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Facts
The assessee filed an appeal against the order of the CIT(A) which confirmed the Assessing Officer's order. The AO had made additions on account of interest from enhanced compensation and saving bank interest, which the assessee argued were received by the legal heir and not taxable in the hands of the deceased. The AO also completed the assessment ex-parte due to non-compliance.
Held
The Tribunal held that since the interest on enhanced compensation and saving bank interest were received by the legal heir, taxing it in the hands of the legal heir was justified. The Tribunal also found no merit in the grounds related to jurisdiction and the assessee's appeal was dismissed.
Key Issues
Whether interest on enhanced compensation and saving bank interest received by the legal heir is taxable in the hands of the legal heir or the deceased, and whether the assessment order passed ex-parte is valid.
Sections Cited
147, 144, 28, 10(37), 148, 142(1), 271F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 27.11.2024 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi
2. Grounds of appeal, as raised by the Assessee are reproduced as under:
128-Chd-2025 AY 2015-16 2
The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has made a grave legal error in uploading the order of Ld. Assessing Officer wherein assessment u/s 147 rws 144 has been framed in the name of the assessee Sh. Mehar Singh through legal heir Sh. Jaswant Singh, for the income which has not been accrued or received by Sh. Mehar Singh in any manner. Thus, the action is contrary to law, and therefore liable to be set aside.
The Ld. Commissioner of Income Tax (Appeals) has upheld assessment order passed by Ld. Assessing officer having 2 jurisdiction on Ward No. 2, Panchkula for an assessee residing at Yamananagar. Thus, the assessment order passed is without jurisdiction and liable to be set aside.
3. The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has made a grave legal error in uploading the order of the Ld. Assessing Officer making addition for amounting Rs. 19,34,039/- to the income of the assessee on a/c of 50 percent of interest received on enhanced compensation u/s 28 which is a part of Enhanced Compensation, Thus, exempt u/s 10(37) of the Income Tax Act. The Interest u/s 28 has been received by Sh. Jaswant Singh (Legal Heir of the assessee Sh. Mehar Singh) in his bank account, and addition has been made as income of the assessee Sh. Mehar Singh.
128-Chd-2025 AY 2015-16 3
That the Ld. Assessing Officer had committed a grave legal error in making addition on account of Saving Bank Interest amounting Rs. 39,657/- which has been received by Sh. Jaswant Singh in his bank account, and addition has been made as income of the assessee Sh. Mehar Singh. Thus, the action is contrary to law, and therefore liable to be set aside
5. That the appellant craves leave to add, delete or amend the grounds of appeal till the disposal of the same.
Brief facts of the case as per the order of the Ld. CIT(A) are as under: - “The AO received information that the assessee has received interest on enhanced compensation amounting to Rs. 38,68,079/- during the FY 2014-15 relevant to AY 2015- 16. Notice u/s 148 was issued on 03.10.2018 and notices u/s 142(1) was issued on 09.07.2019 to which the assessee remained non-compliant. Final Show Cause Notice was issued on 07.11.2019 to which the assessee did not respond. Hence the AO completed the assessment u/s 144.”
4. Against the order of the AO the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A)
1. 128-Chd-2025 AY 2015-16 4 adjudicated the appeal issue wise which ultimately resulted in confirmation of the AO’s order.
Against the said order of the Ld. CIT(A), the Assessee has filed appeal before the Tribunal in which the first two grounds of appeal are against the passing of order and making recovery from the legal heir while the interest on enhanced compensation was received for the acquisition of land in the name of last Shri Mehar Singh. It is important to note here that the Assessee Jaswant Singh is legal heir of Mehar Singh. During the proceedings before us, the ld. Counsel for the Assessee argued that since the land belonged to Shri Mehar Singh on which interest on enhanced compensation has been received, therefore, the AR argued that it should not be taxed in the hands of the legal heir and tax should not be realized form his personal account.
Per contra, the ld. DR argued that since the compensation and all other assets of Late Shri Mehar Singh has been received by one legal heir Shri Jaswant
128-Chd-2025 AY 2015-16 5 Singh the Assessee, therefore, the action of the Assessing Officer is perfectly in accordance with the law.
We have considered the rival arguments on this issue and we do not find anything wrong with the findings of the Revenue. We find that since the interest on enhanced compensation etc. has been received by the legal heir of the Assessee, therefore, taxing it in the hands of legal heir is justified. Accordingly, Assessee’s appeal on this ground is dismissed.
Related to it i.e. ground No.2, taken by the Assessee regarding jurisdiction of the Assessing Officer in passing the assessment order by the AO. In this regard, the ld. DR brought it on record that the assessment order has been passed by the Assessing Officer where late Shri Mehar Singh was assessed and the since the Assessee is legal heir, the Assessee did not get his firm transferred and kept on complying, therefore, at this stage ground of appeal raised on this issue is not relevant.
We have considered this issue of jurisdiction and we find that there is not much force in the arguments
128-Chd-2025 AY 2015-16 6 brought on record by the AR during the proceedings before us as the Assessee kept on complying with the order of the AO of late Shri Mehar Singh and got the assessment order passed by him, therefore, at this stage there is no point in raising the question about the jurisdiction. Accordingly, Assessee’s appeal on this ground is dismissed.
Through ground No. 3, the main grievance of the Assessee is against the addition amounting to Rs. 19,34,039/- to the income of the Assessee on account of 50% on interest received on enhanced compensation. In fact, the Coordinate bench of ITAT Chandigarh has dealt with the issue in question and has already given a detailed findings on this issue in its order passed on 11.11.2025 in a group of cases with leading case i.e. ‘Ajay Kumar and Others vs ITO’ in for assessment year 2018-19.
We find that this ground is squarely covered by the detailed findings given by the Coordinate Bench on this issue in the case of ‘Ajay Kumar and Others vs ITO
128-Chd-2025 AY 2015-16 7 (supra). Accordingly, we are of this considered view that the findings given by the Ld. CIT(A) on this issue does not require any interference. Accordingly, Assessee’s appeal on this issue is dismissed
The last ground of appeal is against the addition confirmed by the Ld. CIT(A) of Rs. 39,657/- which was received as interest in his saving bank. On this issue, the Ld. CIT(A) has given a very clear findings in his order which is reproduced as under: -
“In ground of appeal 2, the appellant has contended that the Ld. Assessing Officer had committed a grave legal error in making addition on account of Saving Bank Interest amounting Rs. 39,657/- which had already been disclosed/considered while filing return u/s 148 of Income Tax Act, 1961. However, it is observed that the AO has mentioned in the order that the assessee has not filed ITR and in fact has initiated penalty u/s 271F for non-filing the return of income. In view of this, the contention of the appellant cannot be accepted.
128-Chd-2025 AY 2015-16 8
Keeping in view the findings given by the Ld. CIT(A) on this issue, which is crystal clear both on facts and findings, we do not find any reason to interfere in the findings given by the ld. CIT(A) on this issue. Accordingly, Assessee’s appeal on this issue is also dismissed.
Ground No.5 is general in nature.
In the result, Assessee’s appeal is dismissed.
Order pronounced on 15.12.2025.