Commissioner of Income Tax vs Bharat Lal Dagar (Huf)

The Revenue has preferred this appeal u/s 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 u/s 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 u/s 56 of the income tax Act being in force during the relevant time ?

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 Commissioner of Income Tax Vs. Sohan Pal, HUF, had taken the view that in such a situation levy of penalty was not called for.

We have heard learned counsel for the appellant.

Learned counsel for the appellant submits that the matter has now been settled by the hon''ble Supreme Court in Commissioner of Income Tax, Faridabad Vs. Ghanshyam (HUF), wherein the income received on account of compensation was held liable to tax and in this situation penalty should have been upheld.

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 Commissioner of Income Tax Vs. Karanbir Singh, which is based on the judgment of the hon''ble Supreme Court in Commissioner of Income Tax, West Bengal-II, Calcutta Vs. Hindustan Housing and Land Development Trust Ltd., , which has now been reversed in (2009) 32 SOT 497

Since the view taken by the Tribunal is in consonance with the view taken by this court in Commissioner of Income Tax Vs. Sohan Pal, HUF, , no substantial question of law arises. The appeal is dismissed.