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TMI Blog2022 (3) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... For that the Ld. CIT(A) has failed to appreciate that the consideration received against compulsory acquisition of land for public purpose is exempt as per Circular of CBDT and the relevant provisions of Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013 (in short "RFCTLARR Act"). 4. For that the Ld. CIT(A) has erred in not following the circulars of CBDT and the provisions of RFCTLARR Act and the judgment of Karnataka High Court and has wrongly dismissed the appeal on the ground of non-availability of exemption u/s. 10(37). 5. For that the whole order is bad in fact and law of the case and is fit to be modified. 6. For that the other grounds, if any, shall be urged at the time of hearing of appeal. 3. Brief facts of the case are that the assessee is an HUF which received compensation on compulsory acquisition of land by State Government for the purpose of widening of NH-28A between Pipra Kothi to Raxaul, Bihar. The assessee declared [inadvertently] the said compensation received as income from capital gain amounting to Rs. 1,26,58,595/- in the return of income filed on 07.02.201, although later it realized that it was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) he was of the opinion that it would not be prudent for him to take any action on this issue and therefore according to him the assessee may await the outcome of his appeal filed before the Ld. CIT(A) and in view of the aforesaid discussion he dropped the proceedings by order dated 19.11.2018. 6. Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 19.02.2020 was pleased to dismiss the appeal and thereby sustained the order. Therefore the assessee is in appeal against this action of Ld. CIT(A) as well before us. 7. First we will take up the appeal of the assessee against the action of CPC i.e. ITA No. 28/Pat/2020. The facts stated supra are not repeated for the sake of brevity. The short question in this appeal is whether the action of the CPC in accepting the tax returned by the assessee dated 07.02.2017 (belatedly filed on 2.2.2017) declaring total income of Rs. 1,33,24,420/- wherein the assessee had inadvertently shown the capital gain from the compensation received pursuant to compulsory acquisition of its land to the tune of Rs. 1,26,58,595/- is legally sustainable or not. According to Ld. Senior Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by the appropriate Government, considering the relevant State specific factors and circumstances, for which the payment of Rehabilitation and Resettlement Costs under this Act is required, he shall file an application with the District Collector notifying him of- (a) intent to purchase; (b) purpose for which such purchase is being made; (c) particulars of lands to be purchased. (2) It shall be the duty of the Collector to refer the matter to the Commissioner for the satisfaction of all relevant provisions under this Act related to rehabilitation and resettlement. (3) Based upon the Rehabilitation and Resettlement Scheme approved by the Commissioner as per the provisions of this Act, the Collector shall pass individual awards covering Rehabilitation and Resettlement entitlements as per the provisions of this Act. (4) No land use change shall be permitted if rehabilitation and resettlement is not complied with in full. (5) Any purchase of land by a person other than specified persons without complying with the provisions of Rehabilitation and Resettlement Scheme shall be void ab initio: Provided that the appropriate Government may provide for rehabilitation and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising to an Individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limit, subject to fulfillment of certain conditions. Therefore, compensation received from compulsory acquisition of an agricultural land is not taxable under the Act (subject to fulfillment of certain conditions for specified urban land). 2. The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax. 3. As no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under the RFCTLARR Act, the exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax-exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he RFCTLARR Act has come into force on 1.1.2014. As per Section 96 of RFCTLARR Act, no income tax shall be levied on any award the assessee received pursuant to acquisition made under this Act. We have carefully gone through the Section 96 as well as Section 46 of the RFCTLARR Act (supra) and we find that the assessee's case does not fall in the ken of Section 46 of RFCTLARR Act; and therefore the compensation received by the assessee to the tune of Rs. 1,26,58,595/- is exempt as per Section 96 of the RFCTLARR Act even though the land in question is residential and since it is exempt from tax it and consequently need not have to be included in the total income of the assessee. 12. We note that inadvertently the assessee had filed the return of income declaring this amount as capital gain. So the CPC while processing the ROI filed by the assessee, accepted the capital gain offered by the assessee. However we note that the Ld. CIT(A) while passing the impugned order against the action of CPC has not considered the claim of the assessee that it has inadvertently reflected the same as capital gain in ROI and the whole amount it received as compensation was exempt from tax as per S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is exempted from payment of income tax, on account of ignorance or by mistake, the Assessing Officer is bound to take into account the said fact in a proceedings under section 143 of the Act. In other words, if the capital gains on a transaction was exempted from payment of tax, the Assessing Officer had a duty to refrain from levying tax on the said capital gains and he could not, in such cases, refuse to grant relief under section 143 to the assessee on the technical plea that the assessee had not filed a revised return. It is so since the paramount duty of the Assessing Officer is to complete the assessments in accordance with law. It is all the more so in the light of the mandate under article 265 of the Constitution that no tax shall be levied or collected except by authority of law. * In the instant case, the assessee has not filed a revised return when he was made to understand that he has no liability to pay tax on the capital gains resulting from the acquisition of land. The reason is obvious that the time prescribed under the Act for submission of revised return had expired by that time. The case of the assessee, in the circumstances, is only that he shall not be pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the said statute is exempted from payment of tax under the Act. In the circumstances, in so far as the acquisition of the land of the petitioner was under the said statute, the petitioner submitted Ext. P9 reply to Ext. P6 notice requesting the first respondent to drop the proceedings initiated against him under Section 143 the Act. Since the first respondent has not considered the request made by the petitioner in Ext. P9 reply, the petitioner filed W.P.(C). No. 23113 of 2017 before this Court challenging the continuance of the proceedings under Section 143 the Act. The said writ petition was admitted on 24.07.2017. This Court also passed an interim order in the said case on 24.07.2017 restraining the first respondent from continuing the proceedings. 3. While so, the petitioner was served with Ext. P12 order dated 14.07.2017, by which the first respondent has completed the proceedings initiated in terms of Ext. P3 notice raising a demand for Rs. 9,95,070/- on the basis that the cost indexation of the land made by the petitioner cannot be accepted and that the fair market value of the land as on 01.04.1981 can be reckoned only at Rs. 1,400/- per cent for the purpose of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ext. P12 order under the Act, he has instituted this writ petition challenging the said order in the light of his case that the same is one rendered maliciously with a view to defeat W.P.(C). No. 23113 of 2017 pending before this Court. Though it is found that Ext. P12 order is not one issued maliciously as contended by the petitioner, in so far as this Court entertained W.P.(C). No. 23113 of 2017 and interdicted the first respondent from proceeding further in the matter, and in so far as this Court admitted this writ petition challenging Ext. P12 order even while the petitioner has an alternative remedy by way of appeal against the same, I am of the view that it may not be appropriate now to relegate the petitioner to avail the alternative remedy available to him against Ext. P12 order. In the circumstances, I propose to examine the correctness of Ext. P12 order in this proceedings itself. 8. As noted above, the impugned order is challenged on the ground that the proceedings under Section 143(2) of the Act, which culminated in Ext. P12 order, is without jurisdiction, in the light of Section 96 of the Land Acquisition Act. 9. The learned Standing Counsel for the first responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the capital gains on a transaction is exempted from payment of tax, the assessing officer has a duty to refrain from levying tax on the said capital gains and the assessing officer cannot, in such cases, refuse to grant relief under Section 143 of the Act to the assessee on the technical plea that the assessee has not filed a revised return. It is so since the paramount duty of the assessing officer is to complete the assessments in accordance with law. It is all the more so in the light of the mandate under Article 265 of the Constitution that no tax shall be levied or collected except by authority of law. I am fortified in the aforesaid view by the observations made by the Apex Court in CIT v. Shelly Products [2003] 129 Taxman 271/261 ITR 367. Paragraph 36 of the judgment of the Apex Court in the said case reads thus: "36. We cannot lose sight of the fact that the failure or inability of the Revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has penalised the petitioner for having paid tax on an income which is not exigible to tax. The said order, in the circumstances, is liable to be interfered with. 12. The question arose in Goetze (India) Ltd. (supra) was whether an assessee could make a claim for deduction other than by filing a revised return. As noted above, the question in the case on hand is whether the assessing officer is precluded from considering an objection as to his authority to make an assessment under Section 143 of the Act merely for the reason that the petitioner has included in his return an amount which is exempted from payment of tax and that he could not file a revised return to rectify the said mistake in the return. The decision of the Apex Court in Goetze (India) Ltd. (supra) has, therefore, no application to the facts of the present case. In the circumstances, the writ petition is allowed and Ext. P12 order is quashed to the extent it assesses the petitioner to capital gains resulting from the acquisition of land mentioned therein." 14. In the light of the aforesaid decision as well as the CBDT Circular (supra) which is binding on the income tax authorities, we find the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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