Amitabha Sanyal, Kolkata V. ITO, Ward-58(4), Kolkata, Kolkata

ITA 359/KOL/2022

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122915 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-12-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Sale consideration of property below Jantri Value; Capital receipt; Set aside
• Section: 148; 271(1)(c); 139; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘B’, KOLKATA [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 359/Kol/2022 Assessment Year : 2011-12 Amitabha Sanyal PAN: ALEPS 2352 J Vs. ITO, Ward-58(4), Kolkata Appellant Respondent Date of Hearing 20.12.2022 Date of Pronouncement 13.03.2023 For the Assessee Shri Amit Agarwal, Advocate For the Revenue Smt. Ranu Biswas, Addl. CIT, Sr. DR ORDER Per Shri Sonjoy Sarma, JM: This appeal of the assessee for the assessment year 2011-12 is directed against the order dated 21.06.2021 passed by the ld. Commissioner of Income-tax, Appeals, NFAC, Delhi [hereinafter referred to as ‘[the ‘ld. CIT(A)’]. The assessee has raised the following grounds of appeal: “i. That the impugned order dated 11th April, 2022 passed by the Ld. National Faceless Assessment Centre. Kolkata (the Assessing Officer) under section 271(1)(C) of the Act levying penalty of Rs.4,56,362 is without jurisdiction, illegal, invalid, bad-in-law being passed against the facts and laws of the case. ii. That the Ld, Assessing Officer erred in confirming the penalty of Rs.4,56,362/- levied by the Assessing Officer under section 271(1)(c) of the Act without recording proper satisfaction within the meaning of section 271 of the Income Tax Act, 1961. iii. That on the facts and circumstances of the case, the Assessing Officer erred in levying the penalty of Rs.4,56,362 when the assessee was prevented by reasonable and sufficient cause, within the meaning of section 275 of the Income Tax Act, 1961, to furnish return of total income under section 139(1) of the Act and when the 2 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal amount of income of Rs. 22,95,849 arising in the hands of the Assessee was duly included in the return filed u/s. 148 of the Act. iv. That, without prejudice to the above, the Assessing Officer failed to appreciate that no penalty could be imposed on the sum of Rs.79,500, being rent paid by Developer on behalf of the Assessee for alternate accommodation during the development period, without appreciating the judicial pronouncements which clearly held that such rent could not be taxed in the hands of the land owner/Assessee. v. That the assessing officer erred in levying penalty of Rs. 4,56,362 without appreciating that findings in the assessment proceeding are not binding on the penalty proceedings and penalty will not be automatically imposed.” 2. Brief facts of the case are that the assessee is an individual having his income from capital gains and income from other sources. During the assessment year under consideration, the present assessee along with his mother executed a Joint Development Agreement (JDA) with M/s. Presidency Nirman Private Limited (Developer) in respect of their property situated at Kolkata for development of the same with a condition to provide 50% of constructed area along with a monetary consideration of Rs. 25 lacs. The total market value of (stamp duty value) for the purpose of assessee’s tax was Rs. 200.55 lacs and 50% share on which tax was applicable was Rs. 100.27 lacs. However, the ld. AO noticed that no ITR was filed u/s 139 of the Act by the assessee and a notice was issued upon the assessee u/s 148 to file his return of income. In consequent to that the assessee computed his taxable income and he had paid legitimate tax and thereafter he filed his return of income u/s 148 of the Act dated 3 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal 25.04.2018. Prior to the above fact, the ld. AO made roving enquiries and requested the assessee to furnish various details, information, evidences and clarifications etc. In compliance to that the assessee had filed various details, evidences which were asked for in the assessment proceedings by the ld. AO. During the assessment proceeding, the ld. AO also issued notices u/s 133(6) to M/s. Presidency Nirman Pvt. Ltd. (Developer) and the developer duly in compliance of such notice had filed his reply before the ld. AO. The ld. AO on perusal of such document, he noticed that rent amounting to Rs. 79,500/- was paid by the developer on behalf of assessee for alternative accommodation for the development period and the said income was not considered by the assessee at the time of filing of return of income as he thought that the said amount directly paid by the third party by the developer and the ld. AO added the amount of Rs. 79,500/- in the hands of assessee and also initiated the penalty proceedings u/s 271(1)(c) of the Act and consequent to that penalty of Rs. 4,56,362/- imposed upon the assessee. 3. Dissatisfied with the above order, assessee preferred an appeal before the ld. CIT(A). However, the assessee could not succeed before the ld. CIT(A) and the appeal of the assessee was dismissed. 4. There are multiple grounds of appeal raised by the assessee in the instant appeal. However, ground no. 4 is qua goes roots of the matter by which assessee states that the assessing officer has 4 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal failed to appreciate the fact that no penalty could be imposed on the sum of Rs. 79,500/- being rent paid by the developer on behalf of the assessee for alternative accommodation during the development period without appreciating the judicial pronouncements which clearly held that such rent would not be taxed in the hands of land owner/assessee. 5. In this context, the ld. AR submitted before us that the assessee has received monthly rental compensation during the year consideration aggregating to Rs. 79,500/- for the alternative accommodation which is a compensation on account of assessee’s family displacements from the accommodation and the said compensation is towards meeting/overcoming the hardship and it is in the nature of capital receipt in the hands of assessee, therefore, it is not liable to be taxed. However, during the assessment proceedings, the assessee to buy complete peace of mind from further litigation, he had already paid taxes on such compensation received from the developer treating the same as income in his hand. Therefore, in such circumstances no further penalty can be imposed upon the assessee since the alleged concealment of income by the authorities below does not come under the purview of income. Therefore, the penalty proceeding initiated by the authorities below is bad in law. In such a situation, the impugned order passed by the authorities below needs to be set aside by the Tribunal. On this context, the ld. AR relied on the decision of co-ordinate bench in the case of Smt. Delilah Raj Mansukhani vs ITO being ITA No. 3526/Mum/2017 5 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal wherein Hon’ble Tribunal held that displacement of compensation received is not in the nature of income in the hands of assessee. On the other hand, ld. DR supported the order passed by the authorities below. 6. We after hearing the rival submission and material available on record and considering the co-ordinate bench judgement in the case of Smt. Delilah Raj Mansukhani (supra) wherein Tribunal held that compensation received by the assessee towards displacement in terms of development agreement is not a revenue receipt and constitute capital receipt in the hands of assessee as the property has gone into re-development, the relevant operative portion is reproduced as under: “5. After hearing the rival submissions and perusing the material on record, we find that compensation received by the assessee towards displacement in terms of Development Agreement is not a revenue receipt and constitute capital receipt as the property has gone into redevelopment. In such scenario , the compensation is normally paid by the builder on account of hardship faced by owner of the flat due to displacement of the occupants of the flat. The said payment is in the nature of hardship allowance / rehabilitation allowance and is not liable to tax. The case of the assessee is squarely supported by the decision of the Co-ordinate Bench in the case of Shri Devshi Lakhamshi Dedhia vs. ACIT in ITA No.5350/Mum/2012 wherein similar issue has been decided in favour of the assessee, the relevant operative portion is reproduced hereunder:- 15. We have considered the rivals submissions and perused the materials on records. We note that the assessee received compensation of Rs. 19,50,873/- from the developer when the building in which the assessee owned flat went for re-development as per the agreement between the developers and flat owners dated 28.03.2008. The said compensation was paid towards hardship Rs, 13,45,278/-; rehabilitation Rs, 5,90,625/- and for shifting Rs. 6 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal 15,000/-.We also note that the assessee paid Rs. 18,63,000/- to Joys Developers for acquiring additional area of 138 Sq Ft. It was also noted that the assessee shifted to his own house when the building went for re-development. Now the question before is whether the compensation upon re-development of property towards hardship, rehabilitation and shifting received by the assessee is taxable if the potential TDR/FSI is available to the land owner or society which owns the (and depending upon .the terms of the de- development agreement without transferring the land . In the present case the assessee who was flat owner in the building was member of the society, As per the agreement each member of the society including the assessee was to be given a flat in lieu of the old one and the each member including the assessee was given compensation. We also note that In the decisions in 1TA No 72/Mum/2012 assessment year 2008-09 Bench E and ITA No 5271/Mum/2012 assessment year 2008-09 Bench "D" the Tribunal held that the amounts received as compensation for hardship, rehabilitation and for shifting are not liable to tax We, therefore, respectfully , the above decisions are of the considered view that the amounts received by the assessee as hardship compensation, rehabilitation compensation and for shifting are not liable to tax and the order passed by the first appellate authority cannot be sustained. Thus the order of CIT(A) is reversed and ground is allowed in favour of the assessee. 16. In the result, appeal of the assessee is partly allowed, as above. 6. Respectfully following the co-ordinate Bench decision, we set aside the findings of the ld. CIT(A) on this issue and direct the AO to delete the addition made of Rs.2,60,000/-. Accordingly, the ground No.6 is allowed. 7. We respectfully follow the co-ordinate bench decision, we find that in the case of assessee, ld. AO cannot imposed penalty on the sum of Rs. 79,500/- being rent paid by the developer on behalf of the assessee for alternative accommodation during the development period as the amount paid by the developer to the assessee could not be taxed in the hands of land owner/assessee 7 ITA No. 359/Kol/2022 AY: 2011-12 Amitabha Sanyal in terms of the above order. Therefore, the initiation of penalty proceeding itself is bad in law. In such a situation impugned order passed by the ld. CIT(A) cannot be sustained, accordingly, we set aside the same and delete the penalty imposed by the AO. 8. Since, we allow issue no. 4 in favour of the assessee. The remaining grounds are connected as well as consequential in nature, therefore need not required to be adjudicated. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on13.03.2023. Sd/- Sd/- (Rajesh Kumar) (Sonjoy Sarma) Accountant Member Judicial Member Dated: 13.03.2023 Biswajit, Sr. PS Copy of the order forwarded to: 1. Appellant- Amitabha Sanyal, 108B, Block-F, New Alipore, Kolkata-700 053. 2. Respondent – ITO, Ward-58(4), Kolkata. 3. Ld. CIT 4. Ld. CIT(A) 5. Ld. DR True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata