KAMLESH KUMAR(HUF), EAST CHAMPARAN V. ITO, WARD-1(3), MOTIHARI

ITA 27/PAT/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9440 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 10-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RUPESH AGARWAL
• Keywords: Capital asset; Earning of tax free income; Fair market value; Revised return; Capital Gains
• Section: 143(3); 139(5); 143(1); 201; 143(2); 139(1); 139(4); 13

Judgement Text

1 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, (VIRTUAL HEARING AT KOLKATA) [Before Shri A. T. Varkey, JM & Shri Rajesh Kumar, AM] I.T.A. No. 27/Pat/2020 Assessment Year: 2016-17 Kamlesh Kumar (HUF) PAN: (AAIHK 4593 C) Vs. ITO, Ward-1(3), Motihari Appellant Respondent I.T.A. No. 28/Pat/2020 Assessment Year: 2016-17 Kamlesh Kumar (HUF) PAN: (AAIHK 4593 C) Vs. DCIT, CPC, Bangalore Appellant Respondent Date of Hearing 23.12.2021 Date of Pronouncement 31.01.2022 For the Assessee Shri A.K. Rastogi, Sr. Advocate Shri Rakesh Kumar, Advocate For the Department Shri Rupesh Agarwal, Sr. D.R. ORDER Per Shri A.T.Varkey, JM These are appeals preferred by the assessee against the separate orders of Ld. CIT(A)-2, Patna dated 19.02.2020 & 12.02.2020 respectively for the assessment year 2016-17. 2. The grounds of appeal raised by the assessee read as under: 1. For that the Ld. CIT(A) has erred in upholding the order of the AO passed u/s 143(3) wherein the income has been determined at Rs. 1,26,58,595/- as against correct income of Rs. 6,65,825/- (Rs. 6,75,825/- - Rs. 10,000/-). 2. For that the Ld. CIT(A) has erred in not excluding the capital gain of Rs. 1,26,58,595/- on the ground that no certificate from the Circle Officer has 2 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 been provided regarding nature of land and that proof of distance from the municipal unit has also not been provided. 3. For that the Ld. CIT(A) has failed to appreciate that the consideration received against compulsory acquisition of land for public purpose is exempt as per Circular of CBDT and the relevant provisions of Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (in short “RFCTLARR Act”). 4. For that the Ld. CIT(A) has erred in not following the circulars of CBDT and the provisions of RFCTLARR Act and the judgment of Karnataka High Court and has wrongly dismissed the appeal on the ground of non- availability of exemption u/s 10(37). 5. For that the whole order is bad in fact and law of the case and is fit to be modified. 6. For that the other grounds, if any, shall be urged at the time of hearing of appeal. 3. Brief facts of the case are that the assessee is an HUF which received compensation on compulsory acquisition of land by State Government for the purpose of widening of NH-28A between Pipra Kothi to Raxaul, Bihar. The assessee declared [inadvertently] the said compensation received as income from capital gain amounting to Rs. 1,26,58,595/- in the return of income filed on 07.02.201, although later it realized that it was exempt from tax as per circular of CBDT Circular no. 36 of 2016 dated 25/10/2016 and Section 96 of Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (in short ‘RFCTLARR Act’). The CPC while processing the original return vide intimation u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) dated 29/05/2017, subjected the compensation from acquisition to tax as it was reflected by the assessee though inadvertently in its return. 4. Aggrieved by the action of CPC, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal vide order dated 12.02.2020. 5. Meanwhile realizing the mistake of showing capital gain from compensation received due to compulsory acquisition of land by State Government, the assessee filed a revised return of income electronically on 23.12.2017. This revised return was 3 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 selected for scrutiny under CASS to examine as to whether capital gain has been computed correctly on sale/acquisition of property. The AO notes that the land owned by the assessee was acquired by the Bihar State Government through the District Land Acquisition Officer, Motihari and payments have been made in the Financial Year 2015-16 (AY 2016-17) and tax amounting to Rs. 16,26,991/- has been deducted u/s 194L/194LA of the Act. However the AO noted that no capital gain has been declared by the assessee in the revised ITR and has claimed refund of Rs. 31,50,300/-. The AO thereafter examined the claim of the assessee that the compensation it received from acquisition of property was exempt from tax. After examination, the AO did not accept/allow the claim because the assessee had filed the original ITR on 07.02.2017 belatedly after the prescribed due date of filing this return as per Section 139(1) of the Act. Therefore according to AO since the original ITR was a belated return u/s 139(4) of the Act and has already been processed u/s 143(1) by CPC on 29.05.2017 which was much prior to the uploading the data in the revised ITR on 23.12.2017 according to him, in such circumstances the belated ITR cannot be revised u/s 139(5) of the Act and therefore held it to be invalid revised ITR. And thereafter the AO having noted that the assessee had preferred an appeal against the CPC order dated 29.05.2017 against 143(1) order and since the matter is pending before the Ld. CIT(A) he was of the opinion that it would not be prudent for him to take any action on this issue and therefore according to him the assessee may await the outcome of his appeal filed before the Ld. CIT(A) and in view of the aforesaid discussion he dropped the proceedings by order dated 19.11.2018. 6. Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 19.02.2020 was pleased to dismiss the appeal and thereby sustained the order. Therefore the assessee is in appeal against this action of Ld. CIT(A) as well before us. 7. First we will take up the appeal of the assessee against the action of CPC i.e. ITA No. 28/Pat/2020. The facts stated supra are not repeated for the sake of brevity. The short question in this appeal is whether the action of the CPC in accepting the 4 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 tax returned by the assessee dated 07.02.2017 (belatedly filed on 2.2.2017) declaring total income of Rs. 1,33,24,420/- wherein the assessee had inadvertently shown the capital gain from the compensation received pursuant to compulsory acquisition of its land to the tune of Rs. 1,26,58,595/- is legally sustainable or not. According to Ld. Senior Counsel for the assessee, the RFCTLARR Act came into force on 1.1.2014 and the notification for acquiring the land of the assessee was dated 7.5.2014 which is after the RFCTLARR has come into force. The Ld. Counsel drew our attention to pages 10 to 14 of PB wherein is placed the relevant Gazette of India and the Ministry of Road Transport & Highways wherein it has notified the lands to be acquired and from a perusal of the same it is seen that the assessee’s land has been shown at page no. 11 as Raxaul taluk, Kannai Persolimpur village and the type of land is shown as private and the nature of land is shown as residential property. According to Ld. Counsel, the Ld. CIT(A) has erred in denying the claim of the assessee that the compensation from acquiring this land was exempt merely by stating that assessee’s claim was since made u/s 10(37) of the Act and since the property in question was residential property, and not agricultural property, the Ld. CIT(A) was of the opinion that the exemption stated in 10(37) of the Act does not apply to the assessee’s case and therefore he dismissed the appeal of the assessee. According to Ld. Senior Counsel, it was not the case of the assessee that its land was agricultural land ,so exempted u/s 10(37) of the Act, whereas, the claim of assessee was that the compensation received was exempt from taxation as per Section 96 of the RFCTLARR Act which reads as under: “96. Exemption from income tax, stamp duty and fees.- No income tax or stamp duty shall be levied on any award or agreement made under this Act, except under section 46 and no person claiming under any such award or agreement shall be liable to pay any fee for a copy of the same. This clause seeks to provide that no award or agreement made under the proposed legislation will be chargeable with income tax or stamp duty except under clause 46. Further a person claiming under any such award or agreement is not required to pay any fee for a copy of such award of agreement (Notes of Clauses).” 8. And Section 46 carves out an exemption from Section 96 which reads as under: 5 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 "Provisions relating to rehabilitation and resettlement to apply in case of certain persons other than specified persons"- (1) Where any person other than a specified person is purchasing land through private negotiations for an area equal to or more than such limits, as may be notified by the appropriate Government, considering the relevant State specific factors and circumstances, for which the payment of Rehabilitation and Resettlement Costs under this Act is required, he shall file an application with the District Collector notifying him of- (a) intent to purchase; (b) purpose for which such purchase is being made; (c) particulars of lands to be purchased. (2) It shall be the duty of the Collector to refer the matter to the Commissioner for the satisfaction of all relevant provisions under this Act related to rehabilitation and resettlement. (3) Based upon the Rehabilitation and Resettlement Scheme approved by the Commissioner as per the provisions of this Act, the Collector shall pass individual awards covering Rehabilitation and Resettlement entitlements as per the provisions of this Act. (4) No land use change shall be permitted if rehabilitation and resettlement is not complied with in full. (5) Any purchase of land by a person other than specified persons without complying with the provisions of Rehabilitation and Resettlement Scheme shall be void ab initio: Provided that the appropriate Government may provide for rehabilitation and resettlement provisions on sale or purchase of land in its State and shall also fix the limits or ceiling for the said purpose. (6) If any land has been purchased through private negotiations by a person on or after the 5th day of September. 201 1. which is more than such limits referred to in sub-section (I) and if the same land is acquired within three years from the date of commencement of this Act, then, forty per cent. of the compensation paid for such land acquired shall be shared with the original land owners. Explanation - For the purpose of this section, the expression- (a) "original land owner" refers to the owner of the land as on the 5th day of September, 2011; (b) "specified persons" includes any person other than- (i) appropriate Government; (ii) Government company; (iii) association of persons or trust or society as registered under the Societies Registration Act 1860, (21 of 1860) wholly or partially aided by the appropriate Government or controlled by the appropriate Government. 6 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 This clause seeks to provide provisions relating to rehabilitation and resettlement to apply in case of certain persons other than specified persons for purchasing land through private negotiations for an area equal to more than such limits. (Notes of Clauses). 9. And according to Sr. Counsel the CBDT has clarified that compensation under RFCTLARR Act is exempt from Income Tax and for that he has drawn our attention to the CBDT Circular which is found placed at page 15 to 16 which is reproduced as under: Circular No. 36/2016 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ITA.II division, North Block, New Delhi, the 25th of October, 2016 Subject: Taxability of the compensation received by the land owners for the land acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ('RFCTLAAR Act’)-reg.- Under the existing provisions of the Income-tax Act, 1961 ['the Act'), an agricultural land which is not situated in specified urban area, is not regarded as a capital asset. Hence, capital gains arising from the transfer (including compulsory acquisition) of such agricultural land is not taxable. Finance (No. 2) Act, 2004 inserted section 10(37) in the Act from 01.04.2005 to provide specific exemption to the capital gains arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfillment of certain conditions. Therefore, compensation received from compulsory acquisition of an agricultural land is not taxable under the Act (subject to fulfillment of certain conditions for specified urban land). 2. The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax. 3. As 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 RFCTLARR Act, the exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax-exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability of compensation received on compulsory acquisition of land, especially those relating to acquisition of non-agricultural land. The matter has been examined by the Board and it is hereby clarified that compensation received in respect of 7 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961. 4. The above may be brought to the notice of all concerned. 5. Hindi Version of the order shall follow.” Thus according to Ld. Sr. Counsel, the action of Ld. CIT(A) is erroneous since he misdirected himself by referring to Section 10(37) of the Act; and has not looked in to the contention of the assessee that its claim was made under the RFCTLARR Act and the CBDT circular (supra). Therefore the Ld Sr Counsel prays that assessee’s claim that the amount of compensation received to the tune of Rs. 1,26,58,595/- should not be taxed as per section 96 of the RFCTLARR Act and the CBDT circular (supra) and the appeal to be allowed. 10. Per Contra, the Ld. D.R. Shri Rupesh Agrawal vehemently opposed the submission of the Ld. Sr. Counsel of the assessee and pointed out the assessee himself had reflected this compensation in the original ROI; and pursuant to it the CPC has processed the same and accepted it. So according to him, no fault can be attributed to the action of CPC and the Ld. CIT(A) upheld the action of CPC because he did not find any merit in the contention of assessee because the claim u/s 10(37) of the Act cannot be accepted since the land in question was not agricultural land. And even the notification of Ministry of Road Transport & Highways shows that land in question was residential. So according to Ld. D.R the Ld. CIT(A) rightly did not allow the claim of the assessee. And therefore he does not want us to interfere with the order of the Ld. CIT(A). 11. We have heard both the parties and perused the records. We note that the assessee’s land which is residential has been acquired by the Bihar State Govt for development of National High Way by virtue of notification dated 7.5.2014 of Govt. of India (Refer Gazette notification placed at page 10 to 14 of PB). We further note that this acquisition of land happened after the RFCTLARR Act has come into force on 1.1.2014. As per Section 96 of RFCTLARR Act, no income tax shall be levied on any award the assessee received pursuant to acquisition made under this Act. We 8 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 have carefully gone through the Section 96 as well as Section 46 of the RFCTLARR Act (supra) and we find that the assessee’s case does not fall in the ken of Section 46 of RFCTLARR Act; and therefore the compensation received by the assessee to the tune of Rs. 1,26,58,595/- is exempt as per Section 96 of the RFCTLARR Act even though the land in question is residential and since it is exempt from tax it and consequently need not have to be included in the total income of the assessee. 12. We note that inadvertently the assessee had filed the return of income declaring this amount as capital gain. So the CPC while processing the ROI filed by the assessee, accepted the capital gain offered by the assessee. However we note that the Ld. CIT(A) while passing the impugned order against the action of CPC has not considered the claim of the assessee that it has inadvertently reflected the same as capital gain in ROI and the whole amount it received as compensation was exempt from tax as per Section 96 of the RFCTLARR Act as well as the CBDT Circular (supra). We do not countenance such an action of the Ld. CIT(A). We note that the Ld. CIT(A) denied the claim to the assessee by misdirecting himself that assessee’s claim u/s 10(37) of the Act cannot be allowed because the land acquired of assessee was not agricultural land, so has sustained the taxation on it. 13. We note that just because the assessee inadvertently or by ignorance has shown the exempt income as exigible to tax, the AO/CPC ought not to have treated the same as taxable income and thereby taxed the exempt income because Article 265 of the Constitution , title reads “ Taxes not to be imposed saved by authority of law’’ and the Article reads ‘No tax shall be levied or collected except by authority of law’. Here in this case the Parliament has exempted this compensation (for acquiring land) from taxation as per Section 96 of RFCTLARR Act. So the CPC/AO ought not to have taxed the same at the first place. For that proposition we rely also of a judgment in a similar case decided by the Hon’ble Kerala High Court in the case of Raghavan Nair vs. ACIT & Ors. reported in (2018) 402 ITR 400 wherein it was held as under: HELD ■ The short question arising for consideration, is whether in the absence of a revised return, the 9 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 Assessing Officer is precluded from considering, in a proceedings under section 143 the contention of the assessee that the capital gains disclosed in the return filed by him is not exigible to tax and that therefore, there cannot be any assessment on the basis that the deduction claimed by him under that head is not admissible. [Para10] ■ It is beyond dispute that the powers of the Assessing Officers under the Act are quasi-judicial in nature and they are duty-bound, therefore, to act fairly in the discharge of their functions. They are also invested with the authority to do justice to the assessees. True, in a given case where the self-assessment made by an assessee is proposed to be revised on the ground that the deduction made him in the return under a particular head is inadmissible, the Assessing Officer, in the absence of a revised return, would proceed on the basis of the facts disclosed by the assessee in the return. But, in a case where it is apparent on the face of the record that the assessee has included in his return, an income which is exempted from payment of income tax, on account of ignorance or by mistake, the Assessing Officer is bound to take into account the said fact in a proceedings under section 143 of the Act. In other words, if the capital gains on a transaction was exempted from payment of tax, the Assessing Officer had a duty to refrain from levying tax on the said capital gains and he could not, in such cases, refuse to grant relief under section 143 to the assessee on the technical plea that the assessee had not filed a revised return. It is so since the paramount duty of the Assessing Officer is to complete the assessments in accordance with law. It is all the more so in the light of the mandate under article 265 of the Constitution that no tax shall be levied or collected except by authority of law. ■ In the instant case, the assessee has not filed a revised return when he was made to understand that he has no liability to pay tax on the capital gains resulting from the acquisition of land. The reason is obvious that the time prescribed under the Act for submission of revised return had expired by that time. The case of the assessee, in the circumstances, is only that he shall not be penalised for having paid tax in terms of his return, on account of ignorance, on an income not exigible to tax. When the materials on record are analysed in the above background, have no hesitation to hold that the order, which is impugned in the writ petition, is a clear case where the first respondent has penalised the assessee for having paid tax on an income which is not exigible to tax. The said order, in the circumstances, is liable to be interfered with. [Para 11] ■ In the circumstances, the writ petition is allowed. Judgment: 1. Petitioner is an assessee under the Income Tax Act (the Act) on the rolls of the first respondent. He received a sum of Rs. 1,28,43,192/- in the year 2014-'15 by way of compensation for a land acquired from him for the Kochi Metro Rail Project. The petitioner, at the relevant time was under the impression that the capital gains resulting from the acquisition of the land is exigible to tax under the Act. Consequently, in the return filed by the petitioner under the Act for the assessment year 2015-'16, he has, disclosed the capital gains resulting from the acquisition of the said land and paid tax on that basis. For the said purpose, the petitioner has worked out the indexed cost of the land reckoning its fair market value as on 01.04.1981 at Rs. 50,000/- per cent. 2. The first respondent issued Ext.P3 notice to the petitioner under Section 143(2) of the Act for scrutiny of the return filed by him. It is mentioned in Ext.P3 notice that the deduction claimed by the petitioner under the head 'capital gains' is the issue identified for examination. The petitioner sent a reply to Ext.P3 notice reiterating that the fair market value of the land as on 01.04.1981 was as disclosed by him and therefore, the deduction claimed by him under the head mentioned in the notice is in order. After examining the reply of the petitioner, in terms of Ext.P6 communication, the first respondent called upon the petitioner to produce documents to establish that the fair 10 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 market value of the land as on 01.04.1981 was as claimed by the petitioner. In the meanwhile, in the light of Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Land Acquisition Act), this Court held in a number of cases that compensation payable to persons for the lands acquired under the said statute is exempted from payment of tax under the Act. In the circumstances, in so far as the acquisition of the land of the petitioner was under the said statute, the petitioner submitted Ext.P9 reply to Ext.P6 notice requesting the first respondent to drop the proceedings initiated against him under Section 143 the Act. Since the first respondent has not considered the request made by the petitioner in Ext.P9 reply, the petitioner filed W.P.(C).No.23113 of 2017 before this Court challenging the continuance of the proceedings under Section 143 the Act. The said writ petition was admitted on 24.07.2017. This Court also passed an interim order in the said case on 24.07.2017 restraining the first respondent from continuing the proceedings. 3. While so, the petitioner was served with Ext.P12 order dated 14.07.2017, by which the first respondent has completed the proceedings initiated in terms of Ext.P3 notice raising a demand for Rs. 9,95,070/- on the basis that the cost indexation of the land made by the petitioner cannot be accepted and that the fair market value of the land as on 01.04.1981 can be reckoned only at Rs. 1,400/- per cent for the purpose of cost indexation. According to the petitioner, after Ext.P6 notice, the first respondent had issued Ext.P11 notice also to the petitioner directing him to appear before him on 20.07.2017 for the hearing proposed in furtherance to Ext.P3 notice. The case of the petitioner is that in the light of Ext.P11 notice, Ext.P12 order dated 14.07.2017 can only be a pre-dated one issued maliciously with a view to defeat W.P.(C).No.23113 of 2017 instituted by the petitioner before this Court. It is also the case of the petitioner that at any rate, Ext.P12 order being one issued without adverting to the contention taken by the petitioner that the proceedings are liable to be dropped in the light of Section 96 of the Land Acquisition Act, the same is unsustainable. The petitioner, therefore, challenges Ext.P12 order in this proceedings on the aforesaid grounds. 4. A statement has been filed on behalf of the first respondent. The stand taken by the first respondent in the statement is that though the petitioner was directed to appear for hearing on 20.07.2017 in terms of Ext.P11 notice, the authorised representative of the petitioner had appeared before the first respondent on 20.07.2017 itself pursuant to the said notice and filed a written submission on behalf of the petitioner and it is in the said circumstances that Ext.P12 order was passed on 14.07.2017. 5. Heard the learned counsel for the petitioner as also the learned Standing Counsel for the first respondent. 6. The petitioner does not dispute Ext.R1(A) written submission filed on his behalf by his authorised representative on 20.07.2017 pursuant to Ext.P11 notice. If that be so, the petitioner cannot be heard to contend, relying on Ext.P11 notice, that the impugned order is a pre- dated one. Apart from the case developed on the strength of Ext.P11 notice, petitioner has not placed on record any material to indicate that the impugned order is one issued after 24.7.2017 with a pre-date maliciously with a view to defeat W.P.(C).No.23113 of 2017 instituted by the petitioner before this Court. In the circumstances, the contention of the petitioner that Ext.P12 order dated 14.07.2017 is a pre- dated one issued maliciously with a view to defeat W.P.(C). No.23113 of 2017 , is liable to be rejected. 7. It is seen that even while the petitioner has an effective alternative remedy by way of appeal against Ext.P12 order under the Act, he has instituted this writ petition 11 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 challenging the said order in the light of his case that the same is one rendered maliciously with a view to defeat W.P.(C).No.23113 of 2017 pending before this Court. Though it is found that Ext.P12 order is not one issued maliciously as contended by the petitioner, in so far as this Court entertained W.P.(C).No.23113 of 2017 and interdicted the first respondent from proceeding further in the matter, and in so far as this Court admitted this writ petition challenging Ext.P12 order even while the petitioner has an alternative remedy by way of appeal against the same, I am of the view that it may not be appropriate now to relegate the petitioner to avail the alternative remedy available to him against Ext.P12 order. In the circumstances, I propose to examine the correctness of Ext.P12 order in this proceedings itself. 8. As noted above, the impugned order is challenged on the ground that the proceedings under Section 143(2) of the Act, which culminated in Ext.P12 order, is without jurisdiction, in the light of Section 96 of the Land Acquisition Act. 9. The learned Standing Counsel for the first respondent does not dispute the fact that in the light of Section 96 of the Land Acquisition Act, no tax is leviable on the capital gains resulting from the acquisition of land under the said statute. The learned Standing Counsel also does not dispute the fact that the only point on which Ext.P12 order has been issued is that the fair market value of the land as on 01.04.1981 adopted by the petitioner for cost indexation cannot be accepted. Nevertheless, it was contended by the learned Standing Counsel that in so far as the petitioner has disclosed the capital gains resulting from the acquisition of land in the return filed by him and paid tax on that basis, in the absence of a revised return, the assessing officer is precluded from considering the question whether the petitioner is liable to pay tax on the said capital gains. The learned counsel relied on the decision of the Apex Court in Goetze (India) Ltd. v. CIT[2006] 284 ITR 323/157 Taxman 1, in support of the said contention. 10. The short question arising for consideration, therefore, is whether in the absence of a revised return, the assessing officer is precluded from considering, in a proceedings under Section 143 of the Act, the contention of the assessee that the capital gains disclosed in the return filed by him is not exigible to tax and that therefore, there cannot be any assessment on the basis that the deduction claimed by him under that head is not admissible. 11. It is beyond dispute that the powers of the assessing officers under the Act are quasi-judicial in nature and they are duty bound, therefore, to act fairly in the discharge of their functions. They are also invested with the authority to do justice to the assessees. True, in a given case where the self assessment made by an assessee is proposed to be revised on the ground that the deduction made him in the return under a particular head is inadmissible, the assessing officer, in the absence of a revised return, would proceed on the basis of the facts disclosed by the assessee in the return. But, in a case where it is apparent on the face of the record that the assessee has included in his return, an income which is exempted from payment of income tax, on account of ignorance or by mistake, according to me, the assessing officer is bound to take into account the said fact in a proceedings under Section 143 of the Act. In other words, if the capital gains on a transaction is exempted from payment of tax, the assessing officer has a duty to refrain from levying tax on the said capital gains and the assessing officer cannot, in such cases, refuse to grant relief under Section 143 of the Act to the assessee on the technical plea that the assessee has not filed a revised return. It is so since the paramount duty of the assessing officer is to complete the assessments in accordance with law. It is all the more so in the light of the mandate under Article 265 of the Constitution that no tax shall be levied or collected except by authority of law. I am fortified in the aforesaid view by the observations made by the Apex Court 12 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 in CIT v. Shelly Products[2003] 129 Taxman 271/261 ITR 367. Paragraph 36 of the judgment of the Apex Court in the said case reads thus: "36. We cannot lose sight of the fact that the failure or inability of the Revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of assessment proceeding. He can certainly make such a claim also before the authority concerned calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing officer, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the authority concerned in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by Section 240 of the Act, an obligation is cast upon the Revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore, it is open to the assessee to bring facts to the notice of the authority concerned on the basis of the return furnished, which may have a bearing on the quantum of the refund, such as those the assessee could have urged under Section 237 of the Act. The authority concerned, for the limited purpose of calculating the amount to be refunded under Section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed, an assessee will not be placed in a more disadvantageous position than what he would have been, had an assessment been made in accordance with law." (Underline Supplied). In the instant case, the petitioner has not filed a revised return when he was made to understand that he has no liability to pay tax on the capital gains resulting from the acquisition of land. The reason is obvious that the time prescribed under the Act for submission of revised return had expired by that time. The case of the petitioner, in the circumstances, is only that he shall not be penalised for having paid tax in terms of his return, on account of ignorance, on an income not exigible to tax. When the materials on record are analysed in the above background, I have no hesitation to hold that Ext.P12 order, which is impugned in the writ petition, is a clear case where the first respondent has penalised the petitioner for having paid tax on an income which is not exigible to tax. The said order, in the circumstances, is liable to be interfered with. 12. The question arose in Goetze (India) Ltd. (supra) was whether an assessee could make a claim for deduction other than by filing a revised return. As noted above, the question in the case on hand is whether the assessing officer is precluded from considering an objection as to his authority to make an assessment under Section 143 of the Act merely for the reason that the petitioner has included in his return an amount which is exempted from payment of tax and that he could not file a revised return to rectify the said mistake in the return. The decision of the Apex Court in Goetze (India) Ltd. (supra) has, therefore, no application to the facts of the present case. In the circumstances, the writ petition is allowed and Ext.P12 order is quashed to the extent it assesses the petitioner to capital gains resulting from the acquisition of land mentioned therein.” 13 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 14. In the light of the aforesaid decision as well as the CBDT Circular (supra) which is binding on the income tax authorities, we find the claim of the assessee has to be allowed and therefore we hold that the capital gain shown by the assessee in its original ROI to the tune of Rs. 1,26,58,595/- need not to be taxed being exempt. So the assessee succeeds at ITA No. 28/Pat/2020 so it is allowed. 15. Now let us take up assessee’s appeal (ITA NO. 27/Pat/2020). Having heard both parties, we note that the AO (ITO, Ward-1(3), Motihari) has passed the order dated 19.11.2018 wherein he has dropped the proceedings which action has been sustained by the Ld. CIT(A) vide order dated 19.02.2020. Therefore the action of both the lower authorities cannot be countenanced. The AO could not have simply dropped the proceedings when the issue of capital gain was selected by CASS for scrutiny. And the Ld. CIT(A) has misdirected himself by observing that assessee’s claim u/s 10(37) of the Act was not tenable since the land in question is not agricultural. We note that the assessee’s case was not that compensation it received was exempt since the land in question was agricultural. Its claim was that the land in question though was residential since it was acquired after RFCTLARR Act has come into force, the compensation is exempt u/s 96 of RFCTLARR Act and the CBDT Circular (supra). Since we have allowed the appeal by upholding the claim of the assessee, that land in question being acquired after RFCTLARR Act has come in force, the compensation is exempt from income tax as per Section 96 of the RFCTLARR Act. Therefore this appeal has become academic, so is dismissed. 16. In the result, the appeal of the assessee in ITA No. 27/Pat/2020 is dismissed and ITA No. 28/Pat/2020 is allowed. Order is pronounced in the open court on 31 st January, 2022. Sd/- Sd/- (Rajesh Kumar) (Aby. T. Varkey) Accountant Member Judicial Member Dated: 31.01.2021 SB, Sr. PS 14 ITA Nos.27 & 28/Pat/2020 Kamlesh Kumar (HUF) Assessment Year: 2016-17 Copy of the order forwarded to: 1. Assessee – Kamlesh Kumar (HUF), S/o Jawaharlal Prasad, Bazar Chauk, Ghorasahan, East Champaran, Pin-845303. 2. Revenue – ITO, Ward-1(3), Motihari DCIT, CPC, Bangalore 3. CIT(A)-2, Patna 4. CIT, Patna. 5. DR, Patna Benches, Patna True Copy By Order Senior Private Secretary ITAT, Patna Bench, Patna