Punjab & Haryana H.C : The issue of taxability of compensation on agricultural land and interest thereon received by the assessee being a highly debatable issue on which two views are clearly possible and the claim of the assessee in adopting one possible view being a bona fide one, no case of penalty under section 271(1)(c)

High Court Of Punjab & Haryana

CIT vs. Bharat Lal Dagar (HUF)

Assessment Year : 2002-03

Section : 271(1)(C)

Adarsh Kumar Goel And Gurdev Singh, JJ.

ITR No. 603 Of 2009 (O&M)

November 16, 2009

JUDGMENT
 
1. The Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (for short, “the Act”), against the order of the Income-tax Appellate Tribunal, Delhi Bench “H”, New Delhi, in I.T. A. No. 1683/Del/2007, dated March 6, 2009, for the assessment year 2002-03, proposing to raise the following substantial question of law :

“(i) Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was right in law in holding that the issue of taxability of compensation on agricultural land and interest thereon received by the assessee being a highly debatable issue on which two views are clearly possible and the claim of the assessee in adopting one possible view being a bona fide one, no case of penalty under section 271(1)(c) of the Act could be made out, whereas the assessee has not offered for taxation the enhanced compensation and interest thereon in the year of its receipt in spite of the clear and unambiguous provisions contained in clause (b) of sub-section (5) of section 45 and under section 56 of the Income-tax Act being in force during the relevant time ?”

2. The land of the assessee was acquired and compensation was paid. But the said amount was not offered by the assessee as taxable income on the ground of pendency of further proceedings. The Commissioner of Income-tax (Appeals) upheld the plea of the assessee but the Tribunal held that the amount was taxable. Thereafter, the Assessing Officer levied penalty. The Commissioner of Income-tax (Appeals) set aside the penalty on the ground that requisite satisfaction has not been recorded which view was upheld by the Tribunal. This court remanded the matter by holding that format of satisfaction was not conclusive if satisfaction has been arrived at and recorded in one form or the other and remanded the matter to the Tribunal. The Tribunal, after considering the merits, set aside the penalty on the ground that the issue was debatable and this court in CIT v. Sohan Lal (HUF) in I. T. A. No. 582 of 2007 dated February 5, 2008, since reported in [2008] 302 ITR 262 (P&H) had taken the view that in such a situation levy of penalty was not called for.

3. We have heard learned counsel for the appellant.

4. Learned counsel for the appellant submits that the matter has now been settled by the hon’ble Supreme Court in CIT v. Ghanshyam (HUF)[2009] 315 ITR 1 (SC), wherein the income received on account of compensation was held liable to tax and in this situation penalty should have been upheld.

5. The question is not of taxability but of not paying tax when the issue was debatable. The assessee had an arguable case and the earlier view was in favour of the assessee in CIT v. Karanbir Singh[2008] 303 ITR 231 (P&H) which is based on the judgment of the hon’ble Supreme Court in CIT v. Hindustan Housing and Land Development Trust Ltd.[1986] 161 ITR 524, which has now been reversed in Ghanshyam (HUF) [2009] 315 ITR 1 (SC).

6. Since the view taken by the Tribunal is in consonance with the view taken by this court in Sohan Pal [2008] 302 ITR 262 (P&H), no substantial question of law arises.

7. The appeal is dismissed.

[Citation : 335 ITR 345]

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