SANJAY KUMAR BAID,RAIPUR vs. INCOME TAX OFFICER, WARD 4(1), RAIPUR

4. However, the A.O disposed of the application filed by the assessee u/s.154 of the Act without making any rectification in the income shown in the return of income observing as follows: “3. The application of the assessee was considered and it is observed that the assessee has filed its return of income on 07.11.2017 showing total income at Rs.87,94,860/-. The issue related to the taxability of compensation claimed by the assessee cannot be considered mistake apparent from record as it involves the reasoning of taxability of compensation received by the assessee. The Hon'ble Supreme Court in the case of T. S. Balaram, ITO v Volkart Bros (1971) 82 ITR 40 (SC) held that; "a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record". A look at the records must show that there has been an error and that error may be rectified; Reference to documents outside the records and the law is impermissible when applying the provisions of section 154. [CIT v Keshri Metal Pvt. Ltd. (1999) 237 ITR 165 (SC)].

7. In view of the above fact, the issue related to the taxability of compensation is not exempted as per the existing CBDT's OM dated 06.06.2019 and the issue also does not constitute mistake apparent from record. Therefore, the application of the assessee is hereby disposed off without making any rectification in the income shown in the ITR.”

5. That being further aggrieved, the assessee carried the matter in appeal before the first appellate authority wherein, Ld. CIT(Appeals)/NAFC relying on the order of the ITAT, Raipur in the case of Heritage Buildcon (P) Ltd. Vs. CIT, 2023 SCC Online ITAT, 1258 had upheld the order of the A.O observing as follows: “5. CIT(A)'s Decision: 5.1 The property of the appellant was acquired by the NHAI and a compensation of Rs.73,58,113/- was paid by NHAI on which TDS of Rs.7,35,811/-was deducted @ 10% u/s 194LA. In the ROI filed for the A.Y. 2017-18 on 07.11.2017, this income was included as part of the total income disclosed in it of Rs.87,94,860/-. 5.2.1 The appellant's states that it was a mistake on its part of having declared this compensation as income, since he was not aware that as per section 96 of RFCTLARR Act, 2013 and Circular no. 36/2016 dated 25.10.2016 of CBDT, the compensation so received was exempt from tax, when the land was compulsorily acquired. According to the appellant the income that was otherwise exempt was offered to tax due to lack of knowledge and improper guidance, inadvertently. 5.2.2. In order to gain relief, the appellant had filed an appeal a rectification petition on 04.09.2023, enclosing a revised computation of income, according to which, the appellant was entitled for a refund of Rs.17,07,340/-. In the revise computation, the gross total income was reduced to Rs.36,41,079/- and through the rectification petition u/s 154, the appellant sought relief, quoting section 96 of RFCTLARR Act, 2013 and Circular no. 36/2016 dated 25.10.2016 of CBDT. 5.2.3 However, in the order dated 24.01.2024, the ITO W- 4(1), Raipur had rejected the claim of relief sought, for the reason that the provision u/s 154, is not the right procedure, since the allowability of the relief is dependent on a long drawn process of reasoning as to whether the transaction squarely falls under section 96 of RFCTLARR Act,2013 or u/s 105(1) of the same Act. Moreover, since there can be conceivably two opinions and the claim can be established only on thorough investigation, it is not an issue that can be deliberated through a rectification petition u/s 154. 5.2.4 Further, the AO has relied on the O.M. dated 06.06.2019 in F.No.225/72/2019-ITA-11 which has stated that land acquired under various Central Act in Fourth Schedule RFCTLARR Act, 2013, no other provision of the said Act would be applicable except for determining the quantum of compensation. Therefore, the issue does not constitute a mistake apparent from the record, both on procedure and merits as well and therefore, the application of the appellant was disposed of without granting the relief sought in it. 5.2.5 Aggrieved by the said order, the appellant preferred an appeal and furnish the Form No. 35 along with SoG and GoA which were carefully considered. 5.3.1 As stated by the AO, whether the transaction falls under section 96 of RFCTLARR Act, 2013 or otherwise is not a case, which can be decided, at a glance and needs a detailed verification. Moreover, when the appellant has stated that the compulsory acquisition falls under section 96 of RFCTLARR Act, 2013, no evidence has been brought to such effect, even at the time of appellate proceedings. The Chhattisgarh Sub-divisional Officer who released the compensation has not certified it to be so. 5.3.2 Therefore, the rectification petition is procedurally infirm, since the same is against the rationale expressed by the Hon'ble Supreme Court in the case of T.S. Balaram, ITO Vs Volkart Bros (1971) 82 ITR 40(SC), relied by the AO and thus, the action to reject the rectification petition based on its procedural incapacity is upheld. 5.4.1 Coming to the merits of the claim, as stated earlier, the appellant has not established with supporting documentation in the form of a certificate from the NHAI or SDO that the payment on which TDS u/s 194LA was deducted is governed by section 96 of RFCTLARR Act, 2013. In the absence of such clarification, it requires to be presumed that the acquisition was made under the NHAI Act. 5.4.2 In this regard, the Hon'ble Jurisdictional ITAT at Raipur in the case of Heritage Buildcon (P) Ltd. v. CIT, 2023 SCC OnLine ITAT 1285. has taken a clear view, holding that Section 105(1) makes all provisions of the Act inapplicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act. While Section 105(3) only makes the First Schedule, Second Schedule and Third Schedule applicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act. 5.4.3 By virtue of the said section, the provisions of Section 96 are not made applicable to land acquisitions made under the enactments specified in the Fourth Schedule to the Act. For this, the ITAT, Raipur has relied on Office Memorandum dated 6-6-2019 issued by the CBDT, which is relied by the AO. Thus, it was held that exemption under Section 96 of the RFCTLARR Act is not applicable to land acquisitions under the NHAI Act, which is an enactment specified under Fourth Schedule of the RFCTLARR Act. 5.4.5 The fact situation in the case under consideration is exactly identical to that of Heritage Buildcon (supra) and therefore, when the Jurisdictional ITAT had held in favour of the Revenue, the lower appellate authority has to mandatorily follow the dictum of a higher appellate authority, more particularly when it is a Jurisdictional ITAT and hence the position taken by the A.O in the order of rectification u/s. 154 dated 24.01.2024 is upheld on a second count on the merits of the claim as well.

6. As a result, all the GoA of the appellant are dismissed.”

6. The Ld. Sr. DR relying on the order of the Ld. CIT(Appeals)/NFAC submitted that the Ld. CIT(Appeals)/NFAC while upholding the order of the A.O has rightly relied on the order of the ITAT, Raipur in the case of Heritage Buildcon (P) Ltd. Vs. CIT, 2023 SCC Online ITAT, 1258. It was also submitted by the Ld. Sr.DR that the order of the Ld. CIT(Appeals)/NFAC is well-reasoned and the same does not call for any interference.