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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI H.S. SIDHU, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the CIT(A), Faridabad, New Delhi dated 07.03.2013 pertaining to A.Y 2003- 04.
The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer in taxing the interest received on enhanced compensation on receipt basis. The ld. CIT(A) further erred in not accepting that there was no proper service of notice.
Representative of both the sides were heard at length and case records carefully perused.
Briefly stated, the facts of the case are that during the year under consideration, the assessee received enhanced compensation in respect of land acquired by HUDA, which was situated in Ankhir Village, within the Municipal Corporation of Faridabad. The enhanced land compensation was at Rs. 7,95,006/- and interest on enhanced compensation was at Rs. 8,88,275/-.
The assessee has challenged the taxability of interest on receipt basis. The main contention of the assessee is that the amount received during the year pertains to F.Ys. 1993-94 to 2001-02, and therefore, the same should have been taxed on accrual basis.
Surprisingly, the assessee has not challenged the taxability of long term capital gains on receipt basis, and yet, he is questioning the taxability of interest on receipt basis.
In so far as taxability of compensation on land acquisition is concerned, the quarrel has been settled by the decision of the Hon'ble Supreme Court in the case of Ghansyam Das [HUF] 315 ITR 1, and in so far as the quarrel in respect of taxability of interest is concerned, the same has been settled by the Hon'ble Punjab and Haryana High Court in the case of Smt. Prakash Kaur 330 ITR 332. The relevant findings of the Hon'ble High Court read as under:
“In case, the assessee was following mercantile/accrual basis, the same would be discernible from earlier years returns where the assessee would have shown the income on account of interest that might have accrued in those years. Otherwise, it shall be treated that cash/receipt basis is the only method which is being adopted by the assessee. Even under the hybrid system of accountancy, the assessee is required to follow either mercantile or cash system in respect of this source of income. There is nothing on record to suggest that the assessee had been declaring interest income on yearly accrual basis, therefore, it shall be taken that the assessee had been following cash system only. Once that is so, then the interest received during the asst. yr. 1985-86 cannot escape from income tax.”
Considering the judicial decisions discussed hereinabove, and considering the fact that the assessee has not challenged the capital gains on receipt basis, we do not find any reason to interfere with the findings of the ld. CIT(A). Appeal on this ground is dismissed.
In so far as the service of notice is concerned, the ld. CIT(A) has elaborately discussed the factual matrix at para 7 page 18 of his order, and the same reads as under:
“7. Ground No. 2 states that no notice was ever served upon the appellant. In order to verify the facts, I perused assessment records of the appellant for the relevant assessment year. As per the assessment records, notice u/s 148 of the Income Tax Act was issued on 09.03.2010 and was sent by registered post bearing dispatch No. 3834. There is nothing on record to suggest that this notice came back un-de!ivered to the appellant. Since no return of income was filed in response to the notice u/s 148, the AO issued a notice dated 17.09.2010 u/s 142(1) of the Income Tax Act asking the appellant to appear before him on 04.10.2010 at 4:20 PM. This notice was also sent by registered post and there is no evidence on record to suggest that the same came back un-served. On 04.10.2010, there was no compliance by the appellant and hence on 05.10.2010, another notice u/s 142(1) was issued to the appellant along with a final show cause as to why the assessment should not be completed ex-parte u/s 144 of the Income Tax Act. As on previous occasions, there was no compliance on the part of the appellant. On 05.10.2010, the AO issued an order u/s 282 of the Income Tax Act regarding service of notice by affixture. As per this order, the AO deputed Shri H.S. Dahiya, Inspector to serve the notice by affixture on some conspicuous place on the last known address of the appellant. Shri H.S. Dahiya, Inspector attached with the Assessing Officer served the notice u/s 142(1) of the Income Tax Act through affixture on 11.10.2010 in the presence of Shri Jai Bhagwan, Notice Server. These facts, available in assessment records, make it abundantly clear that the AO, in the absence of compliance to his earlier notices u/s 142(1) of the Income Tax Act, got the service of notice done through affixture by following the due procedure laid down. On the other hand, the appellant does not have any evidence to substantiate the fact that the notice u/s 142(1) of the Income Tax Act was never served upon him. Hence considering the facts in totality, it is held that the notice u/s 142(1) of the Income Tax Act was served upon the appellant and therefore, this ground of appeal is dismissed.”
10. Before us, the ld. counsel for the assessee could not controvert to the factual matrix explained by the ld. CIT(A) hereinabove. We, therefore, do not find any reason to interfere with his findings. Appeal is also dismissed on this ground.
11. In the result, the appeal of the assessee in is dismissed on the grounds argued before us.
The order is pronounced in the open court on 26.02.2020.