Naransang L.Parmar, Ahmedabad V. Income Tax Officer,Ward-6(3), Ahmedabad

ITA 2507/AHD/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2007 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TALWANI
• Assessee Lawyers: ANKIT TALSANIA
• Keywords: Principle of natural justice; Non-deduction of tax
• Section: 143(3); 147; 28

Judgement Text

ITA NO. 2507/AHD2015 NARANSANG L PARMAR VS. ITO ASSESSMENT YEAR: 2009-10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT AND PRAMOD KUM AR, VICE PRESIDENT] ITA NO. 2507/AHD/2015 ASSESSMENT YEAR: 2009-10 NARANSANG L PARMAR ..................APPELL ANT AT & PO : JUNA NAVDA, TAL : DHANDHUKA, AHMEDABAD-380 001 [PAN : AXTPP 3332 L] VS. INCOME TAX OFFICER ............................ RESPONDENT WARD 6(3), AHMEDABAD APPEARANCES BY: ANKIT TALSANIA, FOR THE APPELLANT VINOD TALWANI, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 30.10.2018 DATE OF PRONOUNCING THE ORDER : 16.11.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 29 TH MAY 2015, PASSED BY THE LEARNED CIT(A)-13, AHMEDAB AD, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 148 OF TH E INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DISMISSING THE APPELLANT'S GROUND OF APPEAL CHALLEN GING THE VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT AS REGARDS RE-OPENING THE ASSESSMENT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) OUGHT TO HAVE HELD THAT NOTICE U/S 148 OF THE ACT AND THE CONSEQUENTIAL RE-ASSESSMENT PROCEEDINGS ARE INVALID. THE SAME BE HELD SO NOW. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT APPRECIATING THAT THE ID AO HAD NOT PROVIDED REASON S RECORDED FOR REOPENING WHICH IS GROSS VIOLATION OF LAW AND THEREFORE THE O RDER PASSED U/S 147 READ WITH 143(3) OUGHT TO HAVE BEEN QUASHED ON THIS SHORT GRO UND ONLY BY THE ID. CIT(A). ITA NO. 2507/AHD2015 NARANSANG L PARMAR VS. ITO ASSESSMENT YEAR: 2009-10 PAGE 2 OF 4 3. THE LEARNED CIT(A) AND AO HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT APPRECIATING THAT THE INTEREST ON ENHANCED C OMPENSATION WAS RECEIVED ON AGRICULTURE LAND, AND THEREFORE, WAS EXEMPT U/S 10( 37) OF THE INCOME TAX ACT, 1961. UNDER THE CIRCUMSTANCES, THE ID. CIT(A) HAS E RRED IN LAW IN CONFIRMING THE ACTION OF ID. AO IN MAKING ADDITION OF RS.6,91,470/ - IN THE HANDS OF THE APPELLANT ON RECEIPT BASIS. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE, T HE LEARNED CIT(A) AND AO OUGHT TO HAVE APPRECIATED THAT AS PER THE SETTLED PROPOSI TION OF LAW THE INTEREST ON ENHANCED COMPENSATION CANNOT BE TAXED ON RECEIPT BA SIS BUT ON ACCRUAL BASIS. UNDER THE CIRCUMSTANCES, THE ID. CIT(A) HAS ERRED I N LAW IN CONFIRMING THE ACTION OF ID. AO IN MAKING ADDITION OF RS.6,91,470/- IN TH E HANDS OF THE APPELLANT ON RECEIPT BASIS IN THE YEAR UNDER CONSIDERATION AND N OT ON ACCRUAL AND PRO-RATA BASIS IN THE YEAR UNDER CONSIDERATION. 5. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDE RS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BR EACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHE D. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B /C OF THE ACT. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 27I( 1)(C) OF THE ACT. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL SUBMITTED THAT THE ISSUE IN APPEAL IS COVERED, ON MERITS AND IN FAVOUR OF THE ASSESSEE, BY HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE O F MOVALIYA BHKHUBHAI BALABHAI VS. ITO [(2016) 70 TAXMANN.COM 45 (GUJ.)] WHEREIN IT HA S BEEN HELD THAT INTEREST RECEIVED BY THE ASSESSEE UNDER SECTION 28 OF THE LAND ACQUIS ITION ACT, 1894, IS EXEMPT FROM TAX UNDER SECTION 10(37). IT WAS THEN POINTED OUT THAT THE ASSESSEE WAS GRANTED COMPENSATION FOR LAND ACQUIRED BY SARDAR SAROVAR NI GAM LTD AND THE ASSESSEE WAS THEREAFTER GRANTED ADDITIONAL COMPENSATION ALONG WI TH INTEREST THEREON AMOUNTING TO RS.6,27,215/- ON LATE PAYMENT OF COMPENSATION. TAK ING NOTE OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS. GHANSHYAM [ (2009) 182 TAXMAN 368 (SC)], ASSESSING OFFICER TREATED THIS AMOUNT AS TAXABLE IN COME. IN APPEAL, THIS ACTION WAS CONFIRMED BY THE CIT(A), AND THE ASSESSEE IS THUS I N FURTHER APPEAL BEFORE US. ITA NO. 2507/AHD2015 NARANSANG L PARMAR VS. ITO ASSESSMENT YEAR: 2009-10 PAGE 3 OF 4 4. LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT SERI OUSLY DISPUTE THE LEGAL POSITION CANVASSED BY THE LEARNED COUNSEL AND AGREED THAT TH E INTEREST GRANTED UNDER SECTION 28, IN THE LIGHT OF HONBLE JURISDICTIONAL HIGH COU RTS JUDGMENT IN THE CASE OF MOVALIA BHIKHUBHAI BALABHAI (SUPRA), IS EXEMPT FROM TAX, BU T HE CONTENDED THAT THERE IS NOTHING ON RECORD TO SHOW THAT INTEREST WAS AWARDED UNDER S ECTION 28. HE VEHEMENTLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE FIND THAT THERE IS A CATEGORICAL FINDING BY T HE CIT(A), AT PAGES 11-12 OF HIS ORDER, THAT PERUSAL OF THE STATEMENT ISSUED TO THE APPELLANT BY THE PRESCRIBED AUTHORITY SHOWS THAT THIS COMPENSATION RECEIVED DURING THE YE AR INCLUDES THE INTEREST UNDER SECTION 28 OF THE LAND ACQUISITION ACT. WE FURTHER NOTE THAT HONBLE JURISDICTIONAL HIGH COURT HAS, IN THE CASE OF MOVALIA BHIKUBHAI BALABHA I (SUPRA), HAS OBSERVED AS FOLLOWS:- 13. THE UPSHOT OF THE ABOVE DISCUSSION IS THAT SIN CE INTEREST UNDER SECTION 28 OF THE ACT OF 1894, PARTAKES THE CHARACTER OF COMPENSA TION, IT DOES NOT FALL WITHIN THE AMBIT OF THE EXPRESSION 'INTEREST' AS CONTEMPLA TED IN SECTION 145A OF THE I.T. ACT. THE FIRST RESPONDENT - INCOME TAX OFFICER WAS, THEREFORE, NOT JUSTIFIED IN REFUSING TO GRANT A CERTIFICATE UNDER SECTION 197 O F THE I.T. ACT TO THE PETITIONER FOR NON-DEDUCTION OF TAX AT SOURCE, INASMUCH AS, THE PE TITIONER IS NOT LIABLE TO PAY ANY TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES' ON THE INTEREST PAID TO IT UNDER SECTION 28 OF THE ACT OF 1894. 6. THE VIEW SO EXPRESSED BY THEIR LORDSHIPS BINDS U S. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE PLEA OF THE ASSESSEE. THE ASSE SSING OFFICER IS, ACCORDINGLY, DIRECTED TO EXCLUDE THE IMPUGNED AMOUNT OF RS.6,91, 470/- FROM TAXABLE INCOME OF THE ASSESSEE. AS WE HAVE DECIDED THE ISSUE ON MERITS, WE SEE NO NEED TO DEAL WITH OTHER LEGAL ISSUES RAISED IN THE GROUNDS OF APPEAL. 7. IN THE RESULT, APPEAL IS ALLOWED IN THE TERMS IN DICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16 TH NOVEMBER, 2018 SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, THE 16 TH DAY OF NOVEMBER, 2018 **BT ITA NO. 2507/AHD2015 NARANSANG L PARMAR VS. ITO ASSESSMENT YEAR: 2009-10 PAGE 4 OF 4 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .......4 PAGES MANUSCRIPTS O F HONBLE VP ATTACHED 08.11.2018... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 11.11.2018..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 16.11.2018... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: .. 16.11.2018. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 16.11.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......