Plausible View Taken By AO In Case Of Debatable Issue Does Not Attract Rigors Of Sec 263: New Delhi ITAT
Pankaj Bajpai
16 March 2024 12:30 PM GMT
Finding that the view taken by the AO that interest u/s 28 of Land Acquisition Act received by the assessee is exempt u/s 10(37) of the Income tax Act is not contrary to law, the New Delhi ITAT quashed the revisionary exercise of powers by the PCIT by taking aid of Section 263.The Bench of N.K. Billaiya (Accountant Member) and Astha Chandra (Judicial Member) observed that “Since the order...
Finding that the view taken by the AO that interest u/s 28 of Land Acquisition Act received by the assessee is exempt u/s 10(37) of the Income tax Act is not contrary to law, the New Delhi ITAT quashed the revisionary exercise of powers by the PCIT by taking aid of Section 263.
The Bench of N.K. Billaiya (Accountant Member) and Astha Chandra (Judicial Member) observed that “Since the order of the AO is based on the decision of the Supreme Court in Ghanshyam HUF (supra) on the issue of taxability of interest received by the assessee under section 28 of Land Acquisition Act, it can at best be said to be a debatable issue on which two views are possible and the AO accepts one of the views”. (Para 16)
As per the brief facts of the case, the case of assessee was selected for complete scrutiny under the e-assessment scheme, 2019 on the issue, namely reduction of income in Revised Return and claim of refund and income from other sources. The AO completed the assessment on total income of Rs.27,900/- as returned by assessee after considering all relevant material on record. Later, the PCIT found that in the ITR the assessee has claimed refund of TDS amount of Rs. 2,85,259/- deducted by HUDA u/s 194A on the interest of Rs.2852590/- received as enhanced compensation on the compulsory acquisition of his agricultural land. He accordingly formed the opinion that the 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 u/s 263(1) to which the assessee responded.
The Bench found from a perusal of the order of PCIT that he assumed revisionary power u/s 263 mainly on the ground that the AO failed to do necessary inquiry about the taxability of the interest on enhanced compensation and passed the order not in accordance with the binding decision of P&H High Court in Mahender Pal Narang vs. CBDT (2021) 279 Taxman 74 (SC) against which SLP stands dismissed by the Supreme Court.
The Bench however clarified that this is not the situation, and rather explained that in response to notice u/s 143(2) & 142(1) with reference to specific query on receipt of interest u/s 28 of Land Acquisition Act, the assessee explained that interest received u/s 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 [(2009) 315 ITR 1], the same being exempt u/s 10(37) has not been included in the total income of the assessee while filing return of income.
Hence, the ITAT allowed the appeal of the assessee and quashed the order of the PCIT passed u/s 263.
Counsel for Appellant/ Assesee: Lalit Mohan
Counsel for Respondent/ Revenue: T. James Singson
Case title: Gulshan Kumar verses Pr. CIT
Case Number: ITA No. 1676/Del/2023
