Smt. Maya Rastogi, Meerut V. ITO, Meerut

ITA 585/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3344 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-04-2017
• Assessment Year: 1990-1991
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Keywords: Invalid notice; Proportionate interest; Reason to believe
• Section: 45(5); 234B; 147; 148; 28

Judgement Text

ITAS NO.584 TO 587/DEL/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITAS NO.584 TO 587 /DEL/2016 ASSESSMENT YEARS 1989-90, 1990-91, 1992-93 & 1993-9 4 SMT. MAYA RASTOGI, C-1, CIT(A)-2, MODEL TOWN KANKER KHERA, MEERUT. PAN: AJDPR 3500L VS. ITO, WARD-1(4), MEERUT. (APPELLANT) (RESPONDENT) REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. ASSESSEE(S) BY : SHRI M.P. RASTOGI, ADV. / DATE OF HEARING : 24/04/2017 / DATE OF PRONOUNCEMENT: 26/04/2017 ORDER THESE FOUR APPEALS OF THE ASSESSEE ARISE FROM THE C OMMON ORDER OF LEARNED CIT(A), MEERUT DATED 3.12.2015 FOR THE ASSE SSMENT YEAR 1998-99, 1990-91, 1992-93 AND 1993-94. THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE AO HAD NO V ALID JURISD I CTION U/S 1 4 7 R EAD W I TH SE C TI O N 148 OF THE AC T AND C ONSEQUE NT L Y T H E I SSUAN CE O F N OT I CE U/ S. 148 OF THE INCOME TAX ACT ON 23 / 06 / 2011 I S B A D IN LAW A ND IN CONSEQUENCE THEREOF THE R E -ASSESSMENT SO FRAMED O N 0 4 /03/2 0 13 IS ARBITRARY , UNJUST AND BAD IN LAW . 2. THAT THE ORDER OF ADJ DA T ED 11 / 05/199 2 F IX I NG THE A DD ITIONAL COMPENSATION W HICH W AS REC EIV ED ON 01 / 01 /19 90 WAS WEL L WIT H IN T HE TIME LIMIT PRESCR I BE UND E R THE T HEN PRO VI S I O N OF SECTIO N 149 OF THE ACT AND CONSEQUENTL Y T HE NOTICE U/S. 148 IS SU E D ON 23 / 06 / 2011 , AFTER T HE EXPIR Y OF TI M E LI M IT PRESCRIB E D UND ER THE THEN PROVISION O F SECTION 14 9 BARRED B Y L I M IT A TIO N A ND CONSEQUENTL Y THE R E -ASSESSMENT SO F RAMED ON S U CH INVALID NOTICE U / S 1 4 8 DA TE D 23/ 0 6/2 0 11 I S A LSO INV AL I D A ND BAD IN LAW. 3. THA T I N T HE ABSEN C E O F COU RT O R D E R PASS E D AFTER THE EX P IR Y OF TIME U / S 149 OF THE ACT , TH E R E LI A NC E O F A S SESSIN G OFF IC ER OF S ECTION 150 TO JUSTIF Y ITAS NO.584 TO 587/DEL/2017 2 THE I NITIATION OF P ROCEEDING U/ S 147 / 14 8 B Y WA Y OF ISSUE OF NOTICE U / S 1 4 8 DATED 2 3/ 06 /2 011 IS ARBITRAR Y, UNJUST AND BA D IN LAW AND CONSEQUENT LY T HE REASSESSMENT SO FRA M E D IS BAD I N LA W . 4.THA T WITHOUT PRE J UDICE TO T HE GROUND TAKEN AB OVE THE ISSUANCE OF NO TI CE U / S 148 DA TE D 2 3 / 06 / 2011 I S BE Y OND T H E R EASONA B LE TIME AND CONSEQUENTL Y THE ASSUMPTION OF JURISDI C TIO N U/ S 1 4 7 / 148 BE Y OND THE REASONABLE PERIOD I S AGAINST T HE BAS I C TENETS OF LAW AND CONSEQUENT LY TH E R E-ASSESSM E N T SO FRAMED ON 04/03/2013 IN FURTHERANCE OF SUCH INVALID NOTIC E IS BAD IN L AW . 5.THA T IS N O REA S ON TO BE L IEVE AS C ON TE MPLATED U/S 1 47/148 OF THE AC T HENC E, THE NOTI C E U / S 148 D A T E D 23/06 /2011 IS BAD IN LAW AND TH E RE-ASSESSME NT SO F R AME D IN FURT H E RAN CE O F SU CH I N V ALI D N O TICE I S A L SO B AD IN L A W. 6.THAT THE INTEREST RECEIVED U/S 28 OF THE LAND ACQ U I S I TION ACT FORM PART OF ADDITIONAL COMPENSATION AS HELD BY SUPREME COURT IN THE CASE OF CIT V I S GHANSHAYM (HUF) 315 ITR 1 AND CONSEQUENTL Y THERE IS NO INCOME ASSESSED IN THE YEAR UNDER APPEA L AND ACCORDINGLY THE ISSUANCE OF NOTICE U/S 148 DATED 23 /06/2011 AND REASSESSMENT SO FRAMED IN FURTHERANCE THERETO IS AL SO INVALID. 7.THAT WITHOUT PREJUDICE TO THE GROUND 1 TO 7 ABOVE THE NOTICE U/S 148 HAS BEEN ISSUED WITHOUT COMPLYING THE PREREQUIS ITE CONDITION CONTEMPLATED U/S. 151 OF THE ACT AND CONSEQUENTLY T HE RE- ASSESSMENT SO FRAMED IN FURTHERANCE OF SUCH INVALID NOTICE IS BAD IN LAW . 8.THAT THE ASSESSEE DENIED HIS LIABILITY TO PAY INT EREST U/S. 234A AND 234B OF THE ACT AT RS . 4,94 , 620/- . 9. THAT THE TOTAL INCOME OF RS.4,08,375/ - AND THE INCOME TAX DEMAND CREATED THEREON AT RS.6,38,405/ - WHICH INCLUDES THE INTEREST CHARGED U/S.234A & 2348 AT RS . 4,94,6 2 0/ - IS ARBITRAR Y , UNJUST AND AT ANY RATE VERY EXCESSIVE. 2. AS REGARDS THE LEGAL GROUNDS, THE BRIEF FACTS OF THE CASE ARE THAT THE AS SESSEE LADY IN THIS CASE OWNED 27255 SQ. YARDS OF L AND ON NANGLA TEHSIL, MEERUT WHICH WAS ACQUIRED BY STATE GOVERNMENT IN TH E YEAR 1997. THE STATE GOVERNMENT AWARDED COMPENSATION WHICH INCLUDED SOLA TIUM , INTEREST ETC . TO THE AMOUNT OF RS.21,26 , 757 / - ON 01 . 01 . 1990. THE ADJ MEERUT ENHANCED COMPENSATION AND THE ASSESSEE FURTHER RECEIVED RS . 67,27 , 575- ON 16.08.1993 AND INTEREST OF RS . 55,31 , 900 / - FOR THE PERIOD FROM THE DATE OF ACQUISITION OF LAND TO THE DATE OF PAYMENT . THE SUM OF RS.1 , 22 , 56743 / - (RS. ITAS NO.584 TO 587/DEL/2017 3 67,24 , 575 / - + RS.55,31 , 900 / -) WAS RECEIVED WITHOUT ANY SECURITY AND GUARANTEE. THE AMOUNT OF ADDITIONAL COMPENSATION AN D INTEREST THEREON WAS FINALLY DETERMINED BY THE ORDER OF THE SUPREME COUR T ON 30.04.1997. IN THE CASE OF ASHWINI DHINGRA V. CCIT AND ANOTHER REPORTE D IN 276 ITR 98 HELD THAT THE INTEREST ON DELAYED PAYMENT OF ADDITIONAL COMPENSATION IS ASSESSABLE ON ACCRUAL BASIS. AS REGARDS LIMITATION ISSUE NOTICE U/S.148 , THE HONBLE SUPREME COURT IN THE CASE OF K.M. SHARMA V . ITO (2002) 254 ITR 72 HELD THAT INTEREST ON DELAYED PAYMENT OF ADDITIO NAL COMPENSATION ASSESSABLE ON ACCRUAL BASIS. IT WAS HELD THAT AMEND MENT MADE IN SECTION 150(1) IS OPERATIVE FRO , 1 . 4.1989. AS SUCH THERE IS NO BAR OF LIMITATION TO TA KE ACTION U / S. 148 FOR ASSESSMENT YEARS 1989-90 TO 1993-94 TO A SSESSEE ACCRUED INTEREST OF THE DELAYED PAYMENT OF ENHANCED COMPENS ATION. ASSESSING OFFICER INITIATED THE PROCEEDINGS U / S.147 / 148 OF THE ACT AND THE NOTICE U/S. 148 , WAS DULY SERVED ON ASSESSEE. IN COMPLIANCE TO THE N OTICE U/S. 148 OF THE ACT , ASSESSEE FILED RETURN OF INCOME ON 16.06.2006 DECLA RING NIL INCOME. NOTICE U/S.143(2) WAS ISSUED ON 24.04.2007. 3. LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER WITH REGARD TO THE REOPENING OF THE ASSESSMENT. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. AS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS T HAT LAND ACQUISITION OFFICER INITIALLY AWARDED COMPENSATION OF THE LAND ACQUIRED AT THE RATE OF RS.501- PER SQUARE YARD. THE TOTAL PAYMENT OF RS.21,26,757 / - PAID B Y AUTHORITIES AS PER DETAIL GIVEN BELOW: COMPENSATION OF LAND RS.13,61,280/- 30% SOLATIUM RS.4,08,375/- INTEREST U/S.34 OF THE LA ACT RS.3,57,132/- TOTAL RS.21,26,787/- ITAS NO.584 TO 587/DEL/2017 4 ON A REFERENCE UNDER SECTION 18 OF THE LAND ACQUISI TION ACT (LA ACT) FILED BY THE ASSESSEE, THE ADDITIONAL DISTRICT JUDGE, MEERUT (ADJ) AWARDED COMPENSATION AT THE ENHANCED RATE OF RS.240/- PER S QUARE YARD AND IN CONSEQUENCE THE ORDER OF THE ADJ ENHANCING COMPENSA TION WAS RECEIVED ON 16 TH AUGUST, 1993 WITHOUT ANY SECURITY AND GUARANTEE AS UNDER: ADDITIONAL ENHANCED COMPENSATION RS.67,24,575/- INTEREST U/S.28 OF THE ACT FOR THE PERIOD FROM THE DATE OF ACQUISITION TILL AUGUST, 1993 RS.55,31,989/- TOTAL : RS.1,22,56,473/- THE MEERUT DEVELOPMENT AUTHORITY (MDA) , FOR WHOM STIPULATED LAND WAS ACQUIRED BY THE LAND ACQUISITION OFFICER , MEERUT, FILED AN APPEAL BEFORE THE HON ' BLE ALLAHABAD HIGH COURT. THE HON'BLE ALLAHABAD HIG H COURT ALLOWED THE APPEAL OF MDA IN PART AND DETERMI NED THE MARKET VALUE OF LAND ACQUIRED AT THE RATE OF RS . 75/- PER SQUARE YARD. THE APPELLANT AND OTHER CLAIMANTS HAD FURTHER PREFERRED APPEA L I N THE HON'BLE SUPREME COURT AGAINST THE JUDGMENT OF ALLAHABAD HIGH COURT. THE H ON'BLE APEX COURT ALLOWED THE CLAIMANTS INCLUDING THE APPELLANT'S APP EAL IN PART AND DETERMINED THE MARKET VALUE OF LAND FINALL Y AT THE RATE OF RS.175/- PER SQUARE YARD IN ADDITION TO SOLATIUM AND INTEREST WAS ALSO GRANTED. AFTER THE JUDGMENT OF HON ' BLE SUPREME COURT DATED 30 TH APRIL 1997, THE ADDITIONAL COMPENSATION , SOLATIUM AND INTEREST HAD BEEN RECALCULATED BY THE LAND ACQUISITION AUTHORITIES AS UNDER: ADDITIONAL ENHANCED COMPENSATION RS.47,64,375/- ADD: INTEREST ON ABOVE U/S.28 OF LA ACT RS.25,97,4 49/- SOLATIUM RS.17,25,987/- TOTAL RS.70,21,511/- THE ASSESSING OFFICER HAD ISSUED NOTICES U/S 148 OF THE INCOME-TAX ACT, 1961 (THE IT ACT) FOR THE ASSESSMENT YEARS 1989-90,1990- 91,1992-93 AND 1993-94 AVAILING THE BENEFIT OF LIMITATION OF SECTION 150(1 ) OF THE IT ACT AFTER TWENTY YEARS ON THE BASIS OF K.M. SHARMA VS. ITO IN 254 IT R 772 (SC) AND ALSO ON THE BASIS OF JUDGMENT OF ASHWANI DHINGRA VS. CHIEF CIT (ALL) WHEREIN THE COURT HAD HELD THAT THE INTEREST RECEIVED ON DELAYED PAYM ENT OF ADDITIONAL COMPENSATION IS ASSESSABLE ON ACCRUAL BASIS. IN THE CASE OF NRK RAMKUMAR VS. ITO IN 249 ITR 385 = 106 TAXMAN 81, THE HON'BLE MADRAS HIGH COURT, WHILE CONSIDERING THE PROVISION OF SECTION 147 OF THE IT ACT, HELD THAT THE WORDS 'THE ASSESSING OFFICER SHOULDHAVE REASON TO BELIEVE' AS CONTAINED IN THE PROVISION OF SECTION 147 OF THE IT ACT, SHOULD BE READ WITH R EFERENCE TO THE OTHER PROVISIONS OF THE ACT UNDER WHICH THE INCOME IS CHA RGEABLE TO TAX AND ACCORDINGLY THE ASSESSING OFFICER BEFORE TAKING ANY ACTION U / S 147/148 OF THE IT ACT SHOULD SATISFY HIMSELF WHETHER SUCH INCOME I S CHARGEABLE TO TAX, BEFORE HOLDING THAT THE ASSESSING OFFICER HAS REASON TO BE LIEVE THAT ANY INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT F OR ANY ASSESSMENT YEAR. THEREFORE, IN THE INSTANT CASE BEFORE INITIATION OF THE PROCEEDINGS U/S 147 / 148 OF THE IT ACT, THE ASSESSING OFFICER SHOULD HAV E SATISFIED HIMSELF WHETHER THE INTEREST AS RECEIVED BY THE ASSESSEE ON ACCOUNT OF THE ORDER OF THE COURT IN TERMS OF SECTION 28 OF THE LA ACT IS C HARGEABLE TO TAX AS INFERRED BY THE ASSESSING OFFICER UNDER THE LAW OR NOT . IT WAS ALSO ARGUED THAT THE ALLAHABAD HIGH COURT JUDGMENT IN THE CASE OF AS HWANI DHINGRA WAS PRONOUNCED BY THE ALLAHABAD HIGH COURT ON 31 ST AUGUST 2004. IN THE JUDGMENT, THE HON'BLE ALLAHABAD HIGH COURT DID NOT EXAMINE TH E NATURE OF INTEREST AWARDED BY THE COURTS U/S.28 OF THE LA ACT IN THE CASE OF ENHANCED ITAS NO.584 TO 587/DEL/2016 6 COMPENSATION BUT HE SIMPLY SAID THAT BECAUSE THE IN TEREST HAS TO BE GRANTED FROM THE DATE OF ACQUISITION, HENCE THE INTEREST AS RECEIVED BY AN ASSESSEE ACCRUED YEAR AFTER YEAR AND WOULD BE SPREAD OVER AC CORDINGLY. HOWEVER, LATER ON THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. GHANSHYAM (HUF) IN 315 ITR 1 HAS NOT ONLY EXAMINED THE NATURE OF I N T ERES T , AS AWARDED BY THE COURT U/S 28 OF THE LA ACT AT THE TIME OF ENHANCING THE COMPE NSATION, BUT HAS ALSO EXAMINED THE DIFFERENCE BETWEEN THE INTEREST GRANTE D U/S.34 OF THE LA ACT AS WELL AS THE INTEREST AWARDED BY THE COURTS U/S.28 O F THE LA ACT. THEREAFTER THE HON'BLE SUPREME COURT HAD ALSO EXAMINED THE INTERES T GRANTED BY THE COURTS U/S. 28 OF THE LA ACT WITH REFERENCE TO THE PROVISION OF SECTION 45(5) OF THE IT ACT WHICH DEALS WITH THE TAXATION OF ADDITIONAL CO MPENSATION IN THE YEAR OF ITS RECEIPT . THE HON'BLE SUPREME COURT FOUND THAT THE INTEREST A WARDED BY THE COURT U/S. 28 OF THE LA ACT IS DIFFERENT FROM THE INTEREST GRA NTED U/S. 34 OF THE LA ACT . THE HON'BLE COURT HELD THAT THE INTEREST U/S.28 OF THE LA ACT IS THE DISCRETION OF THE COURT TO AWARD INTEREST ON THE CLAIM MADE BY TH E PERSON CONCERNED, WHEREAS THE INTEREST U/S 34 OF THE LA ACT IS A STATUTORY INTEREST PROVIDED U NDER THE ACT AND HAS BE GRANTED BY THE LAND ACQUISITION OFFICER/ COLLECTOR ON ACCOUNT OF DELAYED PAYMENT OF THE AWARD HE MADE. THE HON'BLE S UPREME COURT FURTHER HELD THAT KEEPING INTO CONSIDERATION THE NATURE OF INTEREST GRANTED BY THE COURTS U/S. 28 OF THE LA ACT AT THE TIME OF ENHANCING COMPENSAT ION IS BASICALLY IN THE NATURE OF COMPENSATION AND IS PART OF THE ADDITIONA L COMPENSATION AS CONTEMPLATED U/S. 45(5) OF THE IT ACT AND HAS TO BE TAXED IN THE YEAR OF ITS RECEIPT AS PROVIDED U/S.45(5) OF THE IT ACT. IN THE CASE OF GHANSHYAM (HUF), THE SAID ASSESSEE WAS CLAIMING THAT THE INTEREST U/ S 28 OF THE LA ACT AS RECEIVED AT THE TIME OF ADDITIONAL COMPENSATION HAS TO BE SP READ OVER TO VARIOUS YEARS, WHEREAS THE REVENUE WAS OF THE VIEW THAT WHOLE OF T HE INTEREST HAS TO BE TAXED IN THE YEAR OF ITS RECEIPT AND SUCH CONTENTION OF T HE REVENUE HAS BEEN ACCEPTED ITAS NO.584 TO 587/DEL/2016 7 BY THE HONBLE SUPREME COURT. LATER ON, THE HON'BLE SUPREME COURT FOLLOWED THE JUDGMENT OF GHANSHYAM (HUF) IN CIT VS. GOVIND B HAI MAMAIYA IN 367 ITR 498. THE HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. SHARDA KOCHHAR IN [2014] 49 TAXMANN.COM 120 HAS ALSO FOLLOWED THE SUP REME COURT JUDGMENT IN THE CASE OF GHANSHYAM (HUF) AND HELD TH AT THE INTEREST AS RECEIVED BY AN ASSESSEE U/S. 28 OF THE LA ACT HAS TO BE ASSESSED IN THE YEAR OF ITS RECEIPT U/S 45(5) OF THE IT ACT AND WILL NOT BE SPREAD OVER TO VARIOUS YEARS. IN SUCH POSITION OF THE LAW AS LAID DOWN BY THE HON 'BLE SUPREME COURT IN THE CASE OF GHANSHYAM (HUF) , THE VERY BASIS OF INITIATION OF PROCEEDINGS U/S 147/148 OF THE IT ACT DOES NOT SURV IVE BECAUSE IN THE YEARS UNDER APPEAL THE ASSESSING OFFICER HAS SIMPLY TAXED THE PROPORTIONATE INTEREST RECEIVED U/S. 28 OF THE LA ACT WHICH IS NOT PERM ISS IBLE UNDER T HE L AW IN VIEW OF THE SUPREME COURT JUDGMENT IN THE CASE O F GHANSHYAM (HUF) AND ACCORDINGLY THE PROCEEDINGS AS INITIATED BY THE ASSESSING OFFICER BY WAY OF ISSUANCE OF NOTICE U/S.147 / 148 OF THE IT ACT ARE DIRECTED BE QUASHED. SINCE THE ASSESSEE SUCCEEDS ON LEGAL GROUNDS, THEREFORE, THE GROUNDS ON MERIT ARE OF ACADEMIC IN NATURE AND DO NOT REQUIRE ADJUDICATION. ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. 5. SINCE THE ISSUE IN ALL THE APPEALS IS IDENTICAL , AND THEREFORE, ORDER HEREINABOVE APPLIES IDENTICAL IN ALL THE APPEALS ME NTIONED HEREINABOVE. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE I N ALL THE YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 26 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 26/04/2017