Sh. Mohan Singh, Panchkula V. CIT, Panchkula

ITA 993/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68578 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-11-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Keywords: Reopening of assessment; Capital asset; Assessment record; Prejudicial to interest; Capital receipt; Condonation of delay
• Section: 143(3); 45(5); 147; 148; 263; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 993/CHD/2013 ASSESSMENT YEAR: 2001-02 SHRI MOHAN SINGH, VS THE CIT, VPO RAMGARH, PANCHKULA PANCHKULA PAN NO. AEZPS6967F (APPELLANT) (RESPONDENT) DATE OF HEARING : 06.11.2013 DATE OF PRONOUNCEMENT : 28.11.2013 APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI NEERAJ JAIN ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 28.3.2013 OF LD. CIT(A), PANCHKULA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT IS NOT JUSTIFIED IN INITIATING AND PASSING THE ORDER U/S 263 OF THE I.T. ACT. 2. THAT THE LD. CIT IS NOT JUSTIFIED IN HOLDING THAT T HE ORDER PASSED BY THE LD. AO IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE. 3. THAT THE LD. CIT IS NOT JUSTIFIED IN CANCELLING THE ASSESSMENT FRAMED BY THE LD. AO VIDE ORDER DATED 07.10.2010. 2 3. THIS APPEAL IS LATE BY 140 DAYS. THE LD. COUNSE L FOR THE ASSESSEE REFERRED TO THE APPLICATION FOR CONDONATION OF DELAY AND SUB MITTED THAT REVISIONARY ORDER U/S 263 WAS RECEIVED BY THE ASSESSEE ON 30.3.2013 A ND APPEAL WAS TO BE FILED ON 30.5.2013. THE ASSESSEE HAD MET WITH A SERIOUS ACC IDENT ON 16.2.2013 AND GOT A SEVERE HEAD INJURY WHICH RESULTED INTO TEMPORARY ME MORY LOSS. IN THIS REGARD, AFFIDAVIT OF THE ASSESSEE HAD ALSO BEEN FILED. HE FURTHER POINTED OUT THAT ASSESSEE IS A SENIOR CITIZEN AND AGED ABOUT 86 YEAR S AND TOOK TIME TO RECOVER FROM THE ILLNESS AND THAT IS WHY APPEAL HAS BEEN FI LED LATE. HE MADE A PRAYER FOR CONDONATION OF DELAY. 4. ON THE OTHER HAND, THE LD. DR OPPOSED THE APPLI CATION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE S ATISFIED THAT THE ASSESSEE HAS SUFFICIENT CAUSE IN FILING THE APPEAL LATE AND THEREFORE, THE DELAY IS CONDONED. 6. AFTER HEARING BOTH THE PARTIES, WE FIND THAT AFT ER EXAMINATION OF THE ASSESSMENT RECORDS, LD. COMMISSIONER WAS OF THE VIE W THAT ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE AND, THEREFORE, A SHOW CAUSE NOTICE WAS ISSUED. HE FURTHER FOUND THAT ASS ESSEE HAD RECEIVED ENHANCED COMPENSATION AMOUNTING TO RS. 3,52,67,644/- DURING FINANCIAL YEAR 2000-01 ON ACQUISITION OF LAND AND OUT OF THIS A SUM OF RS. 2, 10,55,847/- WAS TOWARDS COMPENSATION AND AMOUNT OF RS. 1,42,11,495/- WAS TO WARDS INTEREST ON ACCRUAL BASIS. THIS CLAIM WAS DISPUTED BY THE STATE GOVERN MENT BY FILING AN APPEAL. IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3), AN ADDI TION OF RS. 1,42,11,497/- WAS MADE ON ACCOUNT OF THE INTEREST. THIS ORDER WAS CH ALLENGED BEFORE CIT(A) WHO CONFIRMED THE ACTION OF ASSESSING OFFICER. THE MAT TER WENT TO THE TRIBUNAL AND THE TRIBUNAL DECIDED THE ISSUE VIDE ITA NO. 905/CHD /2004 AND SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER TO THE FILE OF ASSESSING OFFICER. 3 THEREAFTER THE ASSESSMENT WAS REOPENED BY ISSUE OF A NOTICE U/S 148 ON 27.3.2008. DURING THE RE-ASSESSMENT PROCEEDINGS, A FTER DETAILED DISCUSSIONS, IT WAS HELD THAT CAPITAL GAIN WAS CHARGEABLE, HOWEVER, IT WAS FURTHER OBSERVED AS UNDER:- (II) AS THE A.Y. IN THIS CASE IS 2001-02 AND THE AS SESSEE IS IN DISPUTE BEFORE THE JUDICIAL COURT OF ADDL. DI STT. JUDGE OF PANCHKULA REGARDING THE QUANTUM OF ENHANCE D COMPENSATION AND THE MATTER HAS NOT REACHED ITS FIN ALITY AND THE QUANTUM OF ENHANCED COMPENSATION HAS TO BE STILL DECIDED BY THE JUDICIAL COURT, THEREFORE FOLL OWING THE ORDER OF THE HONBLE PUNJAB AND HARYANA HIGH COURT, IN THE ABOVE MENTIONED CASES, (CHANDI RAM & ORS VS. CIT (2008), 4 DTR 25) THE INCOME OF THE ASSESSEE WILL ONLY BE TAXABLE WHEN THE DISPUTE REGA RDING THE QUANTUM OF ENHANCED COMPENSATION IS SETTLED. AFTER THE ABOVE OBSERVATION, RETURN OF INCOME OF T HE ASSESSEE AT RS. 1,89,477/- WAS ACCEPTED WITH FOLLOWING REMARKS IN THE LIGHT OF THE FACTS AND UNAMBIGUOUS POSITIO N OF LAW IN THIS REGARD, THE RETURN FILED BY THE ASSESSE E, IN RESPONSE TO NOTICE U/S 148 OF THE ACT IS ACCEPTED F OR THE TIME BEING. THE ASSESSEE IS DIRECTED TO INFORM THE A.O. AS AND WHEN THE DISPUTE REGARDING THE QUANTUM OF ENHANCED COMPENSATION IS DECIDED BY THE ADDITION SESSION JUDGE, PANCHKULA. INCOME AS PER APPEAL EFFECT ORDER DATED 22.12.200 6 IS ASSESSED AS RS. 1,89,477/- ASSESSED U/S 143(3) READ SECTION 147 OF THE ACT. 7. ON THE ABOVE FACTS, THE ORDER PASSED U/S 143(3) READ WITH SECTION 147 WAS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE BECAUSE NO PROCEEDINGS WERE PENDING BEFORE THE ASSESSING OFFIC ER AND DEPARTMENT HAD ALREADY FILED AN APPEAL BEFORE THE HIGH COURT AGAIN ST THE ORDER OF THE TRIBUNAL THEREFORE, THERE WAS NO OCCASION TO PASS THE LAST A SSESSMENT ORDER. A SHOW 4 CAUSE NOTICE WAS ACCORDINGLY ISSUED. IN RESPONSE, IT WAS MAINLY STATED THAT IT WAS SUBMITTED THAT AS PER THE DECISION OF HON'BLE S UPREME COURT IN THE CASE OF CIT VS GHANSHYAM ( HUF) 315 ITR 1 (SC) INTEREST ON ENHANCED COMPENSATION WAS ALSO TO BE TREATED AS PART OF THE ENHANCED COMP ENSATION. HOWEVER, IT IS TO BE NOTED THAT DECISION IN THE CASE OF CIT VS GHANSH YAM (HUF) (SUPRA) AROSE OUT OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN CIV IL APPEAL NO. 4403 OF 2009 ARISING OUT OF SLP (C ) NO. 17643 OF 2008 PERTAINED TO CIT PANCHKULA V MOHAN SINGH I.E. THE ASSESSEE WHEREIN IT WAS DECIDED THAT ENHANCED COMPENSATION AND INTEREST ON ENHANCED COMPENSATION ARE NOT TO BE TAX ED IN TOTAL INCOME. THE FOLLOWING DETAILS WERE ALSO SUBMITTED THROUGH WRITT EN SUBMISSIONS. IN CASE OF ASSESSEE THE ORIGINAL AWARD OF COMPENSA TION ON COMPULSORY ACQUISITION OF LAND OF THE ASSESSEE A T RAMGARH IS DATED 17.06.1992 WAS ACQUIRED BY WAY OF NOTIFICATION DATED 26.06.1989 UNDER SECTION 4 OF TH E LAND ACQUISITION ACT, 1894 & POSSESSION OF THE AGRICULTURE LAND WAS TAKEN ON 17.06.1992. WHEREAS I N THE CASE OF CIT, PANCHKULA VS. SMT. SHANKUNTLA DEVI THE LAND WAS ACQUIRED BY WAY OF NOTIFICATION DATED 04.05.1995 UNDER SECTION 4 IF THE LAND ACQUISITION ACT, 1894. FOR THE PURPOSE OF SECTION 2(14)(III)(B), PANCHKULA WAS MENTIONED ONLY IN THE NOTIFICATION NO . 9447/F.NO.154/3/87-ITA-1 DATED 06.01.1994 AND THE COMPULSORY ACQUISITION OF THE LANDS OF THE ASSESSES IS IN VILLAGE RAMGARH ARE PRIOR TO THAT I.E. IN THE PERIO D WHEN NOTIFICATION NO. S.O. 77E DATED 06.02.1973 WAS IN F ORCE WHICH MENTIONED AMBALA, WHICH IS UNDOUBTEDLY MORE THAN 30 KMS FROM THESE VILLAGES. (COPY OF CERTIFICA TE FROM TEHSILDAR IN THIS REGARD IS ATTACHED). THEREFO RE THE CASE OF CIT, PANCHKULA, VS. SHANKUNTALA DEVI DOES N OT COVER THE PRESENT CASE. BUT OUR CASE IS COVERED BY CIT, PANCHKULA VS. PREM SINGH(ITA NO. 85 OF 2010) COPY ENCLOSED. WHERE THE AGRICULTURE LAND WAS ACQUIRED PRIOR TO NOTIFICATION NO. 9447/F.NO.154/3/87-ITA-1 DATED 06.01.1994. WHERE TH E 5 HONBLE HIGH COURT HAS TREATED THE LAND AS AGRICULT URE LAND, NOT A CAPITAL ASSET. THIS AWARD HAS ALREADY ATTAINED AS APPEAL BY THE CIT, PANCHKULA, AGAINST T HIS AWARD BEFORE HONBLE SUPREME COURT HAS BEEN DISMISS ED (COPY ENCLOSED). THEREFORE THE STAND OF THE ASSESSEE THAT AT THE TIM E OF COMPULSORY ACQUISITION OF THE ASSESSEE LANDS IN QUESTION, THE LANDS ACQUIRED WERE NOT SITUATED WITH IN THE AREAS MENTIONED IN SECTION 2(14)(III), IS CORRECT. THE ASSESSEE HAS ALSO FURNISHED EVIDENCE IN THE SHAPE O F REVENUE RECORDS THAT THE LANDS IN QUESTION WAS AGRICULTURAL LANDS AT THE TIME RELEVANT NOTIFICATIO N AND AT THE TIME OF ACQUISITION OF THESE LANDS. THE ORIG INAL AWARDS OF COMPENSATION ALSO MAKE MENTION OF CROPS A ND TRESS ETC. STANDING ON THESE LANDS. HENCE IN VIEW O F THESE FACTS & EVIDENCE LANDS IN QUESTION BEING AGRICULTURAL LANDS AND NOT SITUATED IN THE AREAS MENTIONED IN SECTION 2(14)(III). THEREFORE, THE AMO UNT RECEIVED ON ACCOUNT OF COMPENSATION OR CONSIDERATIO N AS A RESULT OF COMPULSORY ACQUISITION OF THESE LANDS I S NOT TAXABLE AS CAPITAL GAINS U/S 45(5). AS PER THE AFOR ESAID JUDGMENT OF HONBLE SUPREME COURT IN CASE OF CIT VS . GHANSHYAM HUF (315 ITR 1)(SC), INTEREST U/S 28 OF LAND ACQUISITION ACT, 1894 FORMS PART OF THE ENHANC ED COMPENSATION. HENCE THE AMOUNT OF INTEREST ON ENHAN CED COMPENSATION US ALSO NOT TAXABLE AS CAPITAL GAIN U/ S 45(5). 8. THE LD. CIT(A) WAS NOT SATISFIED WITH THESE SUBM ISSION AND OBSERVED THAT ASSESSING OFFICER HAS DEALT WITH TWO ISSUES NAMELY TREATED THE INTEREST INCOME RECEIVED BY THE ASSESSEE U/S 28 OF THE LAND ACQUISI TION ACT AS PART OF THE ENHANCED COMPENSATION AND ENHANCED COMPENSATION WAS HELD TO BE EXEMPT FROM CAPITAL GAIN. HOWEVER, AS PER THE ORDER DATED 26.1 2.2008 PASSED U/S 143(3) / 147, THE COMPENSATION RECEIVED BY THE ASSESSEE WAS HELD TO BE ON ACCOUNT OF CAPITAL ASSET AND ASSESSEE HAD NOT FILED ANY APPEAL AGAINST THAT ORDER; THEREFORE, 6 ORDER PASSED ON 7.10.2010 IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. IN VIEW OF THESE DISCUSSIONS, ULTIMATELY IT WAS HELD VIDE PARA 5.4 AS UNDER:- 5.4 IN VIEW OF THE DISCUSSION IN THE PRECEDING PAR AS, IT IS HELD THAT THE ASSESSMENT ORDER DATED 07.10.2010 IS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE AN D IS ALSO WITHOUT JURISDICTION. THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER VIDE ORDER DATED 07.10.2010 IS THEREFORE CANCELLED U/S 263(1) WITH THE DIRECTION T O THE AO TO GIVE APPEAL EFFECT TO THE DECISION OF HONBLE SUPREME COURT IN ASSESSEES OWN CASE (LEAD CASE GHANSHYAM (HUF)(SUPRA). 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ORIGINALLY RETURN WAS FILED ON 22.3.2002 DECLARING TOTAL INCOME OF RS . 1,89,477/-. THE ASSESSEE RECEIVED ENHANCED COMPENSATION AMOUNTING TO RS. 3,5 2,67,314/- CONSISTING OF COST OF LAND AMOUNTING TO RS. 2,10,55,847/- AND INT EREST AMOUNTING TO RS. 1,42,11,497/- AFTER DETAILED DISCUSSIONS THE ASSESS ING OFFICER HELD COMPENSATION PORTION NOT TAXABLE IN VIEW OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. 161 ITR 524 (SC). HOWEVER, INTEREST PORTION WAS HELD TO BE TAXABLE BE CAUSE ASSESSEE HAD ALSO CLAIMED REFUND AGAINST THE TDS DEDUCTED FROM THE IN TEREST IN VIEW OF SECTION 199 OF THE ACT. ACCORDINGLY, THE INTEREST PORTION AMOUNTING TO RS. 1,42,11,497/- WAS ADDED TO THE INCOME OF THE ASSESS EE. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF CIT(A) WHICH WAS DISMIS SED. AGAINST THAT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL NOTED THAT SUB SECTION (V) HAS BEEN INSERTED IN SECTION 45 BY FINA NCE ACT 1987 W.E.F. 1.4.1988 AND A SUBSEQUENT AMENDMENT WAS ALSO MADE BY FINANCE ACT 2003 W.E.F. 1.4.2004 BY WHICH ENHANCED COMPENSATION WAS TO BE T AXED ON RECEIPT BASIS. HOWEVER, IT WAS FURTHER NOTED THAT FROM THE ASSESSM ENT ORDER IT WAS NOT CLEAR WHETHER STATE HAS FILED AN APPEAL AGAINST THE COMPE NSATION ORDER AND SINCE THE 7 HON'BLE SUPREME COURT HAS ALREADY HELD THAT COMPENS ATION WOULD BE TAXABLE UNLESS DISPUTE IS FINALLY SETTLED, THE MATTER WAS S ET ASIDE TO THE FILE OF ASSESSING OFFICER TO DETERMINE THE NATURE OF DISPUTE. THE REV ENUE FILED AN APPEAL BEFORE THE HON'BLE HIGH COURT WHICH WAS DISMISSED. IN THE MEANTIME, THE ASSESSMENT WAS REOPENED U/S 148 OF THE ACT BECAUSE ACCORDING T O ASSESSING OFFICER THE ASSESSMENT HAS ESCAPED TAXATION ON ENHANCED COMPEN SATION AMOUNTING TO RS. 2,10,55,817/-. THE FINAL ORDER WAS PASSED ON 26.12. 2008. IN THIS FINAL ORDER, NO ADDITION WAS MADE BECAUSE IT WAS OBSERVED THAT DISP UTE WAS PENDING BEFORE THE ADDITIONAL DISTRICT JUDGE OF PANCHKULA REGARDING QU ANTUM OF ENHANCED COMPENSATION. THE ASSESSEE WAS DIRECTED TO INFORM THE ASSESSING OFFICER AS AND WHEN THE DISPUTE GOT FINALIZED IN THE COURT. AGAIN ST THIS ORDER THE ASSESSEE FILED A RECTIFICATION APPLICATION ON 27.1.2009 THAT REOPENING PROCEEDINGS WERE NOT VALIDLY INITIATED. IN THE MEANTIME THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PREM SINGH IN ITA NO. 85 OF 20 10 HELD THAT WHEREVER THE COMPENSATION HAS BEEN TAKEN BEFORE THE DATE OF NOTI FICATION DATED 6.1.1994, THEN ENHANCED COMPENSATION IS NOT ASSESSABLE TO INCOME T AX BECAUSE THEN SUCH LAND REMAINED AS AGRICULTURAL LAND. THE SLP FILED BY TH E REVENUE AGAINST THIS ORDER WAS DISMISSED BY HON'BLE SUPREME COURT. IN VIEW OF THIS DECISION, THE ASSESSEE FILED ANOTHER RECTIFICATION APPLICATION DATED 26.7. 2010 IN WHICH RELIANCE WAS PLACED ON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS PREM SINGH (SUPRA) SINGH THAT ENHANCED COMP ENSATION IS NOT TAXABLE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIN CE SECTION 148 PROCEEDINGS WAS NOT CONCLUDED AND ASSESSING OFFICER DIRECTED TH E ASSESSEE TO FILE INFORMATION REGARDING FINALIZATION OF THE COURT CAS E, WHICH WAS INITIATED THROUGH RECTIFICATION APPLICATION AND THEREFORE, TH E ASSESSING OFFICER PASSED AN ORDER U/S 143(3) READ WITH SECTION 147, THEREFORE, IT CANNOT BE SAID THAT PROCEEDINGS WERE NOT PENDING BEFORE HIM. FURTHER, THE ORDER HAS BEEN PASSED FOLLOWING THE ORDER OF HON'BLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF CIT V PREM SINGH (SUPRA). HE ALSO REFERRED TO THE ASSESSMENT ORDER U/S 143(3) 8 READ WITH SECTION 147 FOR ASSESSMENT YEAR 2007-08 W HEREIN SIMILAR VIEW HAS BEEN TAKEN WHICH HAS ALSO BEEN RELIED IN THIS ASSES SMENT ORDER. THEREFORE, THE ORDER CANNOT BE CALLED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN ANY CASE, ONCE AN ORDER HAS BEEN PASSED FOLLOWING T HE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT THEN SUCH ORDER CANNOT B E CALLED ERRONEOUS AND IN THIS REGARD, HE RELIED ON THE DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF CIT V G.M. MITTAL STAINLESS STEEL P. LTD 263 ITR 255 (SC) . 10. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORT ED THE ORDER OF COMMISSIONER. HE PARTICULARLY REFERRED TO THE PARA 5 OF THE REVISIONARY ORDER AND PLACED HEAVY RELIANCE TO PARAS 5.1 TO 5.4 OF TH E ORDER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT IN THIS CASE A SHOW CAUSE NOTICE U/S 263 WAS ISSUED RAISING VARIOUS POINTS. HOWEVER, ULTIMATELY THE REVISIONARY ORDER HAS BEEN PASSED HO LDING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ONLY ON THE ISSUE THAT NO PROCEEDINGS WERE PENDING BEFORE THE ASSESSING OFFIC ER, THEREFORE, THE IMPUGNED ORDER PASSED U/S 143(3) READ WITH SECTION 147 IS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE ULTIMATELY THE INTEREST ON ENHANCED COMPENSATION WAS TAXABLE. THE LD. COMMISSIONER HAS CANCELLED TH E ORDER DATED 7.10.2010 AND DIRECTED THE ASSESSING OFFICER TO GIVE EFFECT TO TH E ORDER OF THE HON'BLE SUPREME COURT IN ASSESSEES CASE. THE CONTROVERSY RELATING TO THIS POINT STARTED WITH THE FILING OF THE RETURN BY THE ASSESSEE ON 22.3.2002 ( COPY AT PAGE 1 OF THE PAPER BOOK) IN WHICH ENHANCED COMPENSATION WAS RECEIVED A MOUNTING TO RS. 3,52,62,314/- CONSISTING OF RS. 2,10,55,847/- TOWAR DS COST OF LAND AND RS. 1,42,11,497/- TOWARDS INTEREST. THIS WAS NOT OFFER ED AS INCOME AND ACCORDING TO THE ASSESSEE THE PROCEEDINGS REGARDING ENHANCED COM PENSATION HAVE NOT BEEN FINALIZED. HOWEVER, IN THE ASSESSMENT ORDER PASSED U/S 143(3) VIDE ORDER DATED 27.11.2003 (COPY AVAILABLE AT PAGES 2 & 3 OF THE PA PER BOOK), THE ASSESSING 9 OFFICER ACCEPTED THE FACT THAT IN VIEW OF THE DECIS ION IN THE CASE OF CIT V HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD.(S UPRA), SINCE COMPENSATION PROCEEDING HAVE NOT BECOME FINAL, THER EFORE, COMPENSATION PART IS NOT BE TAXABLE. HOWEVER, IN VIEW OF SECTION 199, SI NCE THE ASSESSEE HAS ASKED FOR THE CREDIT OF TDS AND ALSO CLAIMED REFUND, THE INTEREST PORTION WAS TAXABLE. THE ASSESSEE FILED APPEAL AGAINST THIS ORDER BEFORE THE CIT(A) WHICH WAS DISMISSED (ORDER AVAILABLE AT PAGES 4 TO 25 OF PAPE R BOOK). THE ASSESSEE FURTHER MOVED TO THE TRIBUNAL IN RESPECT OF THIS ISSUE. TH E TRIBUNAL IN ITA NO. 905/CHD/2004 (ORDER AVAILABLE AT PAGES 26 TO 43 OF THE PAPER BOOK) NOTED THAT SECTION 45(5) HAS BEEN INSERTED W.E.F. 1.4.1988 BY FINANCE ACT 1987. THIS PROVISION HAS BEEN FURTHER AMENDED BY FINANCE ACT 2 003 W.E.F. 1.4.2004. IN THE MEANTIME, THE TRIBUNAL ALSO NOTED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V HINDUSTAN HOUSING AND LA ND DEVELOPMENT TRUST LTD. (SUPRA) AND ULTIMATELY SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE NATURE OF DISPUTE RAISED B Y THE GOVERNMENT IN RESPECT OF COMPENSATION. THE REVENUE FILED APPEAL AGAINST THI S ORDER BEFORE THE HON'BLE HIGH COURT WHICH WAS DISMISSED VIDE ORDER DATED 16. 5.2007, COPY OF WHICH IS AVAILABLE AT PAGES 44 TO 51 OF THE PAPER BOOK. IN THE MEANTIME, ASSESSMENT PROCEEDINGS WERE REOPENED U/S 147 WHILE RECORDING T HE FOLLOWING REASONS ON 26.3.2008. THE REASONS HAVE BEEN INCORPORATED IN T HE ASSESSMENT ORDER, COPY OF WHICH IS AVAILABLE AT PAGE 52 TO 61 OF THE PAPER BO OK, WHICH READS AS UNDER;- IN THIS CASE THE ASSESSEE FILED RETURN OF INCOME O N 22.03.2002 AND DECLARING TAXABLE INCOME OF RS. 1,89,475/-. ORDER UNDER SECTION 143(3) WAS PASSED I N THE CASE OF THE ASSESSEE ON 27.11.2003 IN WHICH A TOTAL DEMAND OF RS. 5268937/- WAS CREATED. THE MAIN GROUN D OF ADDITION WAS OF RS. 1,42,11,497.50 ON ACCOUNT OF INTEREST ON ENHANCED COMPENSATION. HOWEVER ON PERUS AL OF THE RETURN OF INCOME FILED BY THE ASSESSEE, IT I S SEEN THAT THE ASSESSEE HAS RECEIVED RS. 2,10,55,847/- ON ACCOUNT CAPITAL COST ON LAND RECEIVED. BELOW THE STATEMENT OF BIFURCATION OF COMPENSATION RECEIVED T HE 10 ASSESSEE HAS APPENDED A NOTE THAT AS DECIDED BY THE SUPREME COURT IN THE CASE OF CIT VS. HINDUSTAN HOUS ING AND LAND DEVELOPMENT TRUST LTD, ENHANCED COMPENSATI ON CANNOT BE TREATED AS INCOME TILL THE CASE IS PENDIN G IN THE COURT OF LAW. THE ASSESSEE HAS NOT TREATED THIS AMO UNT OF RS. 2,10,55,847/- AS INCOME ON THE GROUND THAT IT W ILL BECOME TAXABLE WHEN THE DISPUTE IS FINALLY SETTLED. SINCE IT IS FULLY TAXABLE BEING ACCRUED TO THE ASSE SSEE AS PER THE PROVISIONS OF INCOME TAX ACT, 1961, INCOME TO THE EXTENT OF RS. 2,10,55,847/- ON ACCOUNT OF ENHANCED COMPENSATION IS FULLY TAXABLE. I THEREFORE, HAVE RE ASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 2,10,55,847/- HAS ESCAPED ASSESSMENT. THE CASE, THEREFORE, REOPENED WITHIN THE MEANING OF SECTION 1 47 OF THE I.T. ACT. THE ASSESSEE HAD OBJECTED TO THE REOPENING OF THE C ASE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. THE OBJECTIONS OF THE ASSESSEE WERE DULY CONSIDERED IN THE ASSESSMENT PROCEEDINGS AND IT IS HELD THAT THE REOP ENING WAS ON VALID GROUNDS. THE REOPENING WAS DONE AFTER RECORDING THE REASONS TO BELIEVE THAT INCOME HAS ES CAPED ASSESSMENT. IT IS WORTHWHILE TO MENTION THAT THE CA SE WAS REOPENED AFTER DUE APPROVAL FROM THE COMMISSIONER O F INCOME TAX, PANCHKULA VIDE OFFICE LETTER 6162 DATED 26/03/2008. HOWEVER, ULTIMATELY IT WAS ACCEPTED THAT SINCE DISP UTE IS PENDING AND, THEREFORE, THE RETURN WAS ACCEPTED BUT THE ASSESSEE WAS ALSO D IRECTED TO INTIMATE THE DEPARTMENT AS AND WHEN THE PROCEEDINGS BEFORE THE A DDL. SESSION JUDGE PANCHKULA REGARDING COMPENSATION BECAME FINAL. IN THIS REGARD, THE LAST TWO PARAS OF THE ASSESSMENT ORDER PASSED U/S 143 READ W ITH SECTION 147 FOR ASSESSMENT YEAR 2001-02 ARE IMPORTANT, WHICH ARE AS UNDER:- THUS AS THE AY IN THIS CASE IS AY 2001-02 AND THE ASSESSEE IS IN DISPUTE BEFORE THE JUDICIAL COURT OF ADDL 11 DISTT JUDGE OF PANCHKULA REGARDING THE QUANTUM OF ENHANCED COMPENSATION AND THE MATTER HAS NOT REACHE D ITS FINALITY AND THE QUANTUM OF ENHANCED COMPENSATI ON HAS TO BE STILL DECIDED BY THE JUDICIAL COURT, THER EFORE FOLLOWING THE ORDER OF THE HON PUNJAB AND HARYANA HIGH COURT, IN THE ABOVE MENTIONED CASES, THE INCOM E OF THE ASSESSEE WILL ONLY BE TAXABLE WHEN THE DISPUTE REGARDING THE QUANTUM OF ENHANCED COMPENSATION IS SETTLED. IN THE LIGHT OF THE FACTS AND UNAMBIGUOUS POSITION OF THE LAW IN THIS REGARD, THE RETURN FILED BY THE ASSESSE E, IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT IS ACCEPTED FOR THE TIME BEING. THE ASSESSEE IS DIRECT ED TO INFORM THE AO AS AND WHEN THE DISPUTE REGARDING THE QUANTUM OF ENHANCED COMPENSATION IS DECIDED BY THE ADDL SESSIONS JUDGE PANCHKULA . 12. FROM THE ABOVE, IT BECOMES CLEAR THAT IN THE RE OPENED PROCEEDINGS THOUGH RETURN OF THE ASSESSEE WAS ACCEPTED BUT THE ISSUE W AS KEPT OPEN. IN RESPONSE TO THIS ASSESSMENT ORDER, THE ASSESSEE FILED RECTIFICA TION APPLICATION ON 27.1.2009 (COPY AVAILABLE AT PAGES 62 TO 65 OF THE PAPER BOOK ). THROUGH THIS APPLICATION, THE ASSESSEE CHALLENGED THE REOPENING OF ASSESSMENT BECAUSE ORIGINALLY ASSESSMENT WAS COMPLETED U/S 143(3) AND REOPENING WAS DONE AFTER FOUR YEARS. FURTHER CHALLENGE WAS MADE THAT ENHANCED COMPENSATI ON IS NOT TAXABLE BECAUSE LAND WAS ACQUIRED PRIOR TO NOTIFICATION NO. 9447/ F . NO. 164/3/87 DATED 06.01.1994. 13. DURING THIS PERIOD THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS PREM SINGH IN ITA NO. 85 OF 2010 (COPY O F THE ORDER IS AVAILABLE AT PAGES 67 TO 71 OF PAPER BOOK) HELD THAT WHENEVER TH E POSSESSION OF THE LAND HAS BEEN TAKEN BEFORE 6.1.1994, THEN SUCH LAND IS TO BE TREATED AS AGRICULTURAL LAND AND, THEREFORE, ENHANCED COMPENSATION COULD NOT BE BROUGHT TO TAXATION. SINCE 12 THE ASSESSEES CASE WAS RELATED TO THE CASE OF SHRI PREM SINGH, THEREFORE, ANOTHER RECTIFICATION APPLICATION WAS FILED ON 26.7 .2010 (COPY OF WHICH IS AVAILABLE AT PAGE 66 OF THE PAPER BOOK ) WHEREBY AG AIN IT WAS POINTED OUT THAT IN VIEW OF THE DECISION OF JURISDICTION HIGH COURT IN THE CASE OF CIT V PREM SINGH (SUPRA), ENHANCED COMPENSATION COULD NOT BE BROUGHT TO TAX. THE REVENUE HAS FILED AN SLP AGAINST THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PREM SINGH (SUPRA) AND SLP HAS BE EN DISMISSED BY THE HON'BLE SUPREME COURT, COPY OF WHICH IS AVAILABLE A T PAGE 72 OF THE PAPER BOOK. 14. THE LD. COMMISSIONER HAS MAINLY HELD IN THE ORD ER PASSED UNDER SECTION 263 THAT NO PROCEEDINGS ARE PENDING BUT READING OF THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 ON 26.12.2008, COP Y OF WHICH IS AVAILABLE AT PAGES 52 TO 61 CLEARLY SHOWS THAT PROCEEDINGS WERE KEPT PENDING BECAUSE THE ASSESSEE WAS DIRECTED TO FILE THE INTIMATION REGARD ING OUTCOME OF THE DECISION REGARDING COMPENSATION BEFORE THE ADDITIONAL SESSIO N JUDGE, PANCHKULA. THE FINAL ORDER PASSED BY ADDL. SESSION JUDGE PANCHKULA IS AVAILABLE AT PAGES 107 TO 135 OF THE PAPER BOOK AND THIS ORDER HAS BEEN PASSE D ON 24.8.2009 AND ASSESSEE INTIMATED THE ASSESSING OFFICER ON 7.9.2009 A COPY OF THE LETTER IS AVAILABLE AT PAGE 106. 15. NOW THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASS ED ON 7.10.2010 U/S 143(3) READ WITH SECTION 147. IN THIS ORDER IT HAS BEEN HELD THAT COMPENSATION OF THE LAND BELONGING TO THE ASSESSEE WAS TAKEN ON 17.6.1992 I.E. BEFORE THE NOTIFICATION NO. 9447/F.NO. 163/3/87 DATED 6.1.1994 , THEREFORE, ENHANCED COMPENSATION ON THE SAME IS NOT TAXABLE IN VIEW OF THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS PREM SINGH (SUPRA). SIMILARLY, IT WAS FURTHER HELD THAT INTEREST U/S 28 OF THE LAND ACQUISITION ACT WAS ALSO PART OF THE COMPENSATION, THEREFORE, THIS ORDER HAS BEEN PASSED IN CONTINUATION OF THE EARLIER ORDER PASSED U/S 143 (3) READ WITH SECTION 147 O 13 26.11.2008 WHEREIN THE ASSESSEE WAS DIRECTED TO FIL E THE INFORMATION REGARDING OUTCOME OF THE DECISION OF ADDL. SESSION JUDGE, PAN CHKULA. THIS ORDER WAS PASSED FOLLOWING THE ASSESSMENT ORDER FOR ASSESSMEN T YEAR 2007-08 TAKING THE SIMILAR VIEW WHICH WAS PASSED ON 30.12.2009 AND THE COPY OF WHICH IS AVAILABLE AT PAGES 96 TO 105 OF THE PAPER BOOK. 16. WE FURTHER FIND FORCE IN THE SUBMISSIONS OF LD . COUNSEL FOR THE ASSESSEE THAT FROM THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT V G.M. MITTAL STAINLESS STEEL P., LTD (SUPRA). IN THIS CASE, IT WAS CLEARLY HELD THAT ONCE THE ASSESSING OFFICER HAS FOLLOWED A DECISION OF JURIS DICTIONAL HIGH COURT , THEN THERE WAS NO JURISDICTION TO REVISE SUCH ASSESSMENT ORDER. THE HELD COLUMN OF IT READS AS UNDER:- HELD, AFFIRMING THE DECISION OF THE HIGH COURT, TH AT THE COMMISSIONER HAD NOT RECORDED HIS REASONS FOR COMIN G TO THE CONCLUSION THAT THE ASSESSING OFFICER WAS ERRONEOUS IN DECIDING THAT POWER SUBSIDY WAS A CAPITAL RECEIPT. GIVEN THE FACT THAT THE DECISION OF THE JURISDICTIONAL HIGH C OURT WAS OPERATIVE AT THE MATERIAL TIME, THE ASSESSING OFFIC ER COULD NOT BE SAID TO BE WRONG. THE FACT THAT THE SUPREME COURT HAD SUBSEQUENTLY HELD IN SAHNEY STEEL AND PRESS WORKS CASE [1997] 228 ITR 253, THAT POWER SUBSIDY WAS REVENUE IN NATURE WOULD NOT JUSTIFY THE COMMISSIONERS TREATIN G THE DECISION OF THE ASSESSING OFFICER AS ERRONEOUS. THE POWER OF THE COMMISSIONER UNDER SECTION 263 HAD TO BE EXERCI SED ON THE BASIS OF THE MATERIAL THAT WAS AVAILABLE TO HIM WHEN HE EXERCISED THE POWER. AT THAT TIME, THERE WAS NO DIS PUTE THAT THE ISSUE WHETHER POWER SUBSIDY COULD BE TREATED AS A CAPITAL RECEIPT HAD BEEN CONCLUDED AGAINST THE REVENUE. THE SATISFACTION OF THE COMMISSIONER WAS, THEREFORE, NO T BASED ON MATERIAL EITHER LEGAL OR FACTUAL, WHICH ALONE WOULD GIVE HIM THE JURISDICTION TO TAKE ACTION UNDER SECTION 263. 14 IN VIEW OF THE ABOVE ORDER, WE QUASH THE REVISIONAR Y ORDER PASSED U/S 263 OF THE ACT . 17. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 28 TH NOVEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH