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Facts
The assessee's case was reopened based on information that the assessee received interest on enhanced compensation. The Assessing Officer viewed this interest as taxable under Section 56(2)(viii) and Section 145B. The CIT(A) sustained the addition, relying on a Punjab & Haryana High Court decision.
Held
The Tribunal noted that the jurisdictional High Court was Allahabad, not Punjab & Haryana. It held that relying on a non-jurisdictional High Court decision without providing the assessee an opportunity to be heard was improper. Further, two other grounds of appeal were not dealt with by the CIT(A).
Key Issues
Whether reliance on a non-jurisdictional High Court decision by tax authorities without granting the assessee a hearing is valid. Whether the CIT(A) adequately addressed all grounds of appeal, particularly regarding additional grounds not previously dealt with.
Sections Cited
250, 144, 147, 148, 56(2)(viii), 145B, 10(37), 28
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Income Tax Appellate Tribunal, DELHI BENCH‘E’: NEW DELHI
ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 25.12.2023 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of order dated 09.12.2019 made by Assessing Officer(hereinafter referred as ‘the AO’) u/s 144 r.w.s 147of the Act for Assessment Year 2016-17.
The brief facts of the case are that assessee filed his return of income of Rs.2,35,000/- and had also claimed credit for TDS of Rs.9,13,823/- The case of the assessee was reopened by issuing of notice 148 of the Act on the basis of information in possession of the Department that the assessee had received interest on enhanced compensation of Rs.8,84,023/- from New Okhla Industrial Development Authority (NOIDA) during the financial year 2015-16, relevant to Assessment Year 2016-17 on which TDS of Rs.8,84,023/- was deducted by the authority. The assessee had filed return but Assessing Officer was of the view that the amount of Rs.88,40,230/- was in the nature of interest Naseem Ahmed vs. ITO on compensation/enhanced of compensation land, which was liable to be taxed under the provisions of Section 56(2)(viii) read with section 145B of the Act. Thus, the addition has been sustained by Ld. CIT(A) relying on the decision of Hon’ble Punjab and Haryana High Court in the case of Mahender Pal Narang [2020] 120 taxman.com 400 (P&H). The AR has relied on the decision of ITAT, Delhi Bench in Raj Kumar vs. ITO Appeal No.1677/Del/2024 dated 07.01.2025 to submit that enhanced compensation is treated as compensation u/s 28 of the Land Acquisition Act, 1994. The Ld. AR also relied on the decision of Co- ordinate Bench in the case of Chatar Singh in for Assessment Year 2015-16.
2.1 It is countered by the Ld. DR by relying another decision of Co-ordinate Bench in Om Prakash vs. PCIT [2025] 173 taxmann.com 625 (Delhi-Trib.) wherein it was held that the provisions of section 10(37) of the Act deals with ‘compensation’ only and not ‘interest on compensation or enhanced compensation’.
Now what is relevant is that the assessee is Resident of Vill- Haldoni, Greator Noida, Tehsil Dadri, Dist-GautamBuddh Nagar (U.P.) and compensation amount was also with regard to land situated in Noida, U.P. from Noida Authority as the land was acquired for Yamuna Expressway, Noida/Yamuna Express Authority.
Now as matter of fact, the jurisdictional High Court happens to be Hon’ble Allahabad High however, we find that Ld. Tax Authorities relied on decision of Hon’ble Punjab & Haryana High Court which does not happen to be jurisdictional High Court. The settled the proposition of law is that in case of assessments under the Act, residence of assessee is important and, accordingly, if the ld. Tax authorities were relying a decision of Non- Jurisdictional High Court, assessee should have been given an opportunity of hearing as there are decision of other non-jurisdictional Hon’ble High courts in Naseem Ahmed vs. ITO favour of assessee too for which he has right to claim benefit of Hon’ble Supreme Court decision in CIT versus Vegetable Products Ltd. (1973)88 ITR 192 (SC). Accordingly, we restore this issue to the file of Ld. CIT(A) who shall after giving opportunity of being heard to the assessee decide the issue afresh in the light of the aforesaid observations.
Further, we find that assessee had deposited Rs.28,51,000/- in joint account with Smt. Miskeena, wife of assessee and claimed at deposit were out of the cash withdrawal. The assessee has withdrawn Rs.25,00,000/- and deposited Rs.28,50,000/-. The assessee has received 25 lacs against sold property on 19.07.2016. In this context, we find that the notices were issued u/s 250 of the Act by the Ld. CIT(A). The assessee had filed submission and which land were made basis for deciding the grounds raised.
Third addition is alleged of Rs.4,98,000/- as income from other sources. The assessee has shown an interest of Rs.88,000/- and rent income of Rs.1,47,000/- and the assessee relies Form 26AS, copy to justify the same.
We find that Ld. CIT(A) has not dealt with these two ground at all. Although, had taken cognizance of same in para 4.2. Thus, we are of the considered view that these two ground also deserves to be restored to Ld. CIT(A) for afresh adjudication.
In the light of the aforesaid direction, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 15.07.2025.