PREM SINGH ,FATEHABAD vs. ITO, WARD 1, FATEHABAD

That on the facts and circumstances of the case, the impugned assessment order has been passed in violation of section 144B(1)(iii) of the Act by not providing intimation to the appellant that his case has been transferred to the National . Faceless Assessment Centre.

That on the facts and circumstances of the case, neither the JAO, nor the FAO has provided the recorded reasons to believe to initiate the reassessment proceedings which is bad in law.

That on the facts and circumstances of the case, the Ld. CIT (A), NFAC erred in upholding the addition made by the Ld. AO of Rs. 1,45,12,635/- (50% of 2,90,25,369/-) under section 56(2) of the Act to be taxable under the head "Income from other sources", by denying the exemption claimed by the appellant u/ s 10(37) of the Act. The addition having been made in complete violation of settled legal position and contrary to the facts of the case may kindly be deleted.

That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds of appeal before the appeal is finally adjudicated upon.

Briefly stated, the facts of the case are that the assessee is an individual. Information was received by the Assessing Officer that the assessee had received interest amounting to Rs.2,90,25,269/- on enhanced compensation during the year under consideration on which TDS under section 194A of the Act had also been deducted by the Land Acquisition Officer. However, the assessee had not filed return of income for the relevant assessment year.

1 The Assessing Officer further noticed that the assessee had filed an application for condonation of delay in filing return of income wherein the assessee had claimed exemption under section 10(37) of the Act on the enhanced compensation received. Thereafter, proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued. Subsequently, notices under sections 143(2) and 142(1) were also issued to the assessee.

2 The assessee submitted before the Assessing Officer that the amount received under section 28 of the Land Acquisition Act formed part of enhanced compensation and therefore the same was exempt under section 10(37) of the Act in view of the judgment of Hon’ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF) reported in 315 ITR 1. 3.3 The Assessing Officer did not accept the contention of the assessee. The AO held that the interest received on enhanced compensation was taxable under section 56(2)(viii) of the Act under the head “Income from Other Sources”. The AO further allowed deduction @ 50% under section 57(iv) of the Act and accordingly brought to tax a sum of Rs.1,45,12,635/- being 50% of Rs.2,90,25,269/- received by the assessee as interest on enhanced compensation. Accordingly, assessment under section 147 read with section 144B of the Act was completed.

Against the order of the AO the assessee went in appeal before the Ld. CIT(A).

1 Before the Ld. CIT(A), the assessee reiterated that the interest received under section 28 of the Land Acquisition Act was part of compensation and therefore exempt under section 10(37) of the Act. Reliance was placed upon the judgments of Hon’ble Supreme Court in Ghanshyam (HUF) and Union of India Vs. Hari Singh & Others. The assessee also relied upon various decisions of Chandigarh Bench of the Tribunal.

2 The Ld. CIT(A), after considering the submissions of the assessee, upheld the action of the Assessing Officer. The Ld. CIT(A) observed that after insertion of section 56(2)(viii) and section 145B(1) by the Finance Act, 2009, interest received on compensation or enhanced compensation is specifically taxable under the head “Income from Other Sources” in the year of receipt.

3 The Ld. CIT(A), therefore, confirmed the addition made by the Assessing Officer.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

During the course of hearing the Ld. AR submitted that the reassessment proceedings were bad in law as no proper intimation regarding transfer of the case to the Faceless Assessment Centre was provided to the assessee in terms of section 144B(1)(iii) of the Act.

1 The Ld. AR further submitted that the reasons recorded for reopening the assessment were never supplied to the assessee either by the Juri ictional Assessing Officer or the Faceless Assessing Officer and therefore the reassessment proceedings deserved to be quashed.

2 On merits, the Ld. AR submitted that the amount received under section 28 of the Land Acquisition Act is in the nature of compensation and not interest and therefore exempt under section 10(37) of the Act. Reliance was placed upon the judgments of Hon’ble Supreme Court in CIT Vs. Ghanshyam (HUF) and Union of India Vs. Hari Singh & Others. It was argued that the issue is squarely covered in favour of the assessee.

Per contra, the Ld. DR relied upon the orders of the lower authorities. The Ld. DR submitted that the issue is now squarely covered against the assessee by the decision of Chandigarh Bench of the Tribunal in the case of Shri Ajay Kumar Vs. ITO & Others in ITA No.463/Chd/2023 and connected matters.

1 The Ld. DR submitted that the Tribunal in the aforesaid decision has considered the entire statutory scheme including sections 56(2)(viii), 57(iv) and 145B of the Act and has held that interest received on enhanced compensation is taxable under the head “Income from Other Sources” after allowing statutory deduction of 50% under section 57(iv) of the Act.

2 It was further submitted that the legal grounds raised by the assessee are devoid of merit as the assessee had duly participated in the reassessment proceedings and no prejudice has been demonstrated.

We have heard the rival submissions and perused the material available on record.

1 The primary issue involved in the present appeal relates to taxability of interest received on enhanced compensation under section 28 of the Land Acquisition Act.

2 We find that an identical issue has been considered by the Coordinate Chandigarh Bench of the Tribunal in the case of Shri Ajay Kumar Vs. ITO & Others in ITA No.463/Chd/2023 and connected matters. In the said decision, the Bench, after considering the provisions of sections 56(2)(viii), 57(iv) and section 145B of the Act as amended by Finance Act, 2009, held that interest received on compensation or enhanced compensation is taxable under the head “Income from Other Sources” and only deduction permissible is the statutory deduction of 50% under section 57(iv) of the Act.

3 The Bench in the said decision also considered the judgments of Hon’ble Supreme Court in the cases of Ghanshyam (HUF) and Hari Singh and 5 thereafter concluded that after the statutory amendments brought by the Finance Act, 2009, the issue stands covered in favour of the Revenue.

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In the result, appeal of the Assessee is dismissed.

""थ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"ीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File