B. Narendra Reddy, Kurnool V. ITo, Kurnool

ITA 100/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61930 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 19-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K VISWANATHAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Opportunity of being heard
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 98 TO 101/HYD/2011 ASSESSMENT YEARS: 2002-03 TO 2005-06 B. NARENDRA REDDY, -V- ITO, WARD-1, KURNOOL. KURNOOL. PAN: AFIPB 8417R ( APPELLANT) (RESPONDENT) APPELLANT BY SRI S. R AMA RAO RESPONDENT BY SHRI K. VIS WANATHAM DATE OF HEARING : 28-05-2012 DATE OF PRONOUNCEMENT : 22-06-2012. ORDER PER SAKTIJIT DEY, JM: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF CIT (A)-IV, HYDERABAD PERTAINING TO THE ASSESSMENT YEARS 2002-03 TO 2005-06. SINCE COMMON I SSUES ARE INVOLVED IN ALL THESE APPEALS, THESE ARE CLUBBE D TOGETHER AND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. SINCE GROUNDS RAISED IN ALL THESE APPEALS ARE ID ENTICAL, FOR THE SAKE OF BREVITY, WE REPRODUCE HEREUNDER THE GROUNDS ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 2 RAISED IN APPEAL NO.98/HYD/2011 PERTAINING TO THE A SSESSMENT YEAR 2002-03 AND DEAL WITH THE FACTS AS UNDER:- I. THE LD. CIT (A) ERRED IN HOLDING THAT THE REOPENING OF THE ASSESSMENT MADE U/S 147 IS VALID. THE LD. CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE NOTICE U/S 147 IS ISSUED TO THE INDIVIDUAL WHEREAS THE INCOME IS DERIVED BY HUF AND EVEN ON THAT COUNT NOTICE IS NOT VALID. II. THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN ASSESSING THE INTEREST ON COMPENSATION AS THE INCOME OF THE INDIVIDUAL WHEREAS THE PROPERTY BELONGED TO THE ANCESTORS OF THE APPELLANT AND IS ASSESSABLE IN THE ASSESSMENT OF THE HUF. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE EVIDENCE SUBMITTED BEFORE HIM AND HELD THAT THE AMOUNT BELONGS TO THE HUF AND NOT THAT OF THE INDIVIDUAL. III. THE LD. CIT (A) ERRED IN HOLDING THAT THE INTEREST ON COMPENSATION IS NOT TAXABLE UNDER THE ACT. THE LD. CIT (A) OUGHT TO HAVE SEEN THAT THE INTEREST RECEIVED IS NOT SEPARATE FROM COMPENSATION AND IS AN INTEGRAL PART OF THE COMPENSATION FOR ACQUISITION OF THE AGRICULTURAL LAND AND, THEREFORE, IS A COMPENSATION AND NOT INTEREST. IV. THE LD. CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE WORD INTEREST IS DEFINED UNDER THE IT ACT AND THE AMOUNT RECEIVED BY THE ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 3 APPELLANT CANNOT BE TERMED AS INTEREST WITHIN THE MEANING OF IT ACT AND, THEREFORE, THE SAME IS NOT LIABLE FOR TAXATION AS A SEPARATE SOURCE OF INCOME. 3. IN GROUND NOS.1 AND 2, THE ASSESSEE HAS CHALLENG ED THE ASSESSMENT ON THE GROUND THAT THE COMPENSATION AND INTEREST EARNED ON ACQUISITION OF LAND BELONGS TO THE HUF. F ACTS OF THE CASE, IN BRIEF, ARE THAT FOR THE ASSESSMENT YEAR 20 02-03, THE ASSESSEE FILED RETURN DECLARING A TOTAL INCOME OF R S.2,05,092/- . IN THE RETURN OF INCOME, THE ASSESSEE HAS DECLAR ED COMPENSATION RECEIVED ON ACQUISITION OF LAND. INIT IALLY, THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQU ENTLY, FINDING THAT THE ASSESSEE HAS NOT OFFERED THE INTER EST RECEIVED ON COMPENSATION AMOUNT TO TAX, THE AO ISSUED NOTICE UNDER SECTION 148. THE ASSESSEE, IN COMPLIANCE TO THE NO TICE ISSUED U/S 148 FILED A LETTER CLAIMING THEREIN THAT THE CO MPENSATION RECEIVED BELONGED TO HIS HUF AND NOT TO HIM AS AN I NDIVIDUAL. THE AO HOWEVER COMPLETED THE ASSESSMENT INCLUDING T HE INTEREST RECEIVED AS INCOME OF THE ASSESSEE. THE A SSESSEE BEING AGGRIEVED BY THE ORDER OF THE AO FILED AN APP EAL BEFORE THE CIT (A). IN COURSE OF HEARING BEFORE THE CIT ( A), THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD ANCESTRAL AGRICULTURAL LAND BELONGING TO THE HUF AT GARGEYAP URAM VILLAGE IN KURNOOL DISTRICT. THE AP GOVERNMENT ACQUIRED 20.78 ACRES OF LAND IN THE YEAR 1999 AND THE LAND A CQUISITION OFFICER AWARDED AN AMOUNT OF RS.15,27,815/- AS COMP ENSATION FOR ACQUISITION OF LAND. 4. NOT SATISFIED WITH THE AWARD OF COMPENSATION B Y THE LAND ACQUISITION OFFICER, CLAIM WAS MADE IN COURT O F LAW FOR ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 4 ENHANCEMENT OF COMPENSATION AND ULTIMATELY THE DISP UTE WAS SETTLED BY THE ORDER OF HONBLE SUPREME COURT AND T OTAL COMPENSATION OF RS.36,26,249/- WAS AWARDED IN FAVOU R OF THE ASSESSEE. THAT APART THE COURT ALSO DIRECTED PAYME NT OF INTEREST AMOUNTING TO RS.13,63,964. THE AO APPORTI ONED THE INTEREST IN SIX ASSESSMENT YEARS STARTING FROM ASSE SSMENT YEAR 2000-01 TO 2005-06. IT WAS CONTENDED BEFORE THE CI T (A) THAT THE ASSESSEE HAD MADE A SPECIFIC PLEA BEFORE THE AO OBJECTING TO THE INITIATION OF PROCEEDINGS U/S 147 SINCE THE COMPENSATION RECEIVED DOES NOT BELONG TO THE ASSESS EE IN HIS INDIVIDUAL CAPACITY BUT BELONGS TO THE HUF. IN SUP PORT OF HIS CONTENTION, THE ASSESSEE ALSO PRODUCED VARIOUS DOCU MENTS LIKE THE ORDER PASSED BY THE LAND REFORMS TRIBUNAL AND PAHANI PATRIKA TO PROVE THE FACT THAT THE NATURE AND CHARA CTER OF THE AGRICULTURAL LAND ACQUIRED IS AN ANCESTRAL PROPERTY BELONGING TO THE HUF. THE CIT (A) HOWEVER DID NOT ACCEPT THE CON TENTION OF THE APPELLANT ON THE GROUND THAT IN THE JUDGMENT OF HONBLE AP HIGH COURT, THE NAME OF THE RESPONDENT IS CLEARL Y MENTIONED AS B. NARENDRA REDDY AND NOT AS B. NAREN DRA REDDY, HUF. THE CIT (A) FURTHER OBSERVED THAT THE ASSESSEE HIMSELF HAS SHOWN THE AMOUNT RECEIVED IN HIS PERSON AL ACCOUNT IN THE RETURN FILED BY HIM IN HIS INDIVIDUA L CAPACITY. THE CIT (A) FURTHER TAKING INTO CONSIDERATION THE FACT THAT THE HUF HAD NEVER FILED ITS RETURN OF INCOME, CAME TO A CONCLUSION THAT INITIATION OF PROCEEDINGS U/S 147 OF THE ACT AGAINST THE ASSESSEE IN HIS INDIVIDUAL CAPACITY IS VALID. 5. THE LEARNED AR FOR THE ASSESSEE SUBMITTED BEFORE US THAT IN COMPLIANCE TO THE NOTICE ISSUED U/S 148 OF THE ACT, THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE AO THAT THE COMPENSATION AMOUNT ALONG WITH INTEREST BELONGS TO THE HUF ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 5 AND CANNOT BE CONSIDERED AT THE HANDS OF THE ASSESS EE IN HIS INDIVIDUAL CAPACITY. IN THIS REGARD, THE LEARNED A R REFERRED TO PAGE-31 OF THE PAPER BOOK WHICH IS THE NOTE APPENDE D TO THE RETURN IN COMPLIANCE WITH NOTICE ISSUED U/S 148. I N THE AFORESAID NOTE, THE ASSESSEE HAS STATED THAT THE AG RICULTURAL LAND ACQUIRED IS AN ANCESTRAL PROPERTY AND AS SUCH COMPENSATION AWARDED ALONG WITH INTEREST BELONGED T O THE HUF. THE LEARNED AR INVITED OUR ATTENTION TO THE O RDER PASSED BY THE LAND REFORMS TRIBUNAL, KURNOOL WHEREIN IN P ARA 6.1, THE LAND REFORMS TRIBUNAL HAS GIVEN A FINDING THAT THE AGRICULTURAL LAND IS NOT SELF-ACQUIRED PROPERTY BUT IS PART AND PARCEL OF THE ANCESTRAL PROPERTY. REFERRING TO THE PAHANI PATRIKA WHICH IS AT PAGE-11 OF THE PAPER BOOK, THE LEARNED AR SUBMITTED THAT THE CHARACTER OF LAND HAS BEEN ADMI TTED AS ANCESTRAL PROPERTY. THE LEARNED AR CONTENDED THAT THESE DOCUMENTS CLEARLY ESTABLISHED THE FACT THAT THE PRO PERTY ACQUIRED BY THE GOVERNMENT FOR WHICH COMPENSATION W AS PAID BELONGED TO THE HUF OF THE ASSESSEE AND NOT TO HIM AS AN INDIVIDUAL. THEREFORE, THE ASSESSMENT MADE U/S 143 (3) READ WITH SECTION 147 OF THE ACT IN HIS INDIVIDUAL CAPAC ITY ASSESSING THE COMPENSATION INCOME RECEIVED IS LEGALLY UNSUSTA INABLE. 6. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THA T THE ASSESSEE HIMSELF HAVING SHOWN THE COMPENSATION RECE IVED IN HIS INDIVIDUAL CAPACITY, HE CANNOT GO BACK ON HIS E ARLIER STAND WHEN THE AO SOUGHT TO ASSESS THE INTEREST RECEIVED ON THE COMPENSATION AMOUNT BY TAKING THIS STAND THAT THE I NCOME BELONGS TO THE HUF. THE LEARNED DR SUPPORTED THE A CTION OF THE REVENUE AUTHORITIES. ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 6 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL FROM RECORD. FROM THE NOTE APPENDED TO TH E RETURN FILED IN COMPLIANCE WITH THE NOTICE ISSUED U/S 148 OF THE ACT, IT IS CLEAR THAT THE ASSESSEE FROM VERY INCEPTION OF T HE ASSESSMENT PROCEEDINGS HAS TAKEN A STAND THAT THE COMPENSATION ALONG WITH INTEREST AWARDED ON ACQUISI TION OF LAND DOES NOT BELONG TO HIM BUT TO THE HUF. IT IS ALSO A FACT THAT THE LAND REFORMS TRIBUNAL IN ITS ORDER HAS OB SERVED THAT THE AGRICULTURAL LAND IS AN ANCESTRAL PROPERTY AND NOT A SELF- ACQUIRED PROPERTY. THE PAHANI PATRIKA ALSO RECORDS THE CHARACTER OF THE LAND AS ANCESTRAL PROPERTY. WHEN THE ASSESSEE HAS TAKEN A SPECIFIC STAND IN THE REASSESS MENT PROCEEDINGS THAT THE COMPENSATION AWARDED BELONGS T O THE HUF AS THE LAND ACQUIRED WAS AN ANCESTRAL PROPERTY BELONGING TO THE HUF, THE AO WAS NOT JUSTIFIED IN TOTALLY IGN ORING THE CLAIM OF PETITIONER WITHOUT EXAMINING IT WHILE COMP LETING THE ASSESSMENT. THE CIT (A) HAS ALSO NOT RECORDED ANY F INDING WITH REGARD TO THE ANCESTRAL CHARACTER OF THE LAND ACQUIRED WHICH IS EVIDENCED FROM THE ORDER OF THE LAND REFOR MS TRIBUNAL AS WELL AS PAHANI PATRIKA WHICH WERE PRODU CED BEFORE THE REVENUE AUTHORITIES. THE CIT (A) WAS NOT JUSTI FIED IN COMING TO THE CONCLUSION THAT THE ASSESSEES CLAIM IS NOT CORRECT ONLY BECAUSE IN THE JUDGMENT OF HONBLE AP HIGH COURT, THE NAME OF THE RESPONDENT HAS BEEN RECORDED AS B. NARENDRA REDDY INSTEAD OF B. NARENDRA REDDY HUF. CONSIDERING THE FACT THAT THE CLAIM OF THE ASSESSEE HAS NOT BEEN PROPERLY EXAMINED BY THE REVENUE AUTHORITIES W ITH REFERENCE TO THE EVIDENCE PRODUCED BEFORE THEM, WE THINK IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE AO WHO SHALL EXAMINE THE ASSESSEES CLAIM WITH REGARD TO THE ASS ESSABILITY OF THE COMPENSATION AND INTEREST RECEIVED ON ACQUIS ITION OF ITA NOS 98 TO 101/HYD/2011 B. NARENDRA REDDY, KURNOOL. ========================= 7 AGRICULTURAL LAND AFTER EXAMINING ALL EVIDENCES PRO DUCED BEFORE HIM. IF ON THE BASIS OF THE EVIDENCE PRODUCED, THE ASSESSEE IS ABLE TO PROVE THAT THE LAND ACQUIRED ACTUALLY BELON G TO THE HUF, THEN NO ASSESSMENT OF COMPENSATION AND INTERE ST CAN BE MADE AT THE HANDS OF THE ASSESSEE IN HIS INDIVI DUAL CAPACITY. WITH THE AFORESAID OBSERVATION, WE RESTO RE THE MATTER BACK TO THE FILE OF THE AO WHO SHALL COMPLET E THE ASSESSMENT AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE REFRAIN FROM DECIDING GRO UND NOS. (II) AND (IV) SINCE IT DEPENDS UPON THE FACT AS TO WHETHER THE COMPENSATION AND INTEREST ARE AT ALL ASSESSABLE AT THE HANDS OF THE ASSESSEE. 8. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSE SSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE COURT ON 22 -6-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER DATED THE 22 ND JUNE, 2012 COPY FORWARDED TO: 1. C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA S RESIDENCY, ROAD NO.9, HIMAYATNAGAR, HYDERABAD. 2. ITO, WARD-1, KURNOOL. 3. THE CIT(A)-IV, HYDERABAD. 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD JMR*