SH. GEETA RAM,PANCHKULA vs. DCIT/ITO, WARD-1, PANCHKULA

This is an appeal filed by the assessee against the order of Ld. CIT(A), NFAC, Delhi passed under section 250 of the Act dt. 02/11/2021 for A.Y. 2017-18.

Briefly the facts of the case are that the assessee filed his return of income on 30/03/2018 declaring total income of Rs. 2,01,360/- which was processed under section 143(1) of the Act and in terms of intimation issued under section 143(1) dt. 25/03/2019, the CPC had made an addition of Rs. 97,78,250/-. Being aggrieved the assessee moved in appeal before the Ld. CIT(A), NFAC, Delhi who has confirmed the said addition and against the said order, the assessee has now came in appeal before us.

During the course of hearing, the Ld. AR submitted that the assessee has received a sum of Rs. 97,78,250/- as enhanced compensation alongwith interest under section 28 of the Land Acquisition Act towards compulsory acquisition of agriculture land. It was submitted that the said amount was exempt under section 10(37) of the Act and in support reliance was placed on the Hon’ble Supreme Court decisions in case of CIT Vs Ghanshyam (HUF) (2009) 315 ITR 1(SC), CIT Vs. Govind Bhai Mamaiya, [2014] 52 taxmann.com 270, CIT vs. Chet Ram(HUF), [2017] 86 taxmann.com 103, UOI Vs. Hari Singh, [2018] 91 taxmann.com 20. It was submitted that these decisions were brought to the notice of the Ld. CIT(A), however, he has failed to consider the legal proposition so laid down by the Hon’ble Supreme Court and has confirmed the addition so made by CPC while processing the return of income under section 143(1) of the Act.

Per Contra the Ld. Sr. DR submitted that the enhanced compensation has been taxed as per the provisions of Section 56(2) and tax liability has been created as per the provisions of Section 57(iv) of the Act and since all this information were part of the return and Form 26AS, the CPC was justified in making the adjustment while processing the return of income under section 143(1) of the Act and which has rightly been confirmed by the Ld. CIT(A), NFAC, Delhi. At the same time, the Ld. Sr DR fairly admitted that the legal proposition so laid down by the Hon’ble Supreme Court in the various decisions so referred by the Ld. AR have not been considered by the Ld. CIT(A), NFAC, Delhi.

We have heard the rival contentions and purused the material available on record. The ld CIT(A) has affirmed the action of CPC in making an adjustment of Rs 97,78,250/- while processing the return of income u/s 143(1) by stating that the same is based on information available in the return of income and the details submitted before him for claiming exemption u/s 10(37) were not part of return of income and these were submitted by the assessee at the appellate stage which requires examination. The assessee has apparently claimed exemption u/s 10(37) towards enhanced compensation along with interest u/s 28 of the land acquisition Act. However, what information was stated in the return of income and what additional information has been furnished by the assessee before the ld CIT(A) has not been spelt out. As we understand while filing the return of income, the assessee has to make suitable disclosure regarding the nature and quantum of exemption so claimed while filing the return of income. The documentation if any supporting such claim is apparently not required to be annexed with the return of income and it is only when the matter is selected for scrutiny, the assessee is required to submit the requisite information/documentation as so called for by the Assessing officer. Therefore, where the ld CIT(A) is adjudicating a matter in an appeal filed against the intimation u/s 143(1) of the Act, being a quasi-judicial authority, it is incumbent on his part to call for and examine the requisite documentation in support of assessee’s claim of exemption and where the assessee submit the requisite documentation, the ld CIT(A) is required to consider the same as per law and cannot merely discard such documentation stating that the same were not part of the return of income. Further, the ld Sr DR has stated that the enhanced compensation has been taxed as per the provisions of Section 56(2) and tax liability has been created as per the provisions of Section 57(iv) of the Act. The question is firstly the requisite facts have to be brought on record in terms of nature of the land being acquired by the government and the quantum of compensation, enhanced compensation and interest and the relevant provisions of land acquisition Act under which such compensation and interest has been granted and thereafter, the relevant provisions as applicable needs to be applied. Further, where there are decisions rendered by the Highest Court of the land and which are duly brought to the notice of the ld CIT(A), the latter cannot merely rely on the relevant provisions of the Act without taking into consideration the legal proposition so laid down in the said decisions regarding the exact nature of compensation and how the same needs to be construed under the relevant statute and the tax statue. The judicial discipline requires that the law laid down by the Highest Court of the land need to be followed irrespective of individual opinion or view point which the ld CIT(A) may have in a particular matter. At the same time, where there is change in law or any subsequent jurisdictional High Court decision(s) where such decisions rendered by the Hon’ble Supreme Court have been considered and which the ld CIT(A) ought to rely upon, the ld CIT(A) has to say so by way of a speaking order rather than maintaining silence on the applicability of the said decisions. Therefore, in light of the aforesaid discussion and in the entirety of facts and circumstances of the case, we deem it appropriate to remand the matter to the file of the ld CIT(A) to decide the same afresh after bring on record the relevant facts and the decide the same as per law after providing reasonable opportunity to the assessee.