CIT, FARIDABAD vs. BHARAT LAL DAGAR

ITA/603/2009HC Punjab & HaryanaPHHC01084729200916 November 2009Author: MR. JUSTICE GURDEV SINGH,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What were the facts?

The assessee, Sh. Bharat Lal Dagar (HUF), did not offer compensation received for acquired agricultural land and interest thereon as taxable income for assessment year 2002-03, citing pendency of further proceedings. The Assessing Officer levied penalty under Section 271(1)(c) of the Income Tax Act, 1961. The CIT(A) initially set aside the penalty due to lack of requisite satisfaction, a view upheld by the Tribunal. This Court remanded the matter to the Tribunal. Subsequently, the Tribunal, after considering the merits, set aside the penalty, opining the issue was debatable and citing the Tribunal's prior decision in ITA No. 1683/Del/2007 dated 6.3.2009. The revenue appealed this order to the High Court.

What did the High Court hold?

The High Court held that no substantial question of law arises. The Court noted that the issue was not solely about taxability but about not paying tax when the issue was debatable. The assessee had an arguable case, and an earlier view, supported by CIT v. Karanbir Singh (2008) 303 ITR 231 (P&H) and CIT v. Hindustan Housing and Land Development Trust Ltd. (1986) 161 ITR 524 (SC), was in favor of the assessee. Although this earlier view was reversed by the Supreme Court in Ghanshyam (supra), the Tribunal's decision to set aside the penalty was in consonance with the High Court's own prior view in CIT Vs. Sohan Lal (HUF) (ITA No. 582/2007 dated 5.2.2008). Therefore, the appeal was dismissed.

What were the issues?

1. Whether, on the facts and in the circumstances, the ITAT was right in law in holding that no penalty under Section 271(1)(c) could be levied because the taxability of compensation on agricultural land and interest thereon was a debatable issue with two possible views, and the assessee's claim was bonafide, despite the assessee not offering enhanced compensation and interest for taxation in the year of receipt, contrary to Sections 45(5)(b) and 56 of the Income Tax Act? Assessee's contention: The issue of taxability of compensation and interest was debatable, and the assessee's view was bonafide, thus no penalty was leviable. The Tribunal's decision was in line with the High Court's view in CIT Vs. Sohan Lal (HUF) (ITA No. 582/2007 dated 5.2.2008). Revenue's contention: The Supreme Court in Commissioner of Income-Tax v. Ghanshyam (HUF) (2009) 315 ITR 1 (SC) held such income liable to tax. Therefore, the penalty should have been upheld, as the assessee failed to offer enhanced compensation and interest for taxation despite clear provisions.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 45(5)(b),Section 56,Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No. 603 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 603 of 2009 (O&M) Date of decision: November 16, 2009 The Commissioner of Income Tax, Faridabad ...Appellant Versus Sh. Bharat Lal Dagar (HUF) ...Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present: Ms. Urvashi Dhugga, Advocate, for the appellant.

ORDER

1.

This revenue has preferred this appeal under Section 260A of Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal Delhi Bench 'H', New Delhi in ITA No. 1683/Del/2007 dated 6.3.2009 for the assessment year 2002-03, proposing to raise the following substantial question of law:- “(i) Whether, on the facts and in the circumstances of the case, the ld. ITAT was right in law in holding that the issue of taxability of compensation on agricultural land and interest thereon received by the assessee being a highly debatable issue on which two views are clearly possible and the claim of the assessee in adopting one possible view being bonafide one, no case of penalty u/s 271 (1) (c ) of the Act could be made out, whereas the assessee has not offered for taxation

The order continues below.

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