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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI LALIT KUMAR
O R D E R Per Bench: All these three appeals are filed by the same assessee and out of these, one appeal is for Assessment Year 2009-10 in quantum proceedings. The second appeal is for Assessment Year 2010-11 in quantum proceedings and the third appeal is for the same year i.e. Assessment Year 2010-11 in penalty proceedings u/s. 271 (1)(c) of the IT Act. All these three appeals are directed against three separate orders of ld. CIT(A) -1, Bangalore all dated 31.01.2017. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
First we take up the quantum appeal for Assessment Year 2009-10 in ITA No. 756/Bang/2017. The grounds raised
by the assessee are as under. “1. The impugned order dated 31.01.2017 passed by the Commissioner of Income Tax (Appeals)-1, Bengaluru in Proceedings in Appeal / CIT (A)-1 / BR / 15-16 thereby rejecting the appeal petition filed by the appellant challenging the Order dated 20.12.2011 passed by the Income Tax Officer, Ward – 8 (4), to 758/Bang/2017 Page 2 of 9 Bengaluru under section 143 (3) of the Income Tax Act declining to condone the delay in filing appeal petition is highly illegal, improper, unjust and also violative of the principles of natural justice.
2. The lower Appellate Authority seriously erred in not considering and appreciating the principles of law laid down by the Hon'ble Supreme Court of India in the case of Land Acquisition Officer – Vs - Katiji, reported in AIR 1987 SC 1353 for condoning the delay in presentation of the appeal petition despite the same was cited before him.
3. In the instant case the appellant is a grand old senior citizen suffering from serious ailment of cancer and normally residing outside the country on account of her children settled in the United States of America and a valid reason of not presenting the appeal petition within the time and condonation of such an unintentional delay would have had the advancement of cause of justice against a helpless widowed woman. By not condoning the delay by applying the principles of law laid down by the Hon'ble Supreme Court of India, the lower Appellate Authority has seriously erred in failing to uphold the principles of justice expected of him as an Appellate Authority.
The appellant had urged substantial grounds on merits in challenging the very legality of the orders passed by the Income Tax Officer, Ward-8 (4), Bengaluru under section143 (3) of the Income Tax Act on the face of the records and despite knowing the same, the learned First Appellate Authority has preferred to render injustice to the appellant on technical grounds and thereby uphold the illegal order framed by the lower authorities.
5. The learned First Appellate Authority seriously erred in not appreciating the valid reasons supported by the documentary evidences for the unintentional delay in presenting the appeal petition and therefore the appellant most humbly prays to reconsider the same as part and parcel of this grounds of appeal.
6. The First appellate Authority has failed to consider the provisions of section 10(37) of the Income Tax Act, 1961 as it stood then read with section 2(14)(iii) , that the Appellant is legally entitled and claimed the exemption, the compensation received on compulsory acquisition of agricultural land by National Highway Authority.
7. The Article 265 of the constitution of India lays down that no tax shall be levied except by the authority of law. Hence only legitimate tax can be recovered and even a concession by a tax- payer does not give authority to the tax collector to recover more than what is due from him under the law.
8. The Respondent has completely failed to appreciate the true spirit with which the Circularissued by the Central Board of Direct to 758/Bang/2017 Page 3 of 9 Taxes, bearing Circular No.14 (XL-35) dated April 11, 1955 directing that " Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist the tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding the taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would in the long run, benefit the Department, it would inspire confidence in assessee that he may be sure of getting square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should " (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they omitted to claim for some reason or other. (b) Freely advise them when approached by them as to their rights and liabilities as to the procedure to be adopted for claiming refunds and reliefs.”
3. Regarding ground no. 1, in respect of non-condonation of delay in filing appeal before the CIT(A), it was submitted by ld. AR of assessee that as per the copy of Form of Form No. 35 filed before the ld. CIT(A) available on record, it can be seen that the order of AO was passed on 20.12.2011 and the same was served on the assessee on 02.01.2012 and the appeal was filed before the CIT(A) on 13.01.2012 and therefore, under these facts, it can be seen that there is no delay in filing the appeal before the CIT(A) but as per the order of CIT(A), he has noted on page no. 1 of his order that the appeal was filed before him on 29.07.2013 which is incorrect. Thereafter, she pointed out that in para no. 4.1 of his order, the CIT (A) has held that delay in filing of appeal is not condoned and on this basis, he dismissed the appeal of the assessee. In reply it was submitted by ld. DR of revenue that the date of filing of appeal is 29.07.2013 as noted by CIT(A) on page no. 1 of his order and therefore, there is delay in filing of appeal but he could not point out any defect in Form No. 35 filed by the assessee along with the appeal memo as per which the appeal was filed before CIT(A) on 13.01.2012. to 758/Bang/2017 Page 4 of 9 4. We have considered the rival submissions. We find that the CIT(A) has reproduced the statement of facts on page no. 2 of his order and as per that, the assessment order was passed on 20.12.2011. As per the copy of Form No. 35 also, the assessment order is dated 20.12.2011 as per Form No. 35 available on record being filed by the assessee along with the appeal memo. It is seen that the appeal was filed before CIT(A) on 13.01.2012 and therefore, there is no delay in filing the appeal before the CIT(A). The date of filing of appeal noted by CIT(A) on page no. 1 of his order as 29.07.2013 appears to be incorrect. Even if the assessment order was served on the assessee on the date of passing i.e. 20.12.2011 then also, filing of appeal before CIT(A) on 13.01.2012 is not time barred. Hence, we restore the entire matter back to the file of CIT(A) for decision on merit because we find that the appeal filed by the assessee before the CIT(A) is in time and there is no delay in filing the appeal before the CIT(A). In view of the above decision, no adjudication is called for on merit as per various other grounds raised by the assessee.
In the result, the appeal of the assessee for Assessment Year 2009-10 is allowed for statistical purposes.
Now we take up the assessee’s appeal for Assessment Year 2010-11 in quantum proceedings in ITA No. 757/Bang/2017. The grounds raised
by the assessee are as under. “1. The impugned order dated 31.01.2017 passed by the Commissioner of Income Tax (Appeals)-1, Bengaluru in Proceedings in Appeal / CIT (A)-1 / BR / 16-17 thereby partly dismissing the appeal petition filed by the appellant against the Order dated 03.12.2012 passed by the Income Tax Officer, Ward – 8 (4), Bengaluru under section 143 (3) read with section 147 of the Income Tax Act for the assessment year 2010- 11 is highly illegal, improper, unjust and also violative of the principles of natural justice.
2. Both the lower authorities have seriously erred in not recording their findings on the specific grounds urged by the appellant that the agricultural property situated within eight kilometers from the notified municipalities and cantonment boards for the purpose of section 2 (14) (iii) (b) of the Income Tax alone is liable for capital gain tax and the agricultural property of the appellant not having situated within eight K.M to 758/Bang/2017 Page 5 of 9 from any of the notified municipal or cantonment areas. The very levy of capital gain tax either at the instance of the innocent and ignorant admission of the appellant or under the provision of law is illegal and unenforceable.
Both the lower authorities have erred in not recognizing the fact that the income earned on the compulsory acquisition of agricultural property for the purpose of road widening acquired by the Central Government of India is entitled for exemption from capital gain under the provisions of section 10 (37) of the Income Tax Act 1961 and by passing the impugned orders, the officer has levied illegal tax and the First Appellate Authority has illegally ratified the same and therefore the orders of both the lower authorities requires to be quashed as illegal in so for as levy of capital gain tax on the income received from the compulsory acquisition of agricultural land by the Government of India.
4. The learned First Appellate Authority despite recording the grounds of appeal as well as written arguments have miserably failed to record the findings even while illegally dismissing the appeal petition.
5. The appellant had urged substantial grounds on merits in challenging the very legality of the orders passed by the Income Tax Officer, Ward – 8 (4), Bengaluru under section143 (3) r.w.s 147 of the Income Tax Act on the face of the records and despite knowing the same, the learned First Appellate Authority has preferred to render injustice to the appellant by uphold the illegal order framed by the lower authorities.
6. The First appellate Authority has failed to consider the provisions of section 10(37) of the Income Tax Act, 1961 as it stood then read with section 2(14)(iii) , that the Appellant is legally entitled and claimed the exemption, the compensation received on compulsory acquisition of agricultural land by National Highway Authority.
The Article 265 of the constitution of India lays down that no tax shall be levied except by the authority of law. Hence only legitimate tax can be recovered and even a concession by a tax- payer does not give authority to the tax collector to recover more than what is due from him under the law.
8. The Respondent has completely failed to appreciate the true spirit with which theCircular issued by the Central Board of Direct Taxes, bearing Circular No.14 (XL-35) dated April 11, 1955 directing that "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist the tax payer in every reasonable way, to 758/Bang/2017 Page 6 of 9 particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding the taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would in the long run, benefit the Department, it would inspire confidence in assessee that he may be sure of getting square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should” a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they omitted to claim for some reason or other. b) Freely advise them when approached by them as to their rights and liabilities as to the procedure to be adopted for claiming refunds and reliefs.” 7. At the outset, it was submitted by ld. AR of assessee that the written submissions made by the assessee before the CIT(A) are reproduced by CIT(A) on pages 10 to 12 of his order and as per para no. 8 of the written submissions, it was the claim of the assessee that the assessee’s income is exempt u/s. 10(37) of the IT Act r.w.s. 2(14)(iii) and this issue has been raised before CIT (A) in the additional grounds filed before the CIT(A) in the appellate proceedings. She also submitted that copy of additional grounds filed before CIT(A) is also enclosed in the appeal memo and the same were filed before CIT(A) on 18.05.2016 but this aspect of the matter has not been decided by ld. CIT(A) and therefore, the same should be decided at the Tribunal level or it may be restored back to the file of CIT(A) for deciding this aspect of the matter. The ld. DR of revenue supported the order of CIT(A).
We have considered the rival submissions. First we reproduce the provisions of section 10(37) of the IT Act which are as under:- “10. (37) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head "Capital gains" arising from the transfer of agricultural land, where— (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; to 758/Bang/2017 Page 7 of 9 (iii) 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; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation.—For the purposes of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority;”
We also find that as per para no. 3 of statement of facts reproduced by CIT(A) on page no. 2 of his order, the land in question belonging to the assessee was acquired by the National Highways Authority of India (NHAI) in lieu of which the assessee was paid compensation of Rs. 39,84,300/-. As per clause (iii) of sub section 37 of section 10 as reproduced above, if the transfer of capital asset 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 then there may be the case of exemption under this sub section 37 of section 10 if other conditions are satisfied such as that the land was used for agricultural purposes during the period of two years immediately preceding the date of transfer and the requirements of item (a) and item (b) of sub-clause (iii) of clause (14) of section 2 are being complied with. On this aspect, the matter is not decided by CIT(A) and before us also, the complete relevant facts for deciding this aspect are not available and therefore, we deem it fit and proper to restore this matter back to the file of CIT(A) for deciding this additional ground raised before him by assessee after providing adequate opportunity of being heard to both sides. Since this issue goes to the root of the matter, on other aspects of this matter also, we feel that the same should be decided by CIT(A) afresh if the assessee does not succeed on this aspect. We order accordingly.
In the result, the appeal of the assessee for Assessment Year 2010-11 in quantum proceedings is also allowed for statistical purposes.
ITA Nos.756 to 758/Bang/2017 Page 8 of 9 11. Now we take up the third appeal of the assessee for Assessment Year 2010-11 in respect of penalty proceedings u/s. 271(1)(c) in .The grounds raised by the assessee are as under. “1. The impugned order dated 31.01.2017 passed by the Commissioner of Income Tax(Appeals)-1, Bengaluru in Proceedings in Appeal / CIT (A)-1 / BR / 16-17 against the appeal petition filed by the appellant on the Order dated 26.06.2013 passed by the Income Tax Officer, Ward – 8 (4), Bengaluru under section 271 (1) (c) of the Income Tax Act for the assessment year 2010-11 is highly illegal, improper, unjust and also violative of the principles of natural justice.
2. The said order have been challenged by the appellant on substantial grounds as the appellant had surrendered the property to the National Highway Authority of India in the course of their compulsory acquisition which were falling outside the notified area as notified by the Central government not requiring to levy any capital gains Tax for such mandatory acquisition by a statutory authority for a public purpose. Since the very levy of income tax has been challenged, the penalty levied under the provisions of section 271(1) (C) also requires to be quashed for the same reasons as the appellant had not concealed any income and on the contrary received the compensation for the compulsory acquisition of agricultural property in a statutory proceedings not involving any suppression much less concealment of income. The appellant had also made separate prayers to club both the appeals together as the question of law as well as the facts is common to the issues involved in both the cases.
3. That the learned Respondent has erred both in facts and circumstances of the case in upholding and ratifying the order passed by the Assessing Officer u/s 271(1)( c) of Income Tax Act.”
In view of this fact that in quantum proceedings for the same year, we have restored back this matter to the file of CIT(A) for fresh decision, penalty issue is also required to be restored back to the file of CIT(A) for fresh decision simultaneously with the fresh decision in quantum proceedings and therefore, no adjudication is called for at the present stage. We restore back this matter to the file of CIT(A) for fresh decision simultaneously with the decision in quantum proceedings after providing adequate opportunity of being heard to both sides. to 758/Bang/2017 Page 9 of 9 13. The appeal of the assessee for penalty proceedings is also allowed for statistical purposes.
In the combined result, all the three appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.