SAROJ BALA,UNA V. PRINCIPAL COMMISSIONER OF INCOME TAX-1, CHANDIGARH

ITA 427/CHANDI/2024

AI Insights

The case involves Smt. Saroj Bala, who appealed against the order of the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961, concerning the assessment year 2017-18. The CIT had set aside the original assessment order, which was passed under Section 147 read with Section 144B, due to the belief that it was erroneous and prejudicial to the interests of the Revenue. The original assessment included an addition of Rs.98,26,659, which was the enhanced compensation received by the assessee from the Himachal Pradesh government for compulsory land acquisition. The CIT contended that this amount should be taxed at a higher rate under Section 115BBE and considered for penalty under Section 271AAC. However, the Tribunal found that the assessee had sufficiently explained the source and manner of this income, thus negating the need for a higher tax rate or penalty.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469835 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: ASHWANI KUMAR; MUSKAN GARG
• Section: 147; 263; 68

Judgement Text

"आयकर अपील य अ\u000bधकरण,च\u0010डीगढ़ \u0014यायपीठ, च\u0010डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 427/CHD/2024 \rनधा\u0011रण वष\u0011 / Assessment Year: 2017-18 Smt. Saroj Bala, W/o Shri Kewal Singh, Bharolian Khurd, Una (HP). Vs The PCIT-1, Chandigarh. \u0016थायी लेखा सं./PAN NO: BDGPB4467C अपीलाथ\u001a/Appellant \u001b\u001cयथ\u001a/Respondent Assessee by : Shri Ashwani Kumar, CA and Ms. Muskan Garg,CA Revenue by : Smt. Kusum Bansal, CIT DR Date of Hearing : 18.03.2025 Date of Pronouncement : 19.03.2025 HYBRID HEARING O R D E R PER RAJPAL YADAV, VP The present appeal is directed at the instance of the assessee against the order of the ld. Commissioner of Income Tax [in short ‘the CIT’] dated 12.03.2024 passed under Section 263 of the Income Tax Act, 1961 for assessment year 2017-18. 2. Though the assessee has taken two grounds of appeal, but her grievance revolves around a single issue namely, ld. ITA No.427/CHD/2024 A.Y.2017-18 2 CIT has erred in taking cognizance under Section 263 of the Income Tax Act and thereby setting aside the assessment order passed under Section 147 read with Section 144B of the Income Tax Act. 3. The brief facts of the case are that assessee did not file her return of income. The AO armed with information that assessee had made deposits in her Canara Bank account, reopened the assessment. He ultimately made an addition of Rs.98,26,659/- in an assessment order passed under Section 147 read with Section 144B on 24.03.2022. 4. The ld. CIT harboured a belief that assessment order is erroneous as much as it caused prejudice to the interests of the Revenue. He was of the view that on the addition made by the AO, the taxes ought to have been charged under Section 115BBE of the Income Tax Act instead of the normal rates as done by the AO in the impugned assessment. He further observed that AO ought to have considered the initiation of penalty under Section 271AAC of the Income Tax Act. ITA No.427/CHD/2024 A.Y.2017-18 3 4.1 In reply to the Show Cause Notice of the ld. CIT, the assessee has contended that land owned by her late husband Shri Kabool Singh was acquired by State Government of Himachal Pradesh for construction of a Housing Board Colony at Una. She had received compensation on this agriculture land. She was not satisfied with the quantum of compensation determined by the acquisition authorities and ultimately dispute travelled upto the Hon'ble High Court. The amount was deposited in the Hon'ble High Court and it was credited to the Saving Bank account of the assessee with Canara Bank. It was also brought to the notice that the additions made to her income by the AO are in challenge before the CIT(A), therefore, no fresh directions under Section 263 be issued. But CIT(A) did not accept contentions of the assessee and relegated the issue to the AO for charging the rate of tax as per Section 115BBE of the Income Tax Act and initiation of the penalty as required under Section 271AAC of the Income Tax Act. 5. With the assistance of ld. Representative, we have gone through the record carefully.The ld. counsel for the appellant ITA No.427/CHD/2024 A.Y.2017-18 4 has placed on record a certificate from the Registrar of Himachal Pradesh High Court, which is available at page 5 of the Paper Book. This certificate demonstrate that a sum of Rs.98,26,659/- was transmitted to the SB Account with Canara Bank by the Hon'ble High Court which represents the enhanced compensation awarded to the assessee on compulsory land acquisition. The certificate reads as under: TO WHOM IT MAY CONCERN It is certified that a sum of Rs.98,26,659/- was transferred in the Canara Bank Savings Account Number 2066101041 174 of Smt. Saroj Bala by H. P. High Court Shimia on 7.10.2016 through State Bank of Patiala, Shimla-East. This amount being enhanced compensation/award amount was earlier deposited in H.P. High Court Shimia, by the CEO-cum-Secretary, HIMUDA, Shimla-2 in the matter of RFA No.74/2011 titled as Land Acquisition Collector, H.P. Housing and Urban Development Authority Vs Saroj Bala and others on account of acquisition o f land of Smt. Saroj Bala and other land holders for the purpose o f establishing housing colony. Sd/- Dated : 27.04.2022 Registrar (Accounts) H.P. High Court Shimla-1 6. The addition to the income of the assessee has been made with the aid of Section 68 and higher rate of taxation could only be imposed upon an assessee if assessee fails to explain the source and the manner in which such income ITA No.427/CHD/2024 A.Y.2017-18 5 was earned. In the present case, assessee has not only demonstrated the source i.e. enhanced compensation from compulsory acquisition of land, but also the manner. Therefore, no higher rate of taxes could be imposed upon the assessee under Section 115BBE of the Income Tax Act. This is such a small issue which ld. CIT ought to have appreciated after considering the explanation of the assessee. The assessee has submitted that the compensation as well as the enhanced compensation is not taxable under Section 10(37) of the Income Tax Act. But in no case a higher rate of taxes could be applied on this amount. 7. It is pertinent to note that the quantum addition is subject to challenge before the CIT(A). It is yet to be ascertained whether any addition is to be made to the income of the assessee or not. But time being we are not concerned with that. That aspect will be given effect after adjudicating of the issue by the CIT(A). But in any case, no higher rate of taxation could be imposed upon the assessee. It is a very disappointing situation that ld. CIT could not ITA No.427/CHD/2024 A.Y.2017-18 6 appreciate such a small issue and unnecessarily dragged a widow into unwanted litigation of this nature. The aspect to initiate the penalty is in the domain of the AO and for that reason, an assessment order cannot be considered as erroneous which has caused prejudice to the interests of the Revenue. Therefore, we allow the appeal of the assessee and quash the order passed under Section 263 of the Income Tax Act. 8. In the result, appeal of the assessee is allowed. Order pronounced on 19.03.2025. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क\u0002 \u0003ितिलिप अ\tेिषत/ Copy of the order forwarded to : 1. अपीलाथ\u000f/ The Appellant 2. \u0003\u0010यथ\u000f/ The Respondent 3. आयकर आयु\u0014/ CIT 4. िवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड\u001c फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "