TMI Blog2013 (12) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... onal High Court , then there was no jurisdiction to revise such assessment order. The power of the Commissioner under section 263 had to be exercised on the basis of the material that was available to him when he exercised the power - The satisfaction of the Commissioner was, therefore, not based on material either legal or factual, which alone would give him the jurisdiction to take action under section 263 – Decided in favour of assessee. - ITA No. 993/CHD/2013 - - - Dated:- 28-11-2013 - Shri T. R. Sood And Ms. Sushma Chowla,JJ. For the Appellant : Shri Manjit Singh For the Respondent : Shri Neeraj Jain ORDER Per T. R. Sood, A.M. The appeal filed by the assessee is directed against the order dated 28.3.2013 of Ld. C IT(A), Panchkula. 2. In this appeal the assessee has raised the following grounds:- 1. That the Ld. CIT is not justified in initiating and passing the order u/s 263 of the I.T. Act. 2. That the Ld. CIT is not justified in holding that the order passed by the Ld. AO is erroneous and prejudicial to the interest of the revenue. 3. That the Ld. CIT is not justified in cancelling the assessment framed by the Ld. AO vide order dated 07.10.2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till decided by the judicial court, therefore following the order of the Hon'ble Punjab and Haryana High Court, in the above mentioned cases, (Chandi Ram Ors Vs. CIT (2008), 4 DTR 25) the income of the assessee will only be taxable when the dispute regarding the quantum of enhanced compensation is settled." After the above observation, return of income of the assessee at Rs. 1,89,477/- was accepted with following remarks " in the light of the facts and unambiguous position of law in this regard, the return filed by the assessee, in response to notice u/s 148 of the Act is accepted for the time being. The assessee is directed to inform the A.O. as and when the dispute regarding the quantum of enhanced compensation is decided by the Addition Session Judge, Panchkula." "Income as per appeal effect order dated 22.12.2006 is Assessed as Rs. 1,89,477/- assessed u/s 143(3) read section 147 of the Act." 7. On the above facts, the order passed u/s 143(3) read with section 147 was found to be erroneous and prejudicial to the interest of Revenue because no proceedings were pending before the Assessing Officer and Department had already filed an appeal before the High Court against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compulsory acquisition of the assessee lands in question, the lands acquired were not situated within the areas mentioned in section 2(14)(iii), is correct. The assessee has also furnished evidence in the shape of revenue records that the lands in question was agricultural lands at the time relevant Notification and at the time of acquisition of these lands. The original awards of compensation also make mention of crops and tress etc. standing on these lands. Hence in view of these facts evidence Lands in question being agricultural lands and not situated in the areas mentioned in section 2(14)(iii). Therefore, the amount received on account of compensation or consideration as a result of compulsory acquisition of these lands is not taxable as capital gains u/s 45(5). As per the aforesaid Judgment of Hon'ble Supreme Court in case of CIT vs. Ghanshyam HUF (315 ITR 1)(SC), interest u/s 28 of Land Acquisition Act, 1894 forms part of the enhanced compensation. Hence the amount of interest on enhanced compensation us also not taxable as capital gain u/s 45(5)." 8. The Ld. C IT(A) was not satisfied with these submission and observed that Assessing Officer has dealt with two issues n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the Hon'ble Supreme Court has already held that compensation would be taxable unless dispute is finally settled, the matter was set aside to the file of Assessing Officer to determine the nature of dispute. The Revenue filed an appeal before the Hon'ble High Court which was dismissed. In the meantime, the assessment was reopened u/s 148 of the Act because according to Assessing Officer the assessment has escaped taxation on enhanced compensation amounting to Rs. 2,10,55,817/-. The final order was passed on 26.12.2008. In this final order, no addition was made because it was observed that dispute was pending before the Additional District Judge of Panchkula regarding quantum of enhanced compensation. The assessee was directed to inform the Assessing Officer as and when the dispute got finalized in the Court. Against this order the assessee filed a rectification application on 27.1.2009 that reopening proceedings were not validly initiated. In the meantime the Hon ble Punjab Haryana High Court in the case of CIT v Prem Singh in ITA No. 85 of 2010 held that wherever the compensation has been taken before the date of notification dated 6.1.1994, then enhanced compensation is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the Assessing Officer to give effect to the order of the Hon'ble Supreme Court in assessee's case. The controversy relating to this point started with the filing of the return by the assessee on 22.3.2002 (copy at page 1 of the paper book) in which enhanced compensation was received amounting to Rs. 3,52,62,314/- consisting of Rs. 2,10,55,847/- towards cost of land and Rs. 1,42,11,497/- towards interest. This was not offered as income and according to the assessee the proceedings regarding enhanced compensation have not been finalized. However, in the assessment order passed u/s 143(3) vide order dated 27.11.2003 (copy available at pages 2 3 of the paper book), the Assessing Officer accepted the fact that in view of the decision in the case of CIT v Hindustan Housing and Land Development Trust Ltd.(supra), since compensation proceeding have not become final, therefore, compensation part is not be taxable. However, in view of section 199, since the assessee has asked for the credit of TDS and also claimed refund, the interest portion was taxable. The assessee filed appeal against this order before the CIT(A) which was dismissed (order available at pages 4 to 25 of paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, therefore, reopened within the meaning of section 147 of the I.T. Act." The assessee had objected to the reopening of the case under section 148 of the Income Tax Act, 1961. The objections of the assessee were duly considered in the assessment proceedings and it is held that the reopening was on valid grounds. The reopening was done after recording the reasons to believe that income has escaped assessment. It is worthwhile to mention that the case was reopened after due approval from the Commissioner of Income Tax, Panchkula vide office letter 6162 dated 26/03/2008." However, ultimately it was accepted that since dispute is pending and, therefore, the return was accepted but the assessee was also directed to intimate the Department as and when the proceedings before the Addl. Session Judge Panchkula regarding compensation became final. In this regard, the last two paras of the assessment order passed u/s 143 read with section 147 for assessment year 2001-02 are important, which are as under:- "Thus as the AY in this case is AY 2001-02 and the assessee is in dispute before the judicial court of Addl Distt Judge of Panchkula regarding the quantum of enhanced compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order passed under section 263 that no proceedings are pending but reading of the assessment order passed u/s 143(3) read with section 147 on 26.12.2008, copy of which is available at pages 52 to 61 clearly shows that proceedings were kept pending because the assessee was directed to file the intimation regarding outcome of the decision regarding compensation before the Additional Session Judge, Panchkula. The final order passed by Addl. Session Judge Panchkula is available at pages 107 to 135 of the paper book and this order has been passed on 24.8.2009 and assessee intimated the Assessing Officer on 7.9.2009 a copy of the letter is available at page 106. 15. Now the impugned assessment order has been passed on 7.10.2010 u/s 143(3) read with section 147. In this order it has been held that compensation of the land belonging to the assessee was taken on 17.6.1992 i.e. before the notification No. 9447/F.No. 163/3/87 dated 6.1.1994, therefore, enhanced compensation on the same is not taxable in view of the decision of the Hon'ble Punjab Haryana High Court in the case of CIT Vs Prem Singh (supra). Similarl y, it was further held that interest u/s 28 of the Land Acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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