Bhim Singh, Faridabad V. ITO, New Delhi

ITA 5654/DEL/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4460 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 21-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S N
• Keywords: Assessment record; Capital Gains
• Section: 142(1); 148; 28; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ITA NO. 5654/DEL/2013 [A.Y 2003-04] SHRI BHIM SINGH VS. THE INCOME TAX OFFICER H. NO. 1566, SECTOR 28 WARD 2(4) FARIDABAD FARIDABAD PAN : BQZPS 1928 M [APPELLANT] [RESPONDENT] DATE OF HEARING : 26.02.2020 DATE OF PRONOUNCEMENT : 26.02.2020 ASSESSEE BY : SHRI VIVEK AGARWAL, CA REVENUE BY : SHRI S.N. PANDEY, SR . DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A), FARIDABAD, NEW DELHI DATED 07.03.2013 PERT AINING TO A.Y 2003- 04. 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN TAXING THE INTEREST RECEIVED ON ENHANCED COMPENSATI ON ON RECEIPT BASIS. THE LD. CIT(A) FURTHER ERRED IN NOT ACCEPTI NG THAT THERE WAS NO PROPER SERVICE OF NOTICE. 3. REPRESENTATIVE OF BOTH THE SIDES WERE HEARD AT L ENGTH AND CASE RECORDS CAREFULLY PERUSED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED ENHANCED COMPENSATION IN RESPECT OF LAND ACQUIRED BY HUDA, WHICH WAS SITUATE D IN ANKHIR VILLAGE, WITHIN THE MUNICIPAL CORPORATION OF FARIDA BAD. THE ENHANCED LAND COMPENSATION WAS AT RS. 7,95,006/- AND INTERES T ON ENHANCED COMPENSATION WAS AT RS. 8,88,275/-. 5. THE ASSESSEE HAS CHALLENGED THE TAXABILITY OF IN TEREST ON RECEIPT BASIS. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT RECEIVED DURING THE YEAR PERTAINS TO F.YS. 1993-94 TO 2001-02, AND THEREFORE, THE SAME SHOULD HAVE BEEN TAXED ON ACCRU AL BASIS. 3 6. SURPRISINGLY, THE ASSESSEE HAS NOT CHALLENGED TH E TAXABILITY OF LONG TERM CAPITAL GAINS ON RECEIPT BASIS, AND YET, HE IS QUESTIONING THE TAXABILITY OF INTEREST ON RECEIPT BASIS. 7. IN SO FAR AS TAXABILITY OF COMPENSATION ON LAND ACQUISITION IS CONCERNED, THE QUARREL HAS BEEN SETTLED BY THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF GHANSYAM DAS [HUF] 315 ITR 1, AND IN SO FAR AS THE QUARREL IN RESPECT OF TAXABILITY OF INTE REST IS CONCERNED, THE SAME HAS BEEN SETTLED BY THE HON'BLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF SMT. PRAKASH KAUR 330 ITR 332. THE RELEVANT FINDINGS OF THE HON'BLE HIGH COURT READ AS UNDER: IN CASE, THE ASSESSEE WAS FOLLOWING MERCANTILE/ACC RUAL BASIS, THE SAME WOULD BE DISCERNIBLE FROM EARLIER YEARS RE TURNS WHERE THE ASSESSEE WOULD HAVE SHOWN THE INCOME ON ACCOUNT OF INTEREST THAT MIGHT HAVE ACCRUED IN THOSE YEARS. OT HERWISE, IT SHALL BE TREATED THAT CASH/RECEIPT BASIS IS THE ONL Y METHOD WHICH IS BEING ADOPTED BY THE ASSESSEE. EVEN UNDER THE HYBRID SYSTEM OF ACCOUNTANCY, THE ASSESSEE IS REQUIRED TO FOLLOW EITHER MERCANTILE OR CASH SYSTEM IN RESPECT OF THIS SOURCE OF INCOME. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSE SSEE HAD BEEN DECLARING INTEREST INCOME ON YEARLY ACCRUAL BA SIS, THEREFORE, IT SHALL BE TAKEN THAT THE ASSESSEE HAD BEEN FOLLOWING 4 CASH SYSTEM ONLY. ONCE THAT IS SO, THEN THE INTERES T RECEIVED DURING THE ASST. YR. 1985-86 CANNOT ESCAPE FROM INC OME TAX. 8. CONSIDERING THE JUDICIAL DECISIONS DISCUSSED HER EINABOVE, AND CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT CHAL LENGED THE CAPITAL GAINS ON RECEIPT BASIS, WE DO NOT FIND ANY REASON T O INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPEAL ON THIS GROUND IS DISMISSED. 9. IN SO FAR AS THE SERVICE OF NOTICE IS CONCERNED, THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE FACTUAL MATRIX AT PARA 7 PAGE 18 OF HIS ORDER, AND THE SAME READS AS UNDER: 7. GROUND NO. 2 STATES THAT NO NOTICE WAS EVER SERVED UPON THE APPELLANT. IN ORDER TO VERIFY THE FACTS, I PERU SED ASSESSMENT RECORDS OF THE APPELLANT FOR THE RELEVAN T ASSESSMENT YEAR. AS PER THE ASSESSMENT RECORDS, NOT ICE U/S 148 OF THE INCOME TAX ACT WAS ISSUED ON 09.03.2010 AND WAS SENT BY REGISTERED POST BEARING DISPATCH NO. 3834. THERE IS NOTHING ON R ECORD TO SUGGEST THAT THIS NOTICE CAME BACK UN-DE!I VERED TO THE APPELLANT. SINCE NO RETURN OF INCOME WAS FILED IN RESPONSE TO THE NOTICE U/S 148, THE AO ISSUED A NOTICE DATED 17 .09.2010 U/S 142(1) OF THE INCOME TAX ACT ASKING THE APPELLANT T O APPEAR BEFORE HIM ON 04.10.2010 AT 4:20 PM. THIS NOTICE WA S ALSO SENT BY REGISTERED POST AND THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE SAME CAME BACK UN-SERVED. ON 04.10 .2010, THERE WAS NO COMPLIANCE BY THE APPELLANT AND HENCE ON 5 05.10.2010, ANOTHER NOTICE U/S 142(1) WAS ISSUED TO THE APPELLANT ALONG WITH A FINAL SHOW CAUSE AS TO WHY THE ASSESSM ENT SHOULD NOT BE COMPLETED EX-PARTE U/S 144 OF THE INCOME TAX ACT. AS ON PREVIOUS OCCASIONS, THERE WAS NO COMPLIANCE ON T HE PART OF THE APPELLANT. ON 05.10.2010, THE AO ISSUED AN ORDE R U/S 282 OF THE INCOME TAX ACT REGARDING SERVICE OF NOTICE BY A FFIXTURE. AS PER THIS ORDER, THE AO DEPUTED SHRI H.S. DAHIYA, IN SPECTOR TO SERVE THE NOTICE BY AFFIXTURE ON SOME CONSPICUOUS P LACE ON THE LAST KNOWN ADDRESS OF THE APPELLANT. SHRI H.S. DAHI YA, INSPECTOR ATTACHED WITH THE ASSESSING OFFICER SERVED THE NOTI CE U/S 142(1) OF THE INCOME TAX ACT THROUGH AFFIXTURE ON 1 1.10.2010 IN THE PRESENCE OF SHRI JAI BHAGWAN, NOTICE SERVER. TH ESE FACTS, AVAILABLE IN ASSESSMENT RECORDS, MAKE IT ABUNDANTLY CLEAR THAT THE AO, IN THE ABSENCE OF COMPLIANCE TO HIS EARLIER NOTICES U/S 142(1) OF THE INCOME TAX ACT, GOT THE SERVICE OF NO TICE DONE THROUGH AFFIXTURE BY FOLLOWING THE DUE PROCEDURE LA ID DOWN. ON THE OTHER HAND, THE APPELLANT DOES NOT HAVE ANY EVI DENCE TO SUBSTANTIATE THE FACT THAT THE NOTICE U/S 142(1) OF THE INCOME TAX ACT WAS NEVER SERVED UPON HIM. HENCE CONSIDERIN G THE FACTS IN TOTALITY, IT IS HELD THAT THE NOTICE U/S 142(1) OF THE INCOME TAX ACT WAS SERVED UPON THE APPELLANT AND THEREFORE , THIS GROUND OF APPEAL IS DISMISSED. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COU LD NOT CONTROVERT TO THE FACTUAL MATRIX EXPLAINED BY THE LD. CIT(A) H EREINABOVE. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH HIS FINDINGS. APPEAL IS ALSO DISMISSED ON THIS GROUND. 6 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 5654/DEL/2013 IS DISMISSED ON THE GROUNDS ARGUED BE FORE US. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.02. 2020. SD/- SD/- [H.S. SIDHU] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 TH FEBRUARY, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 7 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBE R DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER