Commissioner Of Income Tax, Faridabad v. Shri Kartar Singh

I.T.A. NO. 63 OF 2008DATE OF DECISION: 21.04.2008 COMMISSIONER OF INCOME TAX, FARIDABAD ...APPELLANT VERSUS SHRI KARTAR SINGH C/O RRA TAX INDIA (ADVISORS & ADVOCATES), C.8,BASEMENT-II, EAST OF KAILASH, NEW DELHI. ...RESPONDENT CORAM: HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:Mr.Yogesh Putney, Advocatefor the appellant-assessee. -.- RAKESH KUMAR GARG, J. The assessee has filed the present appeal under Section 260-A of theIncome Tax Act, 1961 (hereinafter referred to as the “Act”) against the orderdated 14.06.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench `G'New Delhi in I.T.A. No. 547/Del/2006 for the assessment year 1998-99. The assessee had received interest on enhanced compensationamounting to Rs.11,89,053/- on 26.10.1996 consequent upon acquisition of landby the Land Acquisition Officer, HUDA Gurgaon. The assessment for theassessment year 1997-98 was completed at an income of Rs. 12,49,410/- videorder dated 31.1.2003 under Section 143(3) of the Act against the returnedincome of Rs. 1,70,640/-. Aggrieved against the assessment order, assessee preferred n appealbefore the Commissioner of Income Tax (Appeals) (hereinafter referred to as the'CIT(A)'), who vide his order dated 3.3.2004 dismissed the appeal and confirmedthe additions made in the assessment order. The penalty proceedings under Section 271 (1) (c) of the Act wereinitiated in terms of notice dated 31.01.2003 requiring the assessee to showcause as to why penalty should not be imposed. Vide letter dated 04.02.2005 theassessee was given an opportunity to show cause as to why penalty under Section 271 (1) (c) of the Act should not be imposed. The counsel for theassessee by writing a letter requested that penalty proceedings under Section271 (1)(c) of the Act be stayed till the decision of the Income Tax AppellateTribunal, Delhi (hereinafter referred to as the ITAT) in his appeal filed against theorder of the CIT(A). The Income Tax Officer, Ward-4, Gurgaon vide order dated 31.3.2005imposed a penalty upon the assessee under Section 271(1) (c) of the Act onaccount of furnishing inaccurate particulars of income leading to concealment ofincome. Aggrieved against the said order, the assessee filed an appeal beforethe CIT(A), Panchkula, who vide order dated 21.11.2005 held that interest onenhanced compensation is taxable on accrual basis and, therefore, in such asituation, there was no deliberate defiance of law proved against the assessee.Consequently, the penalty order under Section 271 (1)(C) of the Act wascancelled. Aggrieved against the order of the CIT(A), the revenue filed an appealbefore the ITAT, which was dismissed vide order dated 14.6.2007, observing asunder:- “....in its recent decision rendered by Delhi Special Bench of ITATin the case of DCIT Vs. Padam Prakash (HUF)-(2006) 10 SOT 1, ithas been held that chargeability of interest income on enhancedcompensation to tax is still governed by the decision of Hon'bleSupreme Court in the case of Smt. Rama Bai Vs. CIT (supra) aswell as in the case of Hindustan Housing & Land DevelopmentTrust-161 ITR 524 in the absence of any change in the relevantstatutory provision and accordingly, the same is to be assessed onaccrual basis from year to year. This decision of the Special Benchof ITAT as well as the judicial pronouncements of Hon'ble ApexCourt relied upon by the Tribunal in the said decision clearly showsthat the claim of the assessee about the chargeability of interest onenhanced compensation on accrual basis was based on a possibleview and making of such claim bona fide on the basis of a possible view, in our opinion, could not be treated as concealment of itsincome by the assessee or furnishing of inaccurate particulars ofsuch income so as to attract the penal provisions of Section 271 (1)(c) as rightly held by the learned CIT(A).” The revenue has challenged the order dated 14.6.2007 passed by the view, in our opinion, could not be treated as concealment of itsincome by the assessee or furnishing of inaccurate particulars ofsuch income so as to attract the penal provisions of Section 271 (1)(c) as rightly held by the learned CIT(A).” The revenue has challenged the order dated 14.6.2007 passed by the Tribunal and has sought to raise the following substantial questions of law:- “1.Whether on the facts and circumstances of the case, theHon'ble ITAT was right in holding that the view of assesseeregarding non-taxability of interest on enhancedcompensation was bonafide?Hon'ble ITAT was right in holding that the view of assesseeregarding non-taxability of interest on enhancedcompensation was bonafide? 2.That the Hon'ble ITAT erred in deciding that provingcontumacious intent is an essential ingredient in levy ofpenalty in contravention of the provisions of a Civil Statutelike Income Tax Act in spite of there being so manyjudgments that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulter with any guilty intention or not?contumacious intent is an essential ingredient in levy ofpenalty in contravention of the provisions of a Civil Statutelike Income Tax Act in spite of there being so manyjudgments that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulter with any guilty intention or not? 3.That the order of the Hon'ble ITAT is in contravention of themany judicial pronouncements including Thirupathy KumarKhemka Vs. Commissioner of Income Tax 210 CTR 287many judicial pronouncements including Thirupathy KumarKhemka Vs. Commissioner of Income Tax 210 CTR 287 (Mad)? 4.That the Hon'ble ITAT at least should have confirmed thepenalty to the extent of interest on enhanced compensationreceived on accrual basis as the assessee had not filedreturn voluntarily?”penalty to the extent of interest on enhanced compensationreceived on accrual basis as the assessee had not filedreturn voluntarily?” Shri Yogesh Putni, learned counsel for the Revenue has very fairlyconceded that question Nos. 1 and 2 as raised by the Revenue have alreadybeen answered by the judgment of this Court passed in ITA No. 490 of 2007decided on 26.3.2008 and ITA No. 579 of 2007 decided on 4.2.2008respectively. He has not addressed any arguments with regard to question Nos.3 and 4 and has stated that in fact these questions are covered by question No.2only. In ITA No. 490 of 2007 decided on 26.3.2008, this Court has held thatinterest on enhanced compensation would not accrue till the issue of enhancedcompensation is finally decided and thereafter on attaining the finality ofdetermination of enhanced compensation by the court, the interest accrued tothe assessee has to be spread over on an annual basis right from the date ofdelivery of possession till the date of order of the Court on the time basis. In ITANo. 579 of 2007 on similar facts, it was held by this Court that the matter relatingto enhanced compensation and interest was still in dispute and the same was ahighly debatable issue as two views were clearly possible on the said issue andthus the claim of the assessee was based on one possible view (although thesaid claim was not accepted in the quantum proceedings on a difference ofopinion) and therefore, such claim made by the assessee could not be treatedas concealment of income by the assessee or furnishing of inaccurateparticulars of such income so as to attract the penal provisions of Section 271(1)(c) of the Act. In view of the above facts, we are not inclined to interfere in theimpugned order passed by the Tribunal. The appeal being without any merit, isdismissed. (RAKESH KUMAR GARG) JUDGE 21.4.2008MK (SATISH KUMAR MITTAL)JUDGE