PR. COMMISSIONER OF INCOME TAX PANCHKULA vs. JAGDEEP SINGH CHANDAIL

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ITA/309/2016HC Punjab & HaryanaPHHC01110512201619 October 2016Bench: REGISTRAR-JUDICIAL,MR. JUSTICE M.M. AGGARWAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in the appeal. The Court found no reason to interfere with the appreciation of facts by the CIT (Appeals) and the Income Tax Appellate Tribunal. Both appellate authorities had concurrently found that there was a bonafide error on the part of the assessee. The Court noted that prior to the amendment to Section 56(2)(viii), tax was not payable on the interest component, as per the Supreme Court's decision in CIT Vs Ghanshyam. The liability arose only due to the subsequent amendment. Since the assessment was completed under Section 143(3) and all necessary facts were disclosed by the assessee, the finding that there was no intention to conceal or misrepresent facts was justified. Therefore, the deletion of penalty by the lower authorities was upheld.

What were the facts?

The appeal by the Principal Commissioner of Income Tax, Panchkula (Revenue) challenges the Income Tax Appellate Tribunal's order. The Tribunal had dismissed the Revenue's appeal against the CIT (Appeals)'s order, which deleted a penalty imposed on the assessee, Jagdeep Singh Chandail. The case pertains to assessment year 2011-2012. The assessee received enhanced compensation and interest on land acquired under the Land Acquisition Act, 1894. This receipt was subject to tax due to an amendment to Section 56(2)(viii) of the Income Tax Act, 1961, effective from 01.04.2010. The compensation and interest were received in the financial year from which the amendment came into force. The assessment was completed under Section 143(3), with all necessary facts disclosed by the assessee.

What were the issues?

1. Whether a substantial question of law arises from the appellate authorities' finding that the assessee had a bonafide error, thereby warranting deletion of penalty under Section 271 of the Income Tax Act, 1961 (the Act)? Assessee's Contentions: The assessee argued that the liability to pay tax on the interest component arose solely due to the amendment to Section 56(2)(viii) of the Act, which came into effect from 01.04.2010. Prior to this amendment, in view of the Supreme Court judgment in CIT Vs Ghanshyam (2009) 315 ITR 1 (SC), tax was not payable on the interest. The assessee contended that there was a bonafide error on their part, and all necessary facts were disclosed during the assessment completed under Section 143(3). They argued that there was no intention to conceal or misrepresent facts. Revenue's Contentions: The Revenue contended that the penalty under Section 271 of the Act was leviable. The judgment does not record specific arguments made by the Revenue beyond their appeal against the deletion of penalty.

Which sections of the Income-tax Act were involved?

Section 56(2)(viii),Section 271,Section 143(3)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-309-2016 (O&M) Date of decision:- 19.10.2016 Pr. Commissioner of Income Tax, Panchkula ...Appellant Versus Jagdeep Singh Chandail ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE DARSHAN SINGH Present:- Mr. Yogesh Putney, Advocate, for the appellant. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Income Tax Appellate Tribunal dismissing the appellant/revenue’s appeal against the order of the CIT (Appeals) deleting the imposition of penalty upon the assessee. The matter pertains to the assessment year 2011-2012. 2. The respondent/assessee admittedly received the enhanced compensation as well as interest in respect of his land which had been acquired under the provisions of the Land Acquisition Act, 1894. Admittedly, the respondent was liable to pay tax on the enhanced compensation and on the interest in view of the amendment to Section 56(2)(viii) of the Income Tax Act, 1961 (in short the Act) which came into effect on 01.04.2010. The amendment, therefore, applied to the assessment year in question, namely, the assessment year 2011-2012. It is not clear as to when exactly the enhanced compensation and the interest thereon was received. Be that as it may, it is clear that it was received in the very financial year with effect Amodh Sharma 2016.10.21 11:42 I attest to the accuracy and authenticity of this document chandigarh

ITA-309-2016 (O&M) 2 from which the amendment came into force. The question, however, is whether the respondent ought to be faced with the penalty under Section 271 of the Act. The CIT (Appeals) and the Tribunal have come to a finding of fact that there was a bonafide error on the part of the assessee. We are unable to hold that the finding is perverse or absurd. Prior to the amendment, tax was not payable on the interest component in view of the judgement of the Supreme Court in CIT Vs Ghanshyam (2009) 315 ITR 1 (SC). The liability arises only in view of the amendment. The assessment was completed under Section 143(3) as recorded in the orders of the CIT (Appeals) and the Tribunal. All the facts necessary had been disclosed by the assessee. The finding, therefore, that there was no intention to conceal any facts or to misrepresent any facts is justified. In these circumstances, a substantial question of law does not arise. 3. We see no reason to interfere with the appreciation of facts by both the appellate authorities. 4. The appeal is, therefore, dismissed. (S.J. VAZIFDAR) CHIEF JUSTICE (DARSHAN SINGH) JUDGE 19.10.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.10.21 11:42 I attest to the accuracy and authenticity of this document chandigarh

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