Shri Pal Singh, Chandigarh V. ITO, W-5(5), Chandigarh

ITA 327/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9359 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 19-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDERSHAN
• Keywords: Capital asset; Earning of tax free income
• Section: 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 327/CHD/2019 / ASSESSMENT YEAR : 2014-15 SHRI PAL SINGH, #180, VILALGE DHANAS CHANDIGARH VS. THE ITO, WARD-5(5), CHANDIGARH ./PAN NO. BOYPS44251 / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI TEJ MOHAN SINGH, ' ! / REVENUE BY : SH. ARVIND SUDERSHAN, SR. DR # $ % /DATE OF HEARING : 01.01.2020 &'() % / DATE OF PRONOUNCEMENT : 01.01.2020 / ORDER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 23.08.2018 OF THE COMMISSIONER OF INCO ME TAX (APPEALS)- 2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A) ] AGITATING THE LEVY OF PENALTY U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE LAND IN QUESTION OF THE ASSESSEE WAS ACQUIRED BY THE GOVERNMENT AND IN LIEU OF WHICH THE ASSESSEE RECEIVED COMPENSATION. LATER ON, THE COMPE NSATION WAS ENHANCED. ALONG WITH ENHANCED COMPENSATION, THE AS SESSEE ALSO RECEIVED INTEREST ON ENHANCED COMPENSATION. THE SAI D AMOUNT RECEIVED ITA NO. 327/CHD/2019- SHRI PAL SINGH, CHANDIGARH 2 BY THE ASSESSEE WAS DEPOSITED IN THE BANK ACCOUNT O F THE ASSESSEE, WHEREUPON, THE ASSESSEE EARNED INTEREST OF RS. 1,86 ,084/-. THE ASSESSEE ORIGINALLY DID NOT SHOW THIS INTEREST INCOME IN THE RETURN OF INCOME. HOWEVER, LATER ON, THE CASE OF THE ASSESSEE WAS SEL ECTED FOR SCRUTINY ASSESSMENT PROCEEDINGS, DURING WHICH, IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED THE AFORESAID INTEREST ON ENHANCED COM PENSATION AS WELL AS INTEREST FROM SAVING BANK ACCOUNT. ON BEING ASKED T O EXPLAIN IN THIS RESPECT, THE ASSESSEE SURRENDERED THE AFORESAID INT EREST ON ENHANCED COMPENSATION AS INTEREST RECEIVED U/S 34 OF THE LA ND ACQUISITION ACT AND CLAIMED 50% DEDUCTION THEREUPON. SO FAR AS THE INTEREST FROM SAVING BANK ACCOUNT WAS CONCERNED, THE ASSESSEE OFF ERED THE SAME FOR TAXATION. THE ASSESSEE DULY PAID THE TAXES THEREUPO N. HOWEVER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT FOR CONCEALMENT OF INCOME ON THE AFORESAID INTEREST INCOME I.E. INTEREST ON ENHANCED COMPENSATION AS WELL AS INTEREST ON SAV ING BANK ACCOUNT. THE ASSESSEE PLEADED THAT THE ASSESSEE INADVERTENTL Y AND DUE TO WRONG ADVICE OF HIS TAX CONSULTANT OFFERED THE SAID INTER EST ON ENHANCED COMPENSATION FOR TAXATION. HOWEVER, AS PER THE SET TLED LAW SINCE THE SAID INTEREST ON ENHANCED COMPENSATION WAS TO BE TR EATED AS PART OF THE COMPENSATION, HENCE, WAS NOT TAXABLE, THE LAND SOLD BEING AGRICULTURAL LAND NOT FALLING IN THE DEFINITION OF CAPITAL ASSET . 3. SO FAR AS THE INTEREST INCOME OF RS. 1,86,084/- WAS CONCERNED, THE ASSESSEE SUBMITTED THAT IF THE INTEREST ON ENHANCED COMPENSATION IS SUBTRACTED OR TO SAY IS NOT CONSIDERED AS INCOME, THE ONLY INCOME THAT ITA NO. 327/CHD/2019- SHRI PAL SINGH, CHANDIGARH 3 WOULD REMAIN IS RS. 1,86,084/-, WHICH IS BELOW TH E TAXABLE LIMIT, HENCE, IT IS NOT A CASE OF EVASION OF TAX BY WAY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 4. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T THE ASSESSEE HAD NOT OFFERED THE TRUE PICTURE OF HIS INCOME. HE DID NOT SHOW IN THE RETURN OF INCOME THE AFORESAID INTEREST ON ENHANCED COMPEN SATION AND INTEREST ON SAVING BANK ACCOUNT. IT WAS ONLY BECAUSE THE CA SE WAS SELECTED FOR SCRUTINY ASSESSMENT, THAT THE ABOVE FACT CAME TO L IGHT. HE, THEREFORE, HAS SUBMITTED THAT IT IS A CLEAR CASE OF CONCEALMEN T OF INCOME. 5. I HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. AU THORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE IMPUGNED ORD ER OF THE LD. CIT(A) REVEALS THAT THE LD. CIT(A) HAS SPECIFICALLY MENTIO NED THAT THE ASSESSEE HAD RECEIVED THE AFORESAID INTEREST AS INTEREST ON ENHANCED COMPENSATION. IT IS SETTLED THAT AS PER THE LAW LA ID DOWN BY THE HON'BLE SUPREME COURT IN THE CASES OF CIT V GHANSHYAM 'HUF ' 315 ITR 1 (SC), CIT VS HARI SINGH AND ORS IN CIVIL APPEAL NO. 150 41 OF 2017 VIDE ORDER DATED 15.9.2017 AND ALSO THE DECISION OF THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL DATED 17.7.2018 IN SOM NATH V ITO ITA NO.552/CHD/2016, THE INTEREST PAID ON THE EXC ESS AMOUNT U/S 28 OF LAND ACQUISITION ACT, 1894 IS PART OF ENHANCED V ALUE OF THE LAND AND AS SUCH THE SAME IS NOT TAXABLE AS INTEREST INCOME U/S 34 OF THE SAID ACT. I, ACCORDINGLY, FIND THAT THE SAME BEING PAR T OF THE COMPENSATION ITA NO. 327/CHD/2019- SHRI PAL SINGH, CHANDIGARH 4 RECEIVED, WAS NOT TAXABLE. HOWEVER, THE ASSESSEE IN ADVERTENTLY MAY BE DUE TO WRONG ADVICE OFFERED THE SAME FOR TAXATION A ND ALSO PAID DUE TAXES THEREUPON. NOW TO IMPOSE PENALTY IN RESPECT O F AN ADDITION, WHICH OTHERWISE, AS PER THE SETTLED LAW WAS NOT WARRANTED , IF THE ASSESSEE WOULD HAVE MADE THE CLAIM OF BEING THE SAME AS TAX EXEMPT INCOME DURING THE ASSESSMENT PROCEEDINGS, IN MY VIEW, IS NOT JUSTIFIED AT ALL. IT WOULD AMOUNT TO DOUBLY PUNISH THE ASSESSEE FOR T HE OFFENCE WHICH, IN FACT, HAS NOT BEEN COMMITTED BY HIM. 7. SO FAR AS THE INTEREST FROM SAVING BANK ACCOUNT IS CONCERNED, THE SAME IS THE ONLY INCOME LEFT, BUT THE TOTAL AMOUNT OF THE SAID INCOME WOULD BELOW THE TAXABLE LIMIT. IN VIEW OF THIS, THE LEVY OF PENALTY IN THIS CASE IS NOT JUSTIFIED AND THE SAME IS ORDERED TO BE DELETED. HOWEVER, IT IS MADE CLEAR THAT FINDINGS GIVEN ABOVE WILL NOT HAVE ANY OPERATION OR BEARING TO RAISE ANY DISPUTE OR TO CONTEST AT THIS STAGE THE VALIDITY OF THE ADDITION OR OTHERWISE. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSE SSEE IS TREATED AS ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING ON 01.01.2020. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 01.01.2020 .. ITA NO. 327/CHD/2019- SHRI PAL SINGH, CHANDIGARH 5 '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR