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TMI Blog2024 (2) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and thus, deserves to be quashed as such. 3 That initiation of proceedings u/s 263 of the Act on the basis of unsigned show cause notice by learned Pr. Commissioner of Income Tax, Rohtak is void-ab- initio therefore both initiation and consequent order u/s 263 of the Act without jurisdiction and thus, deserves to be quashed as such. 4 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible or unsustainable view. 5. That the learned Principal Commissioner of Income Tax has failed to appreciate that action u/s 263 of the Act is otherwise too inapplicable on the factual matrix of the facts of the instant case since it is not a case of "lack of enquiry" or "lack of investigation" and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under him under section 263 of the Act the Ld. PCIT perused/examined the records of the assessee and found that in the ITR the assessee has claimed refund of TDS amount of Rs. 2,85,259/- deducted by HUDA under section 194A of the Act on the interest of Rs. 2852590/- received as enhanced compensation on the compulsory acquisition of his agricultural land. He further found that in the return of income the assessee has claimed interest of Rs. 2852590/- as exempt. He formed the opinion that the Ld. AO had completed the assessment without carrying out necessary and proper enquiry which he ought to have carried out in respect of the treatment of interest received on compensation or enhanced compensation. He, therefore, issued show cause notice dated 16.01.2023 under section 263(1) of the Act to which the assessee responded vide letter dated 14.02.2023. 5. The explanation was not acceptable to the Ld. PCIT who held in para 5.1 of his order as under:- "5. I have carefully examined the facts of the case and the reply of the assessee as well as the material on record. It is evident that the assessee has received interest on enhanced compensation during the assessment year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent proposal to the Ld. PCIT for initiation of proceedings under section 263. Therefore based on such a proposal, initiation of proceeding under section 263 of the Act by the Ld. PCIT is void-ab-initio. He referred to the decision of Hon'ble Calcutta High Court in PCIT vs. Reela Lakhani (2023) 457 ITR 603(Cal). He also pointed out that the unsigned show cause notice (copy at page 68 of Paper Book) was issued by the Ld. PCIT to the assessee. 8.1 The Ld. AR further submitted that it is incorrect to allege that the Ld. AO did not make requisite enquiry which he ought to have done. At page 29- 31 of Paper Book is notice under section 142(1) of the Act dated 10.02.2020 along with questionnaire (No.9) regarding receipt of compensation and enhanced compensation & claim of exemption under section 10(37) of Rs. 49,23,440/-. Another notice under section 142(1) of the Act dated 21.08.2020 is at page 35-37 of Paper Book seeking further details and information. Yet another notice under section 142(1) of the Act dated 24.09.2020 (pages 39-42 of Paper Book) was issued inviting the attention of the assessee to the provisions of section 56(2)(viii) r.w.s 57(iv) and section 145B(1) of the Act. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. During assessment proceedings in response to notice under section 143(2) and 142(1) of the Act, with reference to specific query on receipt of interest under section 28 of Land Acquisition Act, the assessee explained that interest received under section 28 of the Land Acquisition Act has been held to be part of compensation by Apex Court in the case of CIT vs. Ghanshyam HUF reported as (2009) 315 ITR 1, the same being exempt under section 10(37) of the Act has not been included in the total income of the assessee while filing return of income. The Ld. AO accepted the explanation of the assessee. 12. The issue of amended provisions of section 56(2)(viii) by the Finance Act, 2009 and the decision of Hon'ble P & H High Court in Mahender Pal Narang's case was raised by the Ld. PCIT in notice under section 263 on the basis of the proposal submitted by the Ld. Successor AO. Before the Ld. PCIT the assessee explained that the amended provisions were not in connection with the decision of Hon'ble Supreme Court in Ghanshyam HUF's case but to make simple the taxation of interest income as earlier it was taxable on accrual/cash basis on the basis of accounting principles as held by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am HUF. Moreover, the decision in Ghanshyam HUF was pronounced in July, 2016 and the Finance Bill proposing amendment to section 56 was laid in February 2016. So the intention of the legislature could never be the overruling of the ratio laid down in Ghanshyam HUF case. The issue in Rama Bai case involved the taxability in the year of receipt. The facts and questions for determination in Rama Bai's case were different from those of Ghanshyam HUF's case. The position in Ghanshyam HUF'a case has been affirmed by the Hon'ble Supreme Court in UOI vs. Hari Singh (2018) 91 taxmann.com 20 (SC). 14. We have gone through the decision of the Hon'ble P & H High Court in the case of Mahender Pal Narang (supra). In that case the land of the assessee was acquired in AY 2007-08 and 2008-09. The enhanced compensation was received on 21.03.2016. In his return filed for AY 2016- 17 he treated the interest received under section 28 of the 1894 Act as income from other sources and claimed deduction for 50% as per section 57(iv) of the 1961 Act. The return was processed under section 143(1) of the Act. An application under section 264 was made claiming that by mistake the assessee treated the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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