as per the award u/s 3E(1) of the National Highways Act, 1956, bearing Award No. 8 of 2022, dated 04.02.2022 was exempt u/s 10(37) of the Act. 8. Elaborating further on his claim, it was submitted by the assessee that it was due to the wrong advice of his accountant that the compensation received on the acquisition of his land by the National Highways Authority of India (for short, “NHAI”) was erroneously disclosed by him as his income under the head “capital gain” in his 9 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu revised return of income for the subject year. However, the CIT(A) did not find favour with the claim of the assessee. The CIT(A) held a firm conviction that as the scope of jurisdiction u/s 143(1) of the Act is limited to carrying out of prima facie adjustments contemplated under the said statutory provision, therefore, the claim of the assessee that the compensation received on compulsory acquisition of his land under the National Highways Act, 1956 was not exigible to tax fell beyond the scope and ambit of the appeal before him. Accordingly, the CIT(A), based on his aforesaid observations declined to deal with the claim of the assessee that the compensation received on compulsory acquisition of his land under the National Highways Act, 1956 could not have been brought to tax. 9. The assessee, being aggrieved with the order of CIT(A) has carried the matter in appeal before us. 10. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home her contentions. 10 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 11. Smt. Hema Latha K., C.A. the learned Authorized Representative (for short “ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the compensation received by the assessee as per - Award No. 8 of 2022, dated 04.02.2022 on the compulsory acquisition of his agricultural land u/s 3E(1) of the National Highways Act, 1956, was not exigible to tax as per the mandate of law. Elaborating further on her contention, the ld.AR had come forth with two-fold contentions, viz. (i) that the compensation received by the assessee on compulsory acquisition of his land under the National Highways Act, 1956 was exempt from levy of income tax u/s 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, (“RFCTLARR Act”); and (ii) that as the subject agricultural land that was compulsorily acquired by the National Highways Authority of India (NHAI) was neither situated within the jurisdiction of a municipality or a cantonment board having a population of more than ten thousand as envisaged in Section 2(14)(iii)(a) of the Act; nor within the notified area limits as contemplated u/s 2(14)(iii)(b) of the Act, and thus, was not a ‘capital asset’, therefore, the profit/gain on the transfer of the same could not have been brought to tax in the hands of the assessee under the head “capital gain”. The Ld. AR submitted that the aforesaid ground regarding the non-taxability 11 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu of the compensation received on the compulsory acquisition of agricultural land by NHAI was not raised at the time of filing of the return of income, but had been raised because of changed circumstances. The Ld. AR submitted that as the aforesaid ground involves a purely legal issue, the adjudication of which would not require looking beyond the facts available on the record, therefore, the assessee was well within his right to raise the same in the course of the proceedings before the Tribunal. The Ld. AR to buttress her aforesaid claim submitted that though the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 157 Taxman 1 (SC) had jeopardized the jurisdiction of an A.O. to entertain a claim which does not emanate from the return of income filed by the assessee, but it had clarified in its order that the powers of the Tribunal would not be circumscribed by the said restriction. The Ld. AR submitted that as the profit/gain arising on the compulsory acquisition of the subject land of the assessee had been brought to tax de hors the mandate of law, therefore, the said serious infirmity was required to be corrected. The Ld. AR to support her claim that the officers of the department should not take advantage of the ignorance of an assessee and are rather under a bounden duty to assist them in every reasonable way, particularly in the matter of claiming and clearing reliefs/refunds to which they are legally entitled, 12 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu had drawn support from the CBDT Circular No. 14 XL-35, dated 11.04.1955. The Ld. AR, based on her aforesaid contention, submitted that the Tribunal in all fairness and in the interest of justice vacate the action of the lower authorities which have wrongly brought the amount of compensation received by the assessee on the compulsory acquisition of his land under the National Highways Act, 1956 to tax. 12. Per contra, Dr. Aparna Villuri, the Senior Departmental Representative (for short “Ld. DR”) submitted that as the assessee had disclosed the profits/gains on the compulsory acquisition of his land under the National Highways Act, 1956 as his income in the revised return of income for the subject year, therefore, no infirmity emerges from the intimation issued by the CPC, Bangalore, which had rightly brought the same to tax in his hands. Elaborating further on her contention, the Ld. DR submitted that the remedy available with the assessee for seeking the profit/gain on the transfer of the subject land as exempt was by filing a revised return of income, but he had failed to avail the same. The Ld. DR to buttress her aforesaid contention relied on the judgment of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT [(2006) 284 ITR 323 (SC)]. The Ld. DR submitted that as the A.O. was not vested with any jurisdiction to allow a claim not raised by the assessee in his return of income, thus no infirmity 13 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu could be attributed to him for re-quantifying the Long Term Capital Gains (“LTCG) on the compulsory acquisition of the subject land which the assessee himself had offered for tax in his return of income. 13. We have heard the authorized representatives for both parties, perused the orders of the lower authorities and the material available on record in the context of the issue under consideration. 14. Ostensibly, the assessee had offered the compensation received on the compulsory acquisition of his land received as per - Award No.8/2022, dated 04.02.2022 of the NHAI as his income in the revised return of income. We shall before proceeding any further first deal with the issue as to whether an assessee in the course of the assessment proceedings can be permitted to raise a claim that would lead to the exclusion of an income offered by him in his return of income. We find that the said issue had been deliberated upon at length by the Hon'ble High Court of Bombay in the case of CIT Vs. Pruthvi Brokers & Shareholders (P) Ltd. (2012) 349 ITR 336 (Bom). In its said judgment, it was held by the Hon'ble High Court that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to wit claims not made in the return filed by it. 14 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu The Hon'ble High Court while concluding as hereinabove, had observed as under: “10. A long line of authorities establish clearly that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to wit claims not made in the return filed by it. It is necessary for us to refer to some of these decisions only to deal with two submissions on behalf of the department. The first is with respect to an observation of the Supreme Court in Jute Corporation of India Limited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. The second submission is based on a judgment of the Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax. 11(A). In Jute Corporation of India Limited v. CIT, for the assessment year 1974-75 the appellant did not claim any deduction of its liability towards purchase tax under the provisions of the Bengal Raw Jute Taxation Act, 1941, as it entertained a belief that it was not liable to pay purchase tax under that Act. Subsequently, the appellant was assessed to purchase tax and the order of assessment was received by it on 23rd November, 1973. The appellant challenged the same and obtained a stay order. The appellant also filed an appeal from the assessment order under the Income Tax Act. It was only during the hearing of the appeal that the assessee claimed an additional deduction in respect of its liability to purchase tax. The Appellate Assistant Commissioner (AAC) permitted it to raise the claim and allowed the deduction. The Tribunal held that the AAC had no jurisdiction to entertain the additional ground or to grant relief on a ground which had not been raised before the Income Tax Officer. The Tribunal also refused the appellant's application for making a reference to the High Court. The High Court upheld the decision of the Tribunal and refused to call for a statement of case. It is in these circumstances that the appellant filed the appeal before the Supreme Court. The Supreme Court held as under :- \"5. In CIT v. Kanpur Coal Syndicate, a three Judge bench of this Court discussed the scope of Section 31(3)(a) of the Income Tax Act, 1922 which is almost identical to Section 251(1)(a). The court held as under: (ITR p. 229) \"If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the Income-tax Officer. He can do what the Income- 15 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu tax Officer can do and also direct him to do what he has failed to do.\" (emphasis supplied) 6. The above observations are squarely applicable to the interpretation of Section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the Income Tax Officer, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provisions. In the absence of any statutory provision the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income Tax Officer.\" [emphasis supplied] (B) It is clear, therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. 12. At page 694, after referring to certain observations of the Supreme Court in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., (1978) 111 ITR 1, the Supreme Court observed at Page 694 as under :- \"The above observations do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made, or that the ground became available on account of change of circumstances or law. There may be several factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If the Appellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and 16 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu no rigid principles or any hard and fast rule can be laid down for this purpose.\" [emphasis supplied] 13. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read as a whole entitles an assessee to raise new grounds/make additional claims :- \"if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made...\" \"or\" if \"the ground became available on account of change of circumstances or law\" The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The first part viz. \"if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made... \"clearly relate to cases where the ground was available when the return was filed and the assessment order was made but \"could not have been raised\" at that stage. The words are \"could not have been raised\" and not \"were not in existence\". Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz. where \"the ground became available on account of change of circumstances or law.\" 14. The facts in Jute Corporation of India Ltd., various judgments referred to therein as well as in subsequent cases, which we will refer to, establishes this beyond doubt. In many of the cases, the grounds were, in fact, available when the return was filed and/or the assessment order was made. In Jute Corporation of India Ltd., the ground was available when the return was filed. The assessee did not claim any deduction of its liability to pay purchase tax as \"it entertained a belief that it was not liable to pay purchase tax under the Bengal Raw Jute Taxation Act, 1941\". Thus, the ground existed when the return was filed. The assessment order was even made and received by the assessee. It is only after the appeal was filed that the assessee claimed a deduction in respect of the amount paid towards the purchase tax under the said Act. It is also significant to note that the assessee's entitlement to claim deduction had been held to be valid in view of an earlier judgment of the Supreme Court in Kedarnath Jute Manufacturing Company Limited v. Commissioner of Income-tax, (1971) 82 ITR 363. This was, therefore, a case of error in perception/judgment. Despite the same, the Supreme Court upheld the decision of the Appellate Assistant Commissioner in allowing the 17 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu deduction. The words \"could not have been raised\" must, therefore, be construed liberally and not strictly. 15. It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. 16(A). A Full Bench of this Court in Ahmedabad Electricity Limited v. Commissioner of Income-tax, (1993) 199 ITR 351 considered a similar situation. In that case, the appellant/assessee did not claim a deduction in respect of the amounts it was required to transfer to contingencies reserve and dividend and tariff reserve either before the Income Tax Officer or before the Appellate Assistant Commissioner in appeal. Subsequently, this Court had, in Amalgamated Electricity Company Limited v. Commissioner of Income-tax, (1974) 97 ITR 334, held that such amounts represented allowable deductions on revenue account. The appellant, therefore, raised a new claim and additional grounds before the Tribunal in that connection. The Tribunal rejected the same. The second question which was raised in the reference before the Division Bench was as under :- \"(2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in not allowing the assessee leave to raise in its own appeals additional grounds and in the departmental appeals cross objections regarding the deductibility of the sums transferred to contingency reserve and tariff and dividend control reserve?\" (B) The Division Bench which heard the reference, finding that there was a conflict of decisions, placed the papers before the Hon'ble Chief Justice for constituting a larger bench to resolve the controversy. The Full Bench answered the reference in the affirmative and in favour of the assessee. The Full Bench held :- \"Thus, the Appellate Assistant Commissioner has very wide powers while considering an appeal which may be filed by the assessee. He may confirm, reduce, enhance or annul the assessment or remand the case to the Assessing Officer. This is because, unlike an ordinary appeal, the basic purpose of a tax appeal is to ascertain the correct tax liability of an assessee in accordance with law. Hence an Appellate Assistant Commissioner also has the power to enhance the tax liability of the assessee although the Department does not 18 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu have a right of appeal before the Appellate Assistant Commissioner. The Explanation to subsection (2), however, makes it clear that for the purpose of enhancement, the Appellate Assistant Commissioner cannot travel beyond the proceedings which were originally before the Income-tax Officer or refer to new sources of income which were not before the Income-tax Officer at all. For this purpose, there are other separate remedies provided under the Income-tax Act.\" (C) It is unnecessary to refer to all the judgments that the Full Bench referred to while answering the reference. The Full Bench referred to the observations of the Supreme Court in Jute Corporation of India Limited v. Commissioner of Income-tax (supra) set out above. It is important to note that even in this case, therefore, the ground existed when the return was filed. The mere fact that a decision of a court is rendered subsequently does not indicate that the ground did not exist when the law was enacted. Judgments are only a declaration of the law. The assessee could have raised the ground in its return itself. It did not have to await a decision of a court in that regard. Indeed, even if a judgment is against an assessee, it is always open to the assessee to claim the deduction and carry the matter higher. The words \"could not have been raised\", therefore, cannot be read strictly. Neither the Supreme Court nor the Full Bench of this Court meant them to be read strictly. They include cases where the assessee did not raise the claim for a reason found to be reasonable or valid by the appellate authorities in the facts and circumstances of a case. 17. The next judgment to which our attention was invited by Mr. Mistri is the judgment of a Bench of three learned Judges of the Supreme Court in National Thermal Power Company Limited v. Commissioner of Income-tax, (1997) 7 SCC 489 = (1998) 229 ITR 383. In that case, the assessee had deposited its funds not immediately required by it on short term deposits with banks. The interest received on such deposits was offered by the assessee itself for tax and the assessment was completed on that basis. Even before the Commissioner of Income-tax (Appeals), the inclusion of this amount was neither challenged by the assessee nor considered by the Commissioner of Income-tax (Appeals). The assessee filed an appeal before the Tribunal. The inclusion of the amount was not objected to even in the grounds of appeal as originally filed before the Tribunal. Subsequently, the assessee by a letter, raised additional grounds to the effect that the said sum could not be included in the total income. The assessee contended that on a erroneous admission, no income can be included in the total income. It was further contended that the ITO and the Commissioner of Income-tax (Appeals) had erred and failed in their duty in adjudicating the matter correctly and by mechanically including the amount in the total income. It is pertinent to note that the assessee contended that it was entitled to the deduction in view of two orders of the Special Benches of the Tribunal and the assessee further stated that it had raised these additional grounds on learning about the legal position subsequently. 19 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu The Tribunal declined to entertain these additional grounds. The Supreme Court did not answer the question on merits, but framed the following question and held as under :- \"4. The Tribunal has framed as many as five questions while making a reference to us. Since the Tribunal has not examined the additional grounds raised by the assessee on merit, we do not propose to answer the questions relating to the merit of those contentions. We reframe the question which arises for our consideration in order to bring out the point which requires determination more clearly. It is as follows: \"Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same.\" Under Section 254 of the Income Tax Act the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with the appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appea1/cross- objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier.\" 18. In the case before us, the CIT(A) and the Tribunal have held the omission to claim the deduction of Rs.40,00,000/- to be inadvertent. Both the appellate authorities held, after considering all the facts, that the assessee had inadvertently claimed a deduction of Rs.20,00,000/- paid after the end of the year in question. We see no reason to interfere with this finding. We see less reason to interfere with the exercise of discretion by the appellate authorities in permitting the respondent to raise this claim. That the respondent is entitled to the deduction in law is admitted and, in any event, clearly established. In the circumstances, the respondent ought not be prejudiced. 19. The orders of the CIT(A) and the Tribunal clearly indicate that both the appellate authorities had exercised their jurisdiction to consider the additional claim as they were entitled to in view of the various judgments on the issue, including the judgment of the Supreme Court in National Thermal Power Corporation Limited. This is clear from the fact that these judgments have been expressly referred to in detail by the CIT(A) and by the Tribunal. 20 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 20. We wish to clarify that both the appellate authorities have themselves considered the additional claim and allowed it. They have not remanded the matter to the Assessing Officer to consider the same. Both the orders expressly direct the Assessing Officer to allow the deduction of Rs.40,00,000/- under section 43B of the Act. The Assessing Officer is, therefore, now only to compute the respondent's tax liability which he must do in accordance with the orders allowing the respondent a deduction of Rs.40,00,000/- under section 43B of the Act. 21. The conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible. 22. It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in Goetze (India) Limited v. Commissioner of Income-tax. We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs. Commissioner of Income- tax (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Company Limited contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held :- \"4. The decision in question is that the power of the Tribunal under section 254 of the Income-tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income- tax Act, 1961. There shall be no order as to costs.\" [emphasis supplied]‖ 23. It is clear to us that the Supreme Court did not hold anything contrary to what was held in the previous judgments to the effect that even if a claim is 21 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu not made before the assessing officer, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the Supreme Court made it clear that the issue in the case was limited to the power of the assessing authority and that the judgment does not impinge on the power of the Tribunal under section 254. 24. A Division Bench of the Delhi High Court dealt with a similar submission in Commissioner of Income-tax v. Jai Parabolic Springs Limited, (2008) 306 ITR 42. The Division Bench, in paragraph 17 of the judgment held that the Supreme Court dismissed the appeal making it clear that the decision was limited to the power of the assessing authority to entertain a claim for deduction otherwise than by a revised return and did not impinge on the powers of the Tribunal. In paragraph 19, the Division Bench held that there was no prohibition on the powers of the Tribunal to entertain an additional ground which, according to the Tribunal, arises in the matter and for the just decision of the case. 15. Considering the aforesaid settled position of law, we are of the firm conviction that the assessee remained well within his right to raise the claim that the compensation received by him on the compulsory acquisition of his land under the National Highways Act, 1956, was not exigible to tax for the two fold reasons, viz. (i) that the compensation received on the acquisition of land under the National Highways Act, 1956 is not exigible to tax u/s 96 of the REFTLARR Act; and (ii) that as the agricultural land transferred by the assessee during the subject year was not a capital asset within the meaning of u/s 2(14)(iii) of the Act, i.e., neither situated within the urban agglomeration; nor within the notified area limits, therefore the profit/gain arising on the transfer of the same was not exigible to tax under the head capital gains. 22 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 16. Ostensibly, as per the record to which our attention has been drawn by the Ld. AR., we find that the agricultural land of the assessee, admeasuring 111 sq. meters situated at Gudavalli Mandal, Subbavaram, District: Visakhapatnam, was compulsorily acquired as per - Award No. 8 of 2022, dated 04.02.2022 under Section 3E(1) of the National Highways Act, 1956 (Pages 15 and 82–83 of the APB). As per Section 96 of the RFCTLARR Act, 2013, no income tax shall be levied on any award or agreement made under the said Act, except under section 46 of the Act. The Ld. AR had drawn our attention to the judgment of the Hon’ble High Court of Karnataka in the case of Smt. C. M. Uma Vs. The Chief Commissioner of Income Tax, Bangalore, WP No. 19197 of 2024, dated 08.08.2024, wherein the indulgence of the Hon’ble High Court was inter alia sought for adjudicating the following substantial questions of law: i. Whether Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, is applicable to compensation payable for land acquired under the National Highways Act, 1956? ii. Whether compensation payable for acquisition of land under the National Highways Act, 1956 is exempt from payment of income tax/TDS under the Income Tax Act, 1961? 23 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 17. The Hon’ble High Court, in its order, had answered both the questions in the favour of the petitioner and against the respondent/revenue by holding that Section 96 of the REFTLARR Act, 2013 is applicable to compensation payable for land acquired under the National Highways Act, 1956, and consequently, the compensation payable for acquisition of land under the National Highways Act, 1956 is exempt from the payment of income tax or TDS under the Income Tax Act, 1961. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under: “7.21 Viewed from this angle also, I am of the considered opinion that Section 96 of the RFCTLARR Act is applicable to compensation for land acquired under the N.H.Act and the said compensation is exempted from TDS/ payment of income tax under the I.T.Act and the impugned order deserves to be set aside on this score also. 7.22 A perusal of the impugned order will indicate that the respondent has come to the conclusion that in view of Section 105(1) of the RFCTLARR Act is not applicable to acquisition of land under the N.H.Act, which is excluded in the Fourth Schedule, since the land of the petitioner was acquired under the N.H.Act and not under the RFCTLARR Act. 7.23 As stated hereinbefore, I have already come to the conclusion that by virtue of the Three Ordinances, Removal of difficulties order, Notification, Correspondence etc., Section 96 of the RFCTLARR Act is applicable to compensation paid / payable for acquisition of land under the N.H.Act, as a result of which, the compensation would not be exigible to income tax and therefore, the obligation to comply with tax deduction at source would not arise and as such, the said findings recorded by the respondent deserves to be set aside. 7.24 Insofar as the findings recorded by the respondent in relation to the CBDT Circular No.36/2016 dated 25.10.2016 and applicability of Section 96 of the RFCTLARR Act is concerned, for the reason mentioned above, even the said finding recorded by the respondent in the impugned order deserves to be set aside. 24 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu 7.25 A perusal of the impugned order will indicate that the respondent has misconstrued and misinterpreted the various statutory provisions, Ordinances, Orders, Notifications, Circulars etc., as well as the judgment of the Apex Court and this Court relied upon by the petitioner and has rejected the application by assigning wholly untenable reasons warranting interference by this Court in the present petition. 7.26. Points 1 and 2 are accordingly answered in favour of the petitioner and against the respondent-revenue by holding that Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, is applicable to compensation payable for land acquired under the National Highways Act, 1956 and consequently, compensation payable for acquisition of land under the National Highways Act, 1956 is exempt from payment of income tax / TDS under the Income Tax Act, 1961.” 18. At this stage, we may herein observe that the CBDT vide its Circular No. 36 of 2016, dated 25.10.2016, had clarified that the compensation received in respect of an award or agreement which had been exempt from levy of income tax u/s 96 of the RFCTLARR Act, 2013 shall also not be taxable under the provisions of the Income Tax Act, 1961, even if there is no specific provision for exempting such compensation therein. In fact, we find that in the aforesaid CBDT Circular no. 36 (supra), it has been clarified that, as no distinction has been made between the compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption under the RFCTLARR Act, 2013, therefore, the exemption provided u/s 96 of the RFCTLARR Act, 2013 has wider scope than the tax exemption provided under the existing provisions of the Income Tax Act, 1961. Rather the aforesaid issue had also been 25 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu deliberated at length by the Hon’ble High Court of Calcutta in the case of PCIT, Asansol Vs. M/s. The Durgapur Projects Ltd., ITA No. 282 of 2022, dated 24.02.2023. It was observed by the Hon’ble High Court that as per Section 96 of the RFCTLARR Act, 2013 no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income tax under the said Act. 19. Considering the aforesaid settled position of law, we principally concur with the Ld. AR that the compensation received on the compulsory acquisition of the land under the National Highways Act, 1956 would be exempt from levy of income tax. However, we cannot remain oblivion of the fact that the aforesaid contention has been raised by the assessee for the first time in the course of the proceedings before us. We thus, in terms of our aforesaid deliberations and in all fairness, set aside the matter to the file of the A.O. for the limited purpose of verifying the veracity of the factual matrix of the claim raised by the assessee. In case, the claim of the assessee that he had received the compensation on compulsory acquisition of his land under the National Highways Act, 1956 is found to be in order, then the A.O., based on our aforesaid deliberations is directed to hold the amounts so received by 26 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu the assessee as exempt from levy of income tax u/s 96 of the RFCTLARR Act, 2013. 19. Before parting, we may herein observe that the assessee has also submitted that the subject agricultural lands which were compulsorily acquired do not fall within the meaning of a ‘capital asset’ u/s 2(14)(iii) of the Act, i.e., neither situated within the jurisdiction of a municipality or cantonment board having a population of not less than ten thousand; nor within the notified area limits contemplated in Clause (b) of the said statutory provision, therefore, the compensation received was on the said count also not exigible to tax under the head “capital gains”. As the aforesaid issue had also been raised by the assessee for the first time before us, we direct the A.O. to verify the veracity of the factual position pertaining to the same. In case, the claim of the assessee that the subject agricultural lands are not a “capital asset” u/s 2(14)(iii) of the Act is found to be in order, then the compensation so received by him on the compulsory acquisition of the same shall for the said reason also not be liable to be brought to tax as his income under the head “capital gains”. 20. We thus, in terms of our aforesaid deliberations, restore the matter to the file of the A.O. for fresh adjudication but for the limited 27 ITA No.177/Viz/2025 Gangunaidu Sabbavarapu purpose of carrying out necessary verifications in terms of our aforesaid observations. Needless to say, the A.O., shall in the course of the set- aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim based on fresh documentary evidence, if any. 21. Resultantly, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 27th June, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखध सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यधनिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 27.06.2025. TYNM/sps आदेशकी प्रतततिति अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/The Assessee : Gangunaidu Sabbavarapu, Mallunaid Palem, Sabbavaram, Sabbavaram Mandal, Visakhapatnam – 531035. 2. राजस्व/ The Revenue : The Income Tax Officer, Ward – 2(5), Visakhapatnam. 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. तवभागीयप्रतततितर्, आयकर अिीिीय अतर्करण, / DR, ITAT, Visakhapatnam. 5. गार्ाफ़ाईि / Guard file आदेशािुसार / BY ORDER "