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Facts
The assessee received compensation for compulsory acquisition of agricultural land. The Assessing Officer reopened the assessment treating this compensation as escaped income, and passed an ex-parte order as the assessee did not comply with notices. The CIT(A) upheld the addition. The assessee also challenged the service of notices, claiming they were not received.
Held
The Tribunal set aside the order of the CIT(A) and restored the assessment to the file of the Assessing Officer for verification of facts regarding the nature of the land and third-party interests. The penalty order was also set aside as its basis was linked to the quantum appeal.
Key Issues
Whether the compensation received for compulsory acquisition of agricultural land is exempt from tax under Section 10(37) and whether proper notices were served on the assessee for the assessment proceedings.
Sections Cited
147, 144, 271(1)(c), 139(1), 148, 2(14)(iii)(a), 10(37), 271F, 271(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
These two appeals by the assessee against order u/s 147 read with section 144 of the Income Tax Act, 1961 (“Act”, for short) dated 27.03.2022 and another against the order u/s 271(1)(c) of the Act dated 21.09.2022, pertaining to the assessment year 2013-14.
2. For the sake of convenience, both appeals were heard together and are being disposed of by way of consolidated order. First, we take up the (Quantum Appeal), pertaining to the A.Y. 2013-14. The assessee has raised the following grounds of appeal: -
1. That since agricultural land of the appellant falls under the definition of ‘Agricultural Land’ under section 2(14)(iii)(a) of Income Tax Act, 1961, hence the compensation to arisen from the compulsory acquisition such land is exempt from income-tax under the provisions of section 10(37) of Income Tax Act, 1961. Accordingly, tax demand imposed on the amount of compensation of said land is illegal and without jurisdiction.
& 251/LKW/2024 Page 2 of 13
That the notices including notice issued under section 148 of the Act was never served on the appellant, hence she could not respond. Accordingly, ex-parte assessment order passed by Ld.AO is illegal, against the law of natural justice and without jurisdiction.
That as per ‘agreement to sell’ dated 31-03-2012, Sri Dwijendra Ram Tripathi, Sri Surendra Ram Tripathi, Sri Shailendra Ram Tripathi and Sri Rakesh Ram Tripathi (Known as Second Party to the ‘agreement to sell’) are liable to pay entire tax and other demand aroused in respect of compensation paid against the land acquisition by government, hence tax and other demand imposed on the appellant is against the provisions of ‘agreement to sell’, illegal and without jurisdiction.
4. That the appellant reserves right to modify and / or add any other ground or grounds of appeal
as the circumstances of the case might require or justify.
5. That the assessment order passed by the Ld.AO is arbitrary, bad in law and against equity, justice and good conscious and deserves to be cancelled.”
3. The facts giving rise to the present appeal are that, in this case, the Assessing Officer (AO) noted that the assessee had failed to furnish the return of income for the relevant year within the time allowed u/s 139(1) of the Act. Thereafter, he noted that the AO was in possession of an information regarding the assessee having received a sum of Rs.1,04,26,706/- from ADM(LA), Nagarpalika, Lucknow on which tax of Rs.10,42,670/- had been deducted. Therefore, treating the said amount as income of the assessee having escaped assessment, the AO re- opened the assessment u/s 147 of the Act and issued requisite notice u/s 148 of the Act after obtaining necessary approval of the Competent Authority. In response to, the notice so issued u/s 148 of the Act, there was no compliance on the part of the assessee. Therefore, the AO proceeded to make assessment by adding the entire amount of Rs.1,05,67,523/- as the income that had escaped assessment. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) and had also filed detailed submission. By way of these submissions, the contentions raised were that the land was agricultural land and & 251/LKW/2024 Page 3 of 13 had been compulsorily acquired by the Government. Therefore, the compensation so received would not be taxable in terms of Section 10(37) of the Act. The Ld. CIT(A) did not accept the contention of the assessee and sustained the impugned additions. Aggrieved against this order, the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, Ld. Counsel for the assessee reiterated the submissions as made before the lower authorities. He vehemently argued that the lower authorities failed to appreciate the facts that the land in question was acquired by the State Government in terms of Section 10(37) of the Act, the compensation received under compulsorily acquisition of land. Further, he contended that the AO failed to appreciate the facts in the right perspective as the assessee had in fact had executed an agreement to sale in favour of third parties. The compensation so received was paid to these parties as the joint account was held with the parties.
On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions and supported the orders of the lower authorities.
We have heard the rival contention and perused the material available on records. The assessee has taken multiple grounds. Primarily, one of the contentions is that the compensation received by the assessee is exempt from tax secondly, the notice u/s 148 of the Act was not served upon the assessee and the ex parte assessment was made without giving adequate opportunity of being heard to the assessee. Further, it is stated that the assessee had entered into an agreement to sell and had in fact transferred her rights into the property in favour & 251/LKW/2024 Page 4 of 13 of Shri Dwijendra Ram Tripathi, Shri Surendra Ram Tripathi, Shri Shailendra Ram Tripathi and Shri Rakesh Ram Tripathi. The assessee had made elaborate submission before the Ld. CIT(A) and same are reiterated before this Tribunal. For the sake of clarity, the submissions of the assessee are reproduced hereinbelow: - “34. Regarding taxability of ‘the compensation received from the compulsory acquisition of agricultural land: a. As noted in para-2 above, appellant purchased an agricultural land situated vide Khasra Number 2190/2, at village Ujariyaon, District Lucknow from ‘Yug Nirman Sahkari Awas Samiti Ltd, 660, New Colony, Jiyamau, Lucknow’, measuring about one Digha 2 and sixteen biswa Vide registered deed dated 17-01-1990. b. On perusal of sale-deed executed betwen M/s Yug Sahkari Awas Samiti Ltd, 660, New Colony, Jiyamau, ‘Lucknow and-Mrs Usha Yadav dated 17- 01-1990, it is noteworthy-that in pagé no.2 of said deed, it is clearly mentioned that immovable property in question is ‘agricultural land’ bearing Khasra no. 2190/2, measuring one bigha and sixteen biswa in Ujariyaon, Lucknow. c. In page no.3 of the sale deed, it is mentioned that land in question was purchased by M/s Yug Nirman Sahkari Samiti Ltd for residential plots for their members. Later, it was found that said land is wholly agricultural land, which could not be converted into residential land, hence said Samiti decided to sell said land to any one of their members. Accordingly, said land was transferred to Mrs. Usha Yadav W/o Sri Babu Lal Yadav. d. Section 2(14)(iii)(a) of the Act is reproduced for ready reference: “Capital asset means- agricultural land in India, not being land situate - in any area which is comprised within the jurisdiction of a municipality (whether known as municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand.” e. Aforesaid land of appellant falls under the definition of ‘Agricultural Land’ under section 2(14)(iii)(a) of Income Tax Act, 1961, because: i. Land ‘under question is agricultural land, which i is verifiable from the sale- deed itself; ii. Said land is situated in: Lucknow, which is comprised within the n Jurisdiction of Lucknow Nagar Nigam; iii. Population of Lucknow is more than ten thousand f. Section 10(37) of Income e Tax Act, 19611 is; reproduced as under: “In the case of an ‘assesses, being an individual or a Hindu Undivided Family, any income chargeable under the head “Capital gains” arising from the transfer of agricultural land where- & 251/LKW/2024 Page 5 of 13 1. Such land is situate in any area referred to in item (a) or item (b) of subclause (iii) of clause (14) of section 2 2. Such land during the period of two years s immediately preceding the sale ‘of transfer was being used for agricultural purposes by such Hindu ‘undivided family or individual ora ‘Parent of his; 3. Such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the-Reserve Bank of India; 4. Such income has arisen from the compensation of consideration for such transfer received by such assessee on or after the 1st day of April 2004.” g. From perusal of aforesaid facts and the provisions of Income Tax Act, 1961, it is noteworthy that agricultural land of the appellant was compulsorily acquired by ADM (LA), Lucknow. Aforesaid land falls under the provisions of item (a) of section 2(14)(iii) of Income Tax Act, 1961. h. Ld. CIT(A) in para-5.3 of Appeal Order has dismissed the ground no.3 of the appeal for following reasons: i. Since land is in the municipal limits that is why it has been acquired by Land Acquisition Officer (ADM (LA)) Nagarpalika, Lucknow; ii. Therefore, the claim that it was agricultural land and was exempt from income tax is not correct. i. In the light of provisions of section 10(37) of the Act, compensation received for the acquisition of land from ADM (LA), Lucknow is exempt from the levy of income-tax, because: i. Land acquired by ADM (LA) was an agricultural land, which is verifiable from the sale-deed of said land itself; ii. Said land is situated in Lucknow, hence fall under item (a) of section 2(14)ii) of the Act; iii. Assessee is an individual; iv. Capital gain arising from the transfer of said agricultural land falls under section 10(37)(i) of the Act. v. Item (a) of section 2(14)(iii) deals specifically that agricultural land, which falls under municipal limits, that’s why those are capital assets and capital gains on transfer of such land is chargeable to tax. Said situations of capital gains fall under clause (a) of section 10(37) of the Act. vi. Appellant never claimed exemption from income tax for transfer of agricultural land, while claiming said land being not a capital asset. Whereas, appellant claimed exemption for the very reason that land transferred is an agricultural land, which is a capital asset. Income tax on transfer of such land is exempt u/s 10(37) of the Act, because such land of land is by way of compulsory acquisition under, the law for compensation after 01-04-2004. vii. Ld. CIT(A)erred to ignore ‘the facts of the case and disallowed the exemption claimed by the appellant for the only reason that land under question falls under municipal limits. j. in the light of above, tax demand imposed by t the department i in respect of transfer of such agricultural land is illegal, against the provisions of the Act and without jurisdiction.
& 251/LKW/2024 Page 6 of 13 35. Regarding service of notice/order etc, a. As noted in para-1 above, appellant is an old lady of 68 years. Her husband Sri Babulal Yadav died on 17-12-1994, She brought up her children solely with small amount of family pension, agricultural income and honorarium from Anganwadi’. Her total income was below the maximum amount chargeable to income-tax, hence she did not file her return of income prior to a.y.2014-15. b. Appellant filed her first return of income for a.y.2014-15 for refund purposes, because her total income was below the maximum amount chargeable to tax, but TDS on interest on fixed deposits was deducted at source, hence her advocate advised her to file her income-tax return for getting the refund of TDS. c. At the time of registration of assessee in Income Tax Portal, appellant asked the advocate to make primary email ID of her son Mr. Manish Yadav. Accordingly, advocate made her primary email ID as under: manish_yadav77@rediffmail.com d. At the time of filing of her return, her advocate generated another email ID for the purpose of filing of return and operating the same for refund and other purposes, which is ushayadavikoS54@gmail.com. He operated said email ID exclusively by him only. Appellant never ever operated said email ID. Her advocate mentioned aforesaid email ID in her return of income for a.y.2014-15 and onward. e. Since, appellant never operated email ID ‘namely usha adaviko54@omail.com, hence, she could not receive any notice/order etc. delivered in said email-ID by the department. Further, her advocate never informed her in respect of notices or order delivered in aforesaid email ID. f. Appellant at the very first time received following notices on 0110-2022 at her address by speed-post: i. Notice of demand w/s 156 of the Act for a.y.2013-14 for a sum of Rs.30,90,264/-; ii. Notice of demand u/s 156 of the Act for a.y.2013-14 for a sum of Rs.5,000/-; and iii. Notice of demand u/s 156 of the Act for a.y.2013-14 for a sum of Rs.10, 000/-. g. Appellant received ‘Order u/s 271F of the Act’ on 1310-2022 at her address by “post. h. On receipt of aforesaid notices and order, appellant - contacted her advocate. Being not satisfied by his approach towards the preparation: and filing of submission against aforesaid notices, she contacted senior counsel CA. Dharmendra Kumar of Lucknow. i. On logging the Income Tax Portal ty her new counsel, it is found that following four ex-parte orders pertaining to a.y.2013-14 were passed against the appellant: i. Assessment order u/s 147 read with section 144 of the Act dated 27-03- 2022; ii. Penalty order u/s 271(1)(c) of the Act dated 21-09-2022; & 251/LKW/2024 Page 7 of 13 iii. Penalty order u/s 271(1)(b) of the Act dated 02-09-2022; and iv. Penalty order u/s 271F of the Act dated 19-09-2022. j. In the light of aforesaid facts, assessment order passed by Ld.AO is illegal, against the law of natural justice and without jurisdiction, because: i. Appellant never received any notice or order from the department prior to 01-10-2022 as noted in para-26(f) above. ii, Since, appellant is an old lady, who is also a widow and not well versed with the handling of email, hence, she mentioned the email ID of her son in Income Tax Portal in her profile, so that she may receive the information from the department. It is evident from the records that department never sent any notice or order at her _ primary email ID. iii. As noted above, advocate of the appellant mentioned the email ID created by him and exclusively handled by him in her return of income for a.y.2014-15 and onwards. iv. Her advocate never ever informed her in respect of any notice/order delivered in the email ID ushayadaviko54@gmail.com, accordingly, she could not respond against such notices. v. Appellant first time received the notices and orders as mentioned above on 01-10-2022 and on 13-10-2022 only. vi. In the case of non-response of the notices on the part of assessee department should have sent the notices at the address of the appellant by speed-post or should have sent the notices at email ID mentioned in the profile of the appellant in Income Tax Portal. vii. Ld. CIT(A) dismissed the Ground No.2 of the appellant for the only reason that “once the email address i is provided by the assessee, then, any communication made on this email is valid as per Information Technology Act”. viii. As noted above, assessee is an old-lady of about 68 years, hence her email has been opened by her son, who is living with her. Since, the advocate of assessee never informed her about any notices served on the email created by him, hence assessee could not make compliance of any of the notices. ix. In absence of continuous non-compliance, Ld. AO should have sent the email on her primary email ID or sent the notices physically on her address. There might be several reasons for non-operation of email, hence various mode of service of notice has been provided in the Act and rules made thereunder. Ld.AO arbitrarily had not sent the notices/orders to the appellant by email on primary email ID or by post or by physical delivery, but keep on sending the notices/orders etc. on the email, which were non-responsive. x. In the light of aforesaid facts and circumstances, it is evident that appellant never received notices and orders prior to 01-10-2022 and/or 13-10-2022, Accordingly, assessment order passed is illegal, against the law of natural justice and without jurisdiction.
Regarding liability of tax demand and penalty demand a. As noted in para-1 above, appellant is an old lady of 68 years. Her husband Late Babulal Yadav died on 17-12-1994. She brought up her children solely with small amount of family pension, agricultural income and honorarium from ‘Anganwadi’.
& 251/LKW/2024 Page 8 of 13 b. As noted in para-2 and para-3 above, agricultural land purchased by appellant during the life-time of her husband was acquired by the government, which she tried hard to get back. She saved said property for herself and for her children for future needs. c. In the process of fight with government in respect of her property, four persons as mentioned in para-4(a) contacted the appellant and promised for help by their sources and means. Using the undue influence at the prevailing circumstances, they entered into a ‘agreement to sell’ of such land for Rs.51,04,650/-, which they further reduced to Rs.36 lacs only by showing. great difficulties and loopholes in paper and other documents. d. Poor old lady surrendered before said four persons and accepted their proposal and signed the ‘agreement to sell’. e. Said four persons by their connivance received the compensation of land acquisition belonging to the appellant in crores, whereas, poor old lady was forced to be satisfied by Rs. 36 lacs only. They operated the joint bank account as noted above exclusively. f. As noted in para-4(k) above, second party, i.e. said four persons were liable for all tax and other demand pertaining to the amount of compensation of land acquisition. But said persons are not standing with the appellant in this situation, where tax and penalty demand imposed on the appellant is very huge, which is beyond the control. and limit of the appellant. g. Ld. CIT(A) dismissed the Ground No. 8 of the appeal for the following reasons: i. Agreement to sell is not registered, therefore not a reliable document; ii. Agreement to sell is 5 executed on 31-03-2012, whereas, account with Bank of Baroda was opened on 07-04-2012; iii. Most of the withdrawals are in the name of alleged purchasers, if these transactions are correct and related to purchase then the withdrawals should have been in favour of the seller i.e. appellant; iv. Agreement to sell is not correct, because cheques for Rs.10 lacs and Rs.5 lacs were for dates 30-04-2012 and 15-04-2012. Rest of receipts are not proven; v. Agreement to sell has no evidentiary value. h. During appeal proceedings, appellant following documents: i. Agreement to sell; ii. Mukhtarnama in favour of Sri Dwijendra Ram Tripathi; iii. Post Office Account Statement; iv. Indian Bank Account Statement; v. Central Bank Account Statement; vi. Bank of Baroda Account Statement; vii. Allahabad Bank Account Statement; & 251/LKW/2024 Page 9 of 13 i. As noted in para-4 above, ‘appellant demonstrated how and why appellant executed. agreement to sell with following four persons: i. Sri Dwijendra Ram Tripathi; ii Sri Surendra Ram Tripathi; iii. Sri Shailendra Ram Tripathi; and iv. Sri Rakesh Ram Tripathi j. Appellant in para-4 above, submitted that facts and circumstances of her case by stating therein that total consideration was initially decided for Rs.51,04,650/-, but said four persons by their pressure reduced the consideration to Rs.36 lacs. k. Said four persons led by Sri Dwijendra Ram Tripathi opened bank account with the appellant. in Bank of Baroda and entire compensation for the land was deposited in said account. “Said bank account was solely operated by said Sri Dwijendra Ram Tripathi. L. From perusal of appeal-order, it is noticed that Ld. CIT(A) just ignored the facts of the case documents attached therewith, particularly bank entries transferred from joint account of Bank of Baroda to individual account of the appellant wordings of the agreement to sell and prevailing circumstances. Ld. CIT(A) failed to verify the facts from the Sri Dwijendra Ram Tripathi and others, whereas, he raised question regarding the legality/validity of agreement to sell. M. In the light of aforesaid circumstances, appeal-order passed by Ld. CIT(A) is against the facts and circumstances of the case, hence, income- tax demand, if any, should have been recovered from Sri Dwijendra Ram Tripathi and his brothers.
The Ld. CIT(A) disposed of the appeal of the assessee by observing as under: - “5: - DECISION: I have carefully considered the facts of the case, grounds of appeal and written submissions uploaded by the appellant. 5.1 The first ground of appeal that issue of notice u/s 148 is beyond time is not correct as the time limit was extended we. 15.03.2020 to 28.02.2022 by the Hon’ble Supreme Court of India and the Hon'ble High Court of Allah in the case of Rajeev Bansale vs. Union of India in Writ Tax No.1086 of 2022 and others dated 22.02.2013, held that notices issued before 01.04.2021 and the TOLA Act, 2020 is applicable. Hence, the notices issued is not beyond time. This ground of appeal is dismissed. 5.2. Ground No.2: As far was service of notice is concerned, once the email address is provided by assessee, then any communication made on this email is valid as per Information Technology Act. This ground of appeal is dismissed. 5.3. Ground No.3: As far as the claim of Agricultural land, itis not correct as the land is in the municipal limits that is why it has been acquired by Land Acquisition Officer (ADM (LA) Nagarpalika Lucknow. Therefore, the & 251/LKW/2024 Page 10 of 13 claim that it was-Agricultural land and was exempt from Income-tax is not correct. This ground of appeal is dismissed. 5.4 Ground No.4, 5 & 6: These grounds related to TDS credit available/allowed by the Assessing Officer are inconsistent. The Assessing Officer is directed to grant TDS credit, if available in Form-26AS. These grounds of appeal are Allowed. 5.5 Ground No.8 is with respect to belief of fhe Assessing Officer regarding the land. Here the appellant claims that there was an agreement to sell dated 31.03.2012 with Shri Dwijendra Ram Tripathi, Surendra Ram Tripathi, Shailendra Ram Tripathi & Rakesh Ram Tripathi known as Second Party to Agreement to sell and there the liability to pay tax was shifted to them. 5.6 This Agreement to Sell is not registered Agreement, it is only notorized and not even signed by all the four purchasers and even the witnesses are absent. Therefore, this Agreement to Sell is not reliable document. In this Agreement to sell, dated 31.03.2012, the Account Number of Bank of Baroda.is mentioned, whereas the account was opened on 07.04.2012 and most of the withdrawals are in the name of the alleged purchasers. If these transactions are correct and related to purchase then the withdrawals should have been done in favour of seller i.e. appellant. Therefore, the entire story appears cooked up and not true. 5.7 Further, on one hand appellant is claiming land was sold vide Agreement to Sell dated 30.03.2012, however the details of payment as mentioned in Statement of Facts before me is as under: - b. Appellant received aforesaid Rs.36 lacs as under: - Rs.5 lacs through cheque towards earnest money Rs.5 lacs in cash towards earnest money Rs.6,32,698/- through cheque by Lucknow Development Authority towards compensation of land acquisition [Aforesaid amount was adjusted in aforesaid Rs.36 lacs] Rs.10 lacs through cheque no. 048739, dated 30.04.2012 Rs.5 lacs through cheque no.048740, dated 15.04.2012 Rs.4,67,302/- in cash The above conclusively proves that the sale consideration has been adjusted out of - proceeds received from land acquisition at least in part mentioned at S.No.(iii) above Rs.6,32,698/-. Further, the cheques are for dates 30.04.2012 and 15.04.2012 for Rs.10 & 5 lakhs, which again proves that Agreement to Sell is not correct. Rest of the receipts are not proven. Therefore, this Agreement to Sell has no evidentiary value. 5.8 The Para No.7 and Para 10 of Statement of Facts are self- contradictory. The appellant has accepted that Rs.93,81,970/has been credited to the bank account. Therefore, if the TDS amount is included then it should reach to the amount assessed by the Assessing Officer. Further, the Assessing Officer -has not added the pension amount as mentioned by appellant as the appellant never appeared before the Assessing Officer. The. Assessing Officer is directed to take remedial action while giving appeal effect.
& 251/LKW/2024 Page 11 of 13 5.9 The grounds of appeal are rejected.”
8. It is evident from the impugned order that the Ld. CIT(A) has not adverted to the submissions of the assessee. Moreover, the assessee had raised various issues relating to the nature of the land, its compulsorily acquisition as well as the transfer of the rights in the subject land by the assessee in favour of third parties who have received amount in their respective bank accounts. Looking to the totality of the facts, we hereby set aside the impugned order and restore the assessment to the file of the Assessing Authority, who would verify the facts relating to the compulsory acquisition of land. If, upon such verification, it is found that the land in question was agricultural in nature within the meaning of Section 10(37) of the Act, in that event, the AO may allow exemption as claimed. With regard to creation of third- party interest, the AO shall verify the correct facts and decide in accordance with law. Grounds of appeal of the assessee are allowed for statistical purposes.
Now, coming to the assesse’s appeal in (Penalty appeal), pertaining to the A.Y. 2013- 14. The assessee has raised the following grounds of appeal: -
1. That appellant has filed various documents including written submission before first appellate authority, therefore, the reasons for confirming the penalty by Ld. CIT(A) that appellant has not made any submission before first appellate authority is against the facts, incorrect and without jurisdiction.
2. That Ld. CIT(A) failed to deal any of the grounds of appeal
of the appellant, which are 8 (eight in numbers); hence appeal order against penalty-imposed u/s 271(1)(c) of the Act is illegal, against the law of natural justice and arbitrary.
3. That instant penalty is initiated on the alleged concealment of income. Ld. CIT(A) failed to consider and deal with written submission and supporting documents furnished by the appellant during first appeal, applicability of the provisions of section 10(37) of the Act. applicability of the case law and the circular furnished during appeal proceedings. Hence, instant appeal order against the penalty-imposed u/s 271(1)(c) of the Act is non-speaking, illegal, against the law of natural justice and unjustified.
& 251/LKW/2024 Page 12 of 13 4. That the appellant reserves right to modify and / or add any other ground or grounds of appeal as the circumstances of the case might require or justify.”
10. In this case, the assessee has challenged the imposition of penalty u/s 271(1)(c) of the Act. In the quantum proceedings, in (Quantum Appeal) for A.Y. 2013-14, we have set aside the assessment order and restored the matter back to the file of the AO for verification of the correctness of the assessee’s claim regarding exemption of compensation received under the Land Acquisition Act and creation of third-party interest by the assessee. Since the very basis for levying the penalty has been restored back to the AO, the penalty order cannot be sustained at this stage. Accordingly, we set aside the penalty order and restore the issue to the file of the AO to be decided afresh in accordance with law. The grounds raised by the assessee are allowed for statistical purposes.
In the result, both appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 09/12/2025.