Sheshagiri Tukaramsa Nakod, Hubballi V. Principal Commissioner Of Income Tax, Hubballi, Hubballi

ITA 654/BANG/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2551 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-04-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 18-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Keywords: Opportunity of being heard; Capital receipt; Revised return; TDS; Set aside; Capital Gains
• Section: 27; 263; 28; 15; 143(3); 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.654/BANG/2020 ASSESSMENT YEAR : 2015-16 SHRI SHESHAGIRI TUKARAMSA NAKOD, C/O SURYA INDUSTRIES, 485/486, IIND GATE, INDUSTRIAL ESTATE, HUBLI-580 030. PAN ADDPN 5570E VS. THE PR. COMMISSIONER OF INCOME-TAX, HUBBALLI. APPELLANT RESPONDENT ASSESSEE BY : SHRI S.V RAVISHANKAR, ADVOCATE REVENUE BY : SHRI MUZAFFAR HUSSAIN, CIT(DR) DATE OF HEARING : 07-04-2021 DATE OF PRONOUNCEMENT : 16-06-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST O RDER DATED 16/03/2020 PASSED BY THE LD.PR. CIT UNDER SEC TION 263 OF THE ACT IS FOR ASSESSMENT YEAR 2015-16 ON FOLLOWING REVISED GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME-TAX HUBLI, PASSED UNDER SECTION 263 OF THE ACT IN SO FA R AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, NA TURAL JUSTICE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPEL LANT'S CASE. PAGE 2 OF 8 ITA NO.654/BANG/2020 2. THE NOTICE ISSUED FOR INITIATION OF PROCEEDINGS UNDER SECTION 263 OF THE ACT, WAS BAD IN LAW. 3. THE LEARNED CIT IS NOT JUSTIFIED IN LAW IN INVOK ING THE JURISDICTION UNDER SECTION 263 OF THE ACT AND SETTI NG ASIDE THE ORDER OF THE AO, AS BEING 'ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE', WHICH IS CONTRARY TO FACT, ON THE FACTS A ND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT IS NOT JUSTIFIED IN LAW IN HOLDI NG THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS BAD IN LAW, WIT HOUT APPRECIATING THAT THERE WAS NO ERROR IN THE ORDER PASSED, MUCH L ESS PREJUDICIAL TO THE INTEREST OF REVENUE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED CIT FAILED TO APPRECIATE THAT THE AO HAS CALLED FOR INFORMATION, MADE ENQUIRY AND AFTER APPRECIATING TH E SUBMISSIONS, ACCEPTED THE CLAIM THAT THE COMPULSORY ACQUISITION WAS A CAPITAL RECEIPT AND THUS TAKEN A CORRECT VIEW, HENCE THE ORDER OF A SSESSMENT IS NOT ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED CIT FAILED TO APPRECIATE THAT THE AO HAS FOLLOWED THE BINDING CIRCULAR NO. 36/2016, DT:25/10/2O16, TH US THERE WAS NO ERROR IN THE ORDER PASSED, ON THE FACTS AND CIRCUMS TANCES OF THE CASE. 7. THE LEARNED CIT WAS NOT JUSTIFIED IN APPRECIATIN G THAT THE PROVISION OF SECTION 263 OF THE ACT SHALL BE ATTRAC TED ONLY WHEN THE ORDER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE AND SINCE THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT WAS NO T ERRONEOUS, MUCH LESS PREJUDICIAL, THE INVOKING OF SECTION 263 WAS N OT WARRANTED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. WITHOUT PREJUDICE, THE HEAVY RELIANCE OF THE CIT ON THE PROVISIONS OF SECTION 46 OF THE RFCTLARR ACT, IS WI THOUT BASIS, SINCE THE SAID PROVISIONS RELATES TO COMPLIANCES ON REHABILIT ATION ALONE, WHICH EARLIER EXCLUDED A GOVERNMENT COMPANY OR APPROPRIAT E GOVERNMENT AND HAS SUBSEQUENTLY BEEN AMENDED, ON THE FACTS AND CIR CUMSTANCES OF THE CASE. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, CHANGE AND DELETE ANY OF THE GROUNDS OF APPEAL. 10. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. THE ASSESSEE IS AN INDIVIDUAL AND RUNS A PROPRIE TARY CONCERN UNDER THE STYLE AND NAME M/S SURYA INDUSTRI ES LTD., ENGAGED IN MANUFACTURING OF IRON AND STEEL NUTS AND VOLTS PAGE 3 OF 8 ITA NO.654/BANG/2020 REQUIRED FOR INDUSTRIAL USE. FOR THE YEAR UNDER CON SIDERATION ASSESSEE FILED ITS RETURN OF INCOME ON 30/09/2015 D ECLARING TOTAL INCOME OF RS.2,06,3,060/-. SUBSEQUENTLY THE REVISED RETURN WAS FILED ON 24/01/2017 OFFERING TAXABLE INCOME AT RS.4 6,410/-. THE CASE WAS SELECTED FOR SCRUTINY TO VERIFY THE FOLLOW ING: LARGE INCREASE AND SUNDRY CREDITORS WITH RESPECT TO TURNOVER AS COMPARED TO PRECEDING YEARS HIGH INCOME REPORTED IN THE RETURN AND NO ENTRY IN SCHEDULE ASSETS AND LIABILITIES FOR RETURN OF INCOME MISMATCH IN SALES TURNOVER REPORTED IN AUDIT REPORT AND ITR SUBSTANTIAL INCREASE IN CAPITAL IN A YEAR. 3. THE LD.AO PASSED ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON 28/08/2017 DETERMINING TOTAL INCOME AT R S.96,810/-. THE LD.PR.CIT ACCORDINGLY CALLED UPON THE ASSESSMEN T RECORDS AND OBSERVED THAT ASSESSEE AS REPORTED INCOME FROM CAPITAL GAINS TO THE EXTENT OF RS.2,17,52,371/- AGAINST WHICH TAX OF RS.21,75,237/- HAS BEEN DEDUCTED AT SOURCE BY THE H UBLI- DHARWAD BRTS CO. LTD. ALONG WITH OTHER SOURCES OF I NCOME. IT WAS NOTICED THAT ASSESSEE HAD RECEIVED COMPENSATION OF RS.2,17, 52,317/- FROM HUBLI-DHARWAD BRTS CO. LTD T OWARDS ACQUISITION OF LAND AND TDS WAS COLLECTED BY BRTS. ASSESSEE OPTED TO CAPITALISE ASSETS COMPENSATION AND USED TH E FUNDS RECEIVED TO CLEAR THE SUNDRY CREDITORS. 4. THE LD.PR.CIT OBSERVED THAT THE LD. AO IN THE AS SESSMENT ORDER NOTICED THAT, THE SAID LAND WAS ACQUIRED UNDE R THE KARNATAKA STATE HIGHWAY ACT 1964 AND KARNATAKA STAT E HIGHWAY PAGE 4 OF 8 ITA NO.654/BANG/2020 RULES 1965 AS REFERRED IN NOTIFICATION OF KRDCL DAT ED 25/02/2015 WHICH ALSO REFLECTS THE COMPENSATION PAI D AND TDS EFFECTED. THE LD. AO HAD RECORDED THAT WHERE AN AWA RD UNDER THE SAID ACT HAS BEEN MADE 5 YEARS OR MORE PRIOR TO COM MENCEMENT OF THE RFCTLARR ACT 2013, AND THE PHYSICAL POSSESSI ON OF THE LAND HAS NOT BEEN TAKEN OR COMPENSATION HAS NOT BEE N PAID THE SAID PROCEEDINGS SHALL BE DEEMED TO HAVE LAPSED AND THE APPROPRIATE GOVERNMENT IF IT SO CHOOSES SHALL INITI ATE THE PROCEEDINGS OF SUCH LAND ACQUISITION AFRESH IN ACCO RDANCE WITH THE PROVISIONS OF RFCTLARR ACT 2013. THE LD.PR.CIT WAS OF THE OPINION THAT THE ENTIRE COMPENSATION RECEIVED BY AS SESSEE NEEDS TO BE VERIFIED AND BROUGHT TO TAX IN THE LIGHT OF T HE PROVISIONS OF SECTION 54D OF THE ACT AND ACCORDINGLY ISSUED NOTIC E UNDER SECTION 263 DATED 07/01/2020. IN VIEW OF THE NOTICE , ASSESSEE FILED VARIOUS REPLIES AND SUBMISSIONS. THE LD. PR.C IT AFTER GOING THROUGH THE SUBMISSIONS, WAS OF THE OPINION THAT TH E LD. AO ERRED IN NOT VERIFYING THE ACT/LAW UNDER WHICH THE LAND WAS ACQUIRED FOR THE HDBRTS PROJECT. IT WAS OBSERVED BY THE LD.PR.CIT THAT THE LAND ACQUISITION ORDER DATED 25/ 02/2015 IS CLEAR THAT IT HAS BEEN ACQUIRED UNDER SECTION 27 AN D THE KARNATAKA GOVERNMENT NOTIFICATION FOR ACQUISITION I S UNDER SECTION 15 OF KARNATAKA STATE HIGHWAY ACT 1964. THE LAND HAS THUS BEEN ACQUIRED AFTER THE MUTUALLY ACCEPTABLE PR ICE BETWEEN THE LANDOWNER AND KARNATAKA ROAD DEVELOPMENT CORPOR ATION LTD. THE LD.PR.CIT WAS OF THE OPINION THAT THE SINCE COM PENSATION IN HDBRTS PROJECT HAS BEEN WORKED OUT BY PRIVATE NEGOT IATIONS PAGE 5 OF 8 ITA NO.654/BANG/2020 BETWEEN LAND LOOSERS AND NEGOTIATION COMMITTEE, IT FALLS WITHIN THE EXCEPTION OF SECTION 46 OF THE RFCTLARR ACT 201 3 MENTIONED IN THE CBDT CIRCULAR NO. 36/2016. THE LD.PR.CIT WAS THUS OF THE OPINION THAT THE ASSESSMENT ORDER PASSED WAS ERRONE OUS IN AS MUCH AS IT IS PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND THEREFORE SET ASIDE WITH A DIRECTION TO THE ASSESSI NG OFFICER TO PASS FRESH ASSESSMENT ORDER AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF LD. PR.CIT, ASSESSEE I S IN APPEAL BEFORE US NOW. 6. THE LD.AR SUBMITTED THAT ASSESSEES LAND ADJOIN ING STATE HIGHWAY WAS ACQUIRED UNDER THE KARNATAKA STATE HIGH WAY ACT 1964 FOR PUBLIC PURPOSES. THEREFORE THE DETERMINATI ON OF COMPENSATION WAS, PRESCRIBED UNDER SECTION 28 OF TH E STATE HIGHWAY ACT 1964. HE SUBMITTED THAT SECTION 28 (2) OF THE STATE HIGHWAY ACT PRESCRIBES THAT IN DETERMINING THE AMOU NT OF COMPENSATION, THE MATTER SPECIFIED IN SECTION 23 AN D 24 OF LAND ACQUISITION ACT 1984, AS AMENDED BY THE SCHEDULE TO THIS ACT SHOULD BE TAKEN INTO CONSIDERATION. HE FURTHER SUBM ITTED THAT THE LAND ACQUISITION ACT 1894, HAS BEEN REPEALED BY THE NEW ACT NAMELY, THE RIGHT TO FAIR COMPENSATION AND TRANSPAR ENCY IN LAND ACQUISITION AND RESETTLEMENT ACT 2013, (HEREIN AFTER REFERRED TO AS RFCTLARR ACT 2013), W.E.F. 01/01/201 4. IT HAS BEEN SUBMITTED THAT, THE BENEFIT UNDER RFCTLARR ACT 2013 WOULD BE AVAILABLE IN ALL CASES OF LAND ACQUISITION UNDER THE LAND ACQUISITION ACT 1984, WHERE, AWARD HAS NOT BEE N MADE OR PAGE 6 OF 8 ITA NO.654/BANG/2020 POSSESSION OF LAND HAS NOT BEEN TAKEN. THE LD.AR RE LIED ON PAGE 37-40 OF PAPER BOOK WHEREIN THE RELEVANT GAZETTE NO TIFICATION HAS BEEN PLACED. 7. THE LD.AR HAS POINTED OUT AND SUBMITTED THAT, AS PER KARNATAKA GOVERNMENT ORDER G. O. NO. PWD 175 EPA 20 14, BANGALORE DATED 14/11/2014 WHILE PASSING AWARD TO L AND LOSERS UNDER SECTION 28 OF KARNATAKA STATE HIGHWAY ACT 196 4, COMPENSATION AS PER RFCTLARR ACT 2013 IS TO BE PAID . HE THUS SUBMITTED THAT ALL THE NECESSARY CONDITIONS FOR EXE MPTIONS STANDS COMPLIED WITH AS CLARIFIED BY CIRCULAR NO. 3 6/2016 ISSUED BY CBDT DATED 25/10/2016. 8. THE LD.DR RELIED ON THE ORDER PASSED BY THE LD.P R.CIT IN SUPPORT. 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN LIGHT OF RECORDS PLACED BEFORE US. 10. WE NOTE THAT THE SUBMISSIONS ADVANCED BY ASSESS EE HAS NOT BEEN CONSIDERED AND LOOKED INTO BY THE LD.PR.CIT. I N OUR VIEW THIS IS A FIT CASE TO REMAND THE ORDER BACK TO THE FILE OF LD.PR,CIT FOR DUE VERIFICATION OF THE ABOVE RECORDED SUBMISSI ONS BY ASSESSEE. THE LD.PR.CIT IS DIRECTED TO CONSIDER THE SUBMISSIONS OF ASSESSEE IN THE LIGHT OF THE DOCUMENTS RELIED UP ON AND THE RELEVANT PROVISIONS OF THE ACT REFERRED TO AND CONS IDERED HEREIN ABOVE. THE LD.PR.CIT IS DIRECTED TO PASS A DETAILED ORDER IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO ASSESSEE. PAGE 7 OF 8 ITA NO.654/BANG/2020 ACCORDINGLY THE GROUND RAISED BY ASSESSEE STANDS AL LOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2021 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 16 TH JUNE, 2021. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 8 OF 8 ITA NO.654/BANG/2020 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -6-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -6-2021 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -6-2021 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -6-2021 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -6-2021 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -6-2021 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -6-2021 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS