Smt. Sakarben K. Patel, Ahmedabad V. The Income Tax Officer, Ward-13(3), Ahmedabad

ITA 2989/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6090 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Principle of natural justice; Reassessment proceedings
• Section: 143(3)

Judgement Text

ITA NO. 2989 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 7 - 08 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 298 9 /AHD/201 3 ASSESSMENT Y EAR : 20 0 7 - 08 SAKARBEN K . PATEL , ..... .......... .APPELLANT B - 13, SARASWATI NAGAR SOCIETY, OPP. ONGC AVNI BHAVAN, SA BARMATI, AHMEDABAD 380 005. [PAN: A LWPP 2515 N ] VS. INCOME TAX OFFICER , WARD 13(3), AHMEDABAD. .. ......... RESPONDENT APPEARANCES BY: TUSHAR HEMANI , FOR THE APPELLANT D INESH SINGH , FOR THE RESPONDENT D ATE OF CONCL UDING THE HEARING : 1 4 . 0 2 . 201 7 DATE OF PRONOUNCING THE ORDER : 28 .04. 2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 23 RD OCTOBER 2013 , PASSED BY THE LEARNED CIT(A) , IN THE M ATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S 147 OF THE INCOME T AX ACT 1961 , FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. G ROUND NO. 1, WHICH IS DIRECTED AGAINST THE LEARNED CIT(A) S UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS, IS NOT PRESSED, AND IS DISM ISSED AS SUCH. 3. IN GROUND NOS. 2,3 AND 4, WHICH WE WILL TAKE UP TOGETHER, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES: 2 . THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS.3,90,034/ - MADE I N RESPECT OF INTEREST INCOME ON RECEIPT BASIS INSTEAD OF ACCRUAL BASIS IN SPITE OF THE FACT THAT THE SAID INTEREST PERTAINED TO EARLIER ASSESSMENT YEARS. 3 . BOTHE THE LOWER AUTHORITIES FAILED TO APPRECIATE THAT IT IS A SETTLED LEGAL POSITION OF LAW T HAT INTEREST ON ENHANCED COMPENSATION FOR LAND ITA NO. 2989 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 7 - 08 PAGE 2 OF 3 COMPULSORILY ACQUIRED UNDER THE LAND ACQUISITION ACT, 1894 CANNOT BE TAKEN TO HAVE ACCRUED ON THE DATE OF THE ORDER OF THE COURT GRANTING ENHANCED COMPENSATION BUT HAS TO BE TAKEN AS HAVING ACCRUED YEAR AFTER YEAR FROM THE DATE OF DELIVERY OF POSSESSION OF LANDS TILL THE DATE OF SUCH ORDER. 4 . BOTHE THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANAT IONS 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 BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVE S TO BE QUASHED. 4. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. IT IS A CASE FOR REOPENED ASSESSMENT. DURING THE COURSE OF REOPENED ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS OFFERED INTEREST INCOME OF RS 64 ,346 BEING 1/4 TH SHARE OF THE INTEREST ACCRUED DURING THE RELEVANT PREVIOUS YEAR. THIS INTEREST WAS IN RESPECT OF A LAND COMPENSATION AWARD TO ASSESSEE S LATE HUSBAND. THE TOTAL INTEREST RECEIVED BY THE ASSESSE, IN RESPECT OF THIS COMPENSATION, WAS RS 4, 53,570. WHEN ASSESSING OFFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THIS ENTIRE AMOUNT OF RS 4,53,570 NOT BE BROUGHT TO TAX IN THIS YEAR, IT WAS EXPLAINED BY THE ASSESSEE THAT THIS INTEREST IS FOR A PERIOD OF 62 MONTHS AND IT SHOULD BE TAXED IN TH E ASSESSMENT YEAR TO WHICH IT BELONGS . THIS EXPLANATION WAS REJECTED BY THE ASSESSING OFFICER AND IT WAS HELD THAT THE AMOUNT IS TAXABLE IN THE YEAR OF RECEIPT. THE ASSESSING OFFICER, ON THE BASIS OF CALCULATIONS SET OUT IN PAGE 3 OF THE ASSESSMENT ORDER, ALSO DEMONSTRATED THAT EVEN IF AN EXERCISE, AS SUGGESTED BY THE ASSESSEE, IS TO BE CONDUCTED BY ALLOCATING THE INTEREST TO THE RELEVANT ASSESSMENT YEARS, THE ASSESSEE WILL HAVE A TAX LIABILITY AGGREGATING TO RS 69,418, OVER A PERIOD OF FIVE ASSESSMENT YEAR S BEGINNING 2003 - 04 TO 2006 - 07, BUT SHE HAS SHOWN INCOME OF RS 63,436 ONLY AND PAID TAX THEREON. HE THUS REJECTED THE STAND OF THE ASSESSEE AND PROCEEDED TO BRING THE ENTIRE AMOUNT OF RS 4,53,470 TO TAX IN THIS ASSESSMENT YEAR, AND FOR THAT REASON, MADE AN ADDITION OF RS 3,90,034. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN SECOND APPEAL BEFORE THIS TRIBUNAL. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL O N RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. ITA NO. 2989 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 7 - 08 PAGE 3 OF 3 6. I FIND THAT, AS HELD BY HON BLE GUJARAT HIGH COURT IN THE CASE OF MOVALIYA BHIKUBHAI BALABHAI VS ITO [(2016) 388 ITR 343 (GUJ)] INTEREST AWARDED UNDER SECTION 28 OF THE LAND ACQUISITION ACT, AS ADMITTEDLY THE INTEREST IN THIS CASE IS, IS AN ACCRETION TO ENHANCED COMPENSATION AND IS REQUIRED TO BE TREATED AS CONSIDERATION ON TRANSFER WHICH CAN BE BROUGHT TO TAX AS CAPITAL GAINS. IN THE PRESENT CASE, THE LAND TRA NSFERRED IS AN AGRICULTURAL LAND AND, THEREFORE, IT CANNOT BE TAXED AS CAPITAL GAINS SINCE THE AGRICULTURAL LAND WILL FALL OUTSIDE THE AMBIT OF ASSET . IN THIS VIEW OF THE MATTER, THE PLEA RAISED BY THE ASSESSING OFFICER FOR TAXATION OF INTEREST, ON RECEI PTS BASIS, IS DEVOID OF LEGALLY SUSTAINABLE BASIS. WHILE I DECLINE TO DEAL WITH THE INCOME ALREADY OFFERED TO TAX BY THE ASSESSEE, ON HER OWN, I HOLD THAT THE ADDITION OF RS 3,90,034 WAS VITIATED IN LAW. I DIRECT THAT THIS ADDITION OF RS 3,90,034 BE DELETE D. 7. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 28 TH DAY OF APRIL, 2017. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED : 28 TH DAY OF APRIL , 2017 . PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD