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2017 (6) TMI 780 - ITAT CHANDIGARH

2017 (6) TMI 780 - ITAT CHANDIGARH - TMI - Levy of penalty u/s 271(1)(c) - addition of interest on compensation received as exempt u/s 10(37) not offered to tax - Held that:- As at the time of filing of return of income since the interest received by it pertained to section 28 of the Land Acquisition Act, as claimed by the assessee all along and not disputed by the Revenue, he was of the belief that the interest was a capital receipt to be treated as compensation. Though section 145A(b) and Sect .....

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ct. - The assessee having disclosed all particulars of his income pertaining to interest on enhanced compensation and having claimed the same as exempt under a bonafide belief, we hold that the assessee’s case is squarely covered by case of Reliance Petroproducts (P.)ltd. [2010 (3) TMI 80 - SUPREME COURT] which states that merely making an incorrect claim in law would not tantamount to furnishing of inaccurate particulars of income when admittedly information given in the return is not found .....

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This appeal has been filed by the assessee against the order of the Ld. CIT(A)-1, Chandigarh dt. 19/08/2016, confirming the levy of penalty under section 271(1)(c) of the Income Tax Act,1961. 2. The assessee has raised the following grounds: That the Learned Commissioner of Income Tax (Appeals)-I has failed to appreciate the facts and circumstances of the case and has thereby erred in sustaining penalty u/s 271(1)(c) on flimsical grounds. The order of the Commissioner of Income Tax (Appeals)-I i .....

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it was noticed that, the assessee had received interest on enhanced compensation amounting to ₹ 1,00,18,432/- during the year, which he had claimed as exempt u/s 10(37) of the Act, in the return of income. On this income, however, TDS had been partly deducted by the Land Acquisition Officer, which the assessee had filed before the Assessing Officer during the course of assessment proceedings. On the remaining amount, the assessee paid the Advance Tax. On being asked to furnish the details .....

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ed about the income claimed to be exempt in the ITR.The assessee accepted the quantum addition made by the Assessing Officer and did not file any appeal against the order of assessment. 3.2 The Assessing Officer thereafter imposed penalty u/s 271(1)(c) of the Act, for concealing particulars of income and furnishing inaccurate particulars of income. The Assessing Officer stated that the assessee was very well aware that the income which had been claimed as exempt was taxable in his hands since if .....

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. The Assessing Officer stated that the assessee would have enjoyed the income as exempt if the Department had not scrutinized the claim of the assessee. He therefore imposed penalty u/s 271(1)(c) of the Act, amounting to ₹ 15,45,849/-, @ 100% of the tax sought to be evaded on 50% of the interest on enhanced compensated received,. 4. During appellate proceedings the assessee pleaded that the interest on compensation having been received u/s 28 of the Land Acquisition Act, had been claimed .....

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of interest on enhanced compensation at the point of time when the assessee had filed return of income, the issue having attended finality in view of various judicial pronouncements and amendment in the Act, well before the filing of the return of income by the assessee. The Ld. CIT(A) referred to the decision in the case of CIT Vs. Ghanshyam(HUF) 20096 (315 ITR 1) (SC) and the decision of the Hon ble Jurisdictional High Court in the cases of CIT Vs. Bir Singh (HUF) and further to the amendment .....

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g the year had been disclosed by the assessee. Further Ld. Counsel stated that the same was claimed as exempt under section 10(37) in view of the decision of the Hon ble Supreme Court in the case of Ghanshyam (HUF) (supra). Ld. Counsel for the assessee further relied on the decision of ITAT Chandigarh Bench in the case of ITO Vs. Rameshwar Giri in ITA No. 1344/Chd/2012 dt. 11/06/2013 and pointed out that the ITAT in the said case had held that since the AO did not bifurcate which part of interes .....

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regarding the taxability of interest on enhanced compensation which had to be brought to tax by virtue of the provision of Section 145A(b), 56(viii) of the Income Tax Act 1961. Ld. DR further stated that the assessee had himself agreed that the interest was taxable under section 56(viii) during the assessment proceedings and offered the same to tax, which is evident from the assessment order itself. 7. Ld. Counsel for the assessee raised another argument in support of its contention that penalty .....

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evy penalty in the assessees mothers case, was no reason for deleting penalty in the assessee s case also and the issue was to be decided on the basis of law. Ld. DR further pointed out that in any case the facts in the case of assessee s Mother Smt. Anjana Sehgal were distinguishable from the assessees case. Ld DR pointed out that in the case of Smt. Anjana Sehgal,the mother of the assessee, the return had been revised by her including the interest on enhanced compensation in the revised return .....

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10. The sole issue in the present case is relating to levy of penalty under section 271(1)(c) of the Act on interest on enhanced compensation received which was not offered to tax. It is not disputed that particulars of the said income were disclosed in the return of income filed by the assessee on 30/07/2012 and that taxes had also been paid on the same claiming the same as exempt u/s 10(37) of the Act.It is also not in dispute that the assessee offered the same to tax only when confronted by t .....

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claimed as exempt under a bonafide belief borrowed from the decision of the apex court in Ghanshyam (HUF). The reasons given by the Ld. Counsel for the assessee for harboring such belief was that at the time of filing of return of income by the assessee, the decision of the Hon ble Apex Court in the case of Ghanshyam (HUF)(supra) had been rendered and which stated that interest on enhanced compensation received under section 28 of the Land Acquisition Act was to be treated as part of compensatio .....

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s 10(37) of the Act, could be said to have been under a bonafide belief. 11. We are in complete agreement with the contention of the Ld. DR that the applicable provision for bringing to tax interest on enhanced compensation for the impugned Assessment year i.e; 2012-13 was section 145A(b), 56(viii) & 57(iv) of the Income Tax Act. The relevant provision are being reproduced here under: Section 145 A. Notwithstanding anything to the contrary contained in section 145,- (a)... (i).. (ii).. (b) i .....

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ice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head Income from other sources , namely:- (i)…… (ii)…… (iii)…… (v)…… vi)…… (vii)….. Section 56 (viii) income by way of interest received on compensation or on enhanced compensation referred to in clause(b) of section 145A Section 57. The income chargeable under the head Income from other sources .....

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the same. But having said so, there is no denying the fact that at the time of filing of return of income by the assessee for the impugned Assessment year i.e; on 30/07/2012 there was the judgment of the Hon ble Apex Court in CIT Vs. Ghanshyam(HUF) 315 ITR 1 dt. 16/07/2009, wherein the Hon ble Apex Court had after going through the provisions of the Land Acquisition Act, 1854,categorically stated that interest received under section 28 of the Land Acquisition Act was to be treated as part of com .....

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see all along and not disputed by the Revenue, he was of the belief that the interest was a capital receipt to be treated as compensation. Though section 145A(b) and Section 56(viii) do categorically state that interest on enhanced compensation is to be taxed on receipt but the said sections do not clarify that interest for the purposes of the said sections includes interest under section 28 of the Land Acquisition Act alongwith interest under section 34 of the Land Acquisition Act. The assessee .....

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