TMI Blog2008 (8) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in upholding the validity of notice under s. 148 dt. 22nd March, 2002 on which the assessment order is based. 3. That on the facts and in circumstances of the case CIT(A), Panchkula, was not justified in confirming the levy of capital gains in compulsory acquisition of agricultural lands by ignoring the provisions of s. 2(14)(iii) of the IT Act, 1961. 4. That on the facts and in circumstances of the case CIT(A), Panchkula, was not justified in assessing the interest as compensation amounting to Rs. 24,93,763 on receipt basis." 3. The grounds of appeal in asst. yr. 1999-2000 are as under: "1. That on the facts and in the circumstances of the case CIT(A), Panchkula, was not justified in upholding the order of ITO, Ward-4, Gurgaon who completed the assessment in the status of individual instead of HUF. 2. That on the facts and in circumstances of the case CIT(A), Panchkula, was not justified in upholding the validity of notice under s. 148 dt. 22nd March, 2002 on which the assessment order is based. 3. That on the facts and in circumstances of the case CIT(A), Panchkula, was not justified in assessing the interest as compensation amounting to Rs. 6,27,622 on receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elonged to the HUF, the AO in his remand report pointed out that land was inherited by assessee from his father, Shri Siri Chand under the Hindu Succession Act. In the land record, i.e., in the Jamabandi, Shri Om Prakash is shown to be the owner in his individual capacity and not Om Prakash, HUF. Further, enhanced compensation of acquired land along with interest were deposited by the assessee in his individual capacity and not in any account of Om Prakash, HUF through its Karta. In his comments on the report of the AO, the assessee again claimed that land belonged to joint Hindu family. Learned CIT(A) rejected the claim of the assessee by agreeing with the report of the AO. It was treated as individual property of the assessee. 9. In respect of the claim that notice under s. 148 was not served on the assessee, learned CIT(A) again called for report from the AO and himself perused the record of assessment. He found that original notice under s. 148 is dt. 2nd May, 2000 and was issued by letter No. 805. Subsequent notices under s. 142(1) vide letter No. 1808, dt. 23rd June, 2000 were sent by post. Another notice dt. 24th Feb., 2001 under s. 142(1) was served on a family member of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res (1-1/3 km.) from the Old Delhi-Gurgaon Road near Payal Cinema." 13. The AO in his report submitted that as per the report of Tehsildar, the land of the assessee in Village Sukhrali was situated approx. 16 acres (1 km.) from the municipal limit and approx. 26 acres (1-1/3 km.) from the Old Delhi-Gurgaon Road near Payal Cinema. It was covered by Notification No. SO 77(E), dt. 6th Dec., 1973 issued by the Government of India wherein the area falling within 6 kms. from the Delhi Municipal Corporation limits along the Delhi-Gurgaon Road upto a distance of 2 kms. on either side of that road was notified as a capital asset within the meaning of s. 2(14) of the IT Act, 1961. Since the land belonging to the assessee fell within the specified area of 2 kms., the total consideration of Rs. 25,69,328 received from HUDA consequent to acquisition of land was rightly charged to capital gains tax in asst. yr. 1997-98, the AO stated in the remand report. 14. The assessee, in his rejoinder to AO's report again claimed that assessee's land was 2,500 kms. from Gurgaon Municipality. He further raised an objection to the correctness of certificate dt. 2nd Sept., 2003 as earlier Tehsildar had use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re further discussed in para IV p. 15 of the impugned order and rejected. 17. Learned CIT(A) also observed that certificate dt. 8th Dec., 2003 filed by the assessee from Revenue authorities was additional evidence attracting application of r. 46A of IT Rules. It was not admissible in the light of non-co-operative attitude adopted by the assessee. Learned CIT(A) went on to observe that assessee had deliberately chosen not to produce any evidence before the AO. He further observed that none of the clauses of r. 46A(1) was helpful to the assessee in view of his attitude and deliberate attempt to keep away from the assessment proceedings. Above certificate was not admitted in evidence. 18. Learned CIT(A), thereafter, proceeded to consider the question that compensation received by the assessee was subject-matter of dispute and was not assessable until the dispute was ultimately settled. The enhanced compensation cannot be subjected to tax. The assessee relied upon the decision of the Supreme Court in the case of CIT vs. Hindustan Housing Land Development Trust Ltd. (1986) 58 CTR (SC) 179 : (1986) 161 ITR 524 (SC). The assessee pleaded before the learned CIT(A) that dispute relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed interest earned by assessee on compensation. Learned CIT(A) found merit in the contention of the assessee and held that the addition was not sustainable. The AO was, however, entitled to verify if any amount of interest was actually earned by assessee and the same can be brought to tax. This ground was accordingly disposed of. 24. The assessee is aggrieved and has brought the issue in appeal. We have heard both the parties. The first ground of appeal relating to the status raised in asst. yr. 1997-98 was not pressed by learned counsel for the assessee. The ground is not in fact raised in appeal for asst. yr. 1999-2000. The said ground is accordingly rejected. 25. That in the next ground of appeal assessee has challenged the validity of notice issued under s. 148 of the IT Act. The learned counsel for the assessee has drawn our attention to the relevant observation of the AO where he has accepted the affidavit of the assessee dt. 19th March, 2002 relating to non-service of notice and fresh notice under s. 148 was issued on 22nd March, 2002. 26. Copies of notices issued for the two years under consideration have been placed on record. It was contended by the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot be accepted. We are of the view that notices under s. 148 were legally issued and were served on the assessee in accordance with law. The assessee, without dispute, participated in the proceedings before the AO. In these circumstances, we do not find any substance in the submissions of the assessee that notices issued in two years were not legal. We confirm action of the Revenue authorities. 28. In the next ground, the assessee has challenged levy of capital gain by contending that the property acquired was not a capital asset in terms of s. 2(14)(iii) of the IT Act. It is claimed that agricultural land of assessee which was acquired and for which compensation was paid was situated beyond 2 kms. from Gurgaon. It is submitted that the land was not falling within the area covered by Notification SO 77(E), dt. 6th Feb., 1973. It was not covered by entry No. 25 of the said notification. Under the above entry, area falling within 6 kms. of Delhi Municipal Corporation along Delhi-Gurgaon Road "upto Gurgaon" upto a distance of 2 kms. on either side of that road is covered under the notification for purposes of s. 2(14) of the IT Act. The said notification is not applicable to l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. All the lands situated within the municipal committee, municipal corporation etc. are capital assets within the meaning of s. 2(14) of the IT Act. But. as municipality, municipal corporation, notified committees are extending their areas on account of growth in population, certain areas outside the municipality, municipal corporation, etc. were also included in the term 'capital asset' as per Notification No. SO 77(E), dt. 6th Feb., 1973. Item No. 25(1) relating to Delhi Municipal Corporation extended the limit toward Gurgaon as under: "Delhi Municipal Corporation Area falling within (i) 6 kms. from corporation limits along the Delhi-Gurgaon Road (upto Gurgaon) upto a distance of 2 kms. on either side of the road." 32. There is no dispute that land of the assessee is situated within 6 kms. from the corporation limits of Delhi Municipal Corporation toward Gurgaon side. It falls in District Gurgaon. We, therefore, do not see any force in the objection of the assessee that limit from Delhi Municipal Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. from Delhi-Gurgaon Road. Revenue authorities had brought cogent evidence to show that it was at a distance of 1-1/3 km. from Delhi-Gurgaon Road near Payal Cinema. It has rightly been held that land acquired was a "capital asset" within the meaning of s. 2(14) of the IT Act and compensation received on such acquisition was exigible to capital gains tax. We do not find any force in the submission of the assessee that land in question was not a capital asset. 34. We may now proceed to consider the alternative submission of the assessee raised in written submissions that enhanced compensation cannot be brought to tax unless the dispute relating to compensation is finally settled. In the case of Dy. CIT vs. Padam Prakash (HUF) (2006) 104 TTJ (Del)(SB) 989 : (2006) 288 ITR 1 (Del)(SB)(AT), Special Bench of the Tribunal, after taking note of provision of s. 45(5) had held that enhanced compensation paid to the assessee under the Acquisition Act was liable to be taxed on receipt basis and in the year in which it is received, notwithstanding that matter is not finally decided. On further appeal, the aforesaid decision has been modified by their Lordships of Punjab Haryana High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired by HUDA on 20th March, 1989 and total amount of Rs. 50,63,091 including interest of Rs. 18,66,141 was paid to the assessee on 14th Oct., 1996 and 26th Oct., 1996 relevant to asst. yr. 1997-98. Likewise, interest of Rs. 62,76,022 was paid on 3rd May, 1998 relevant to asst. yr. 1999-2000. The assessee did not submit any return voluntarily for the above two assessment years. Even in response to notices under s. 148, no return was filed and accordingly, ex parte assessments under s. 144 were made vide assessment orders dt. 11th Dec., 2002 in both the years. The appeal of the assessee was dismissed by the CIT(A). In reply to the show-cause notice why penalty should not be imposed, assessee vide letter dt. 25th Feb., 2005 gave reasons and requested that penalty be not levied. This reply has been found to be not "convincing". For failure to submit the return and in the light of assessments made under s. 144, the assessee was held to be a defaulter in terms of s. 271(1)(c) in the two years. Accordingly, penalties of Rs. 13,17,722 and Rs. 1,73,286 respectively for asst. yrs. 1997-98 and 1999-2000 were imposed. The penalty impugned represented 100 per cent of tax sought to be evaded. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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