Rakesh Garg, J. - (1.) THE Revenue has filed the present appeal against the order dated December 12, 2006, passed by the Income Tax Appellate Tribunal, Delhi Bench "H", New Delhi, in I.T.A. No. 793/Del/2006 in the case of the respondent/assessee for the assessment year 1998 -99 raising the following substantial questions of law: (i) Whether the hon'ble Income Tax Appellate Tribunal was right in law in deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, whereas it had already confirmed the addition made under Section 45(5) of the Income Tax Act on account of enhanced compensation received during the previous year relating to the assessment year 1998 -99? (ii) Whether, on the facts and circumstances of the case, the hon'ble Income Tax Appellate Tribunal was right in holding that the view of the assessee regarding non -taxability of enhanced compensation was bona fide particularly in view of the provisions of Section 45(5) of the Income Tax Act?
(2.) THE brief facts of the case are that the respondent -assessee is an agriculturist whose agricultural land was acquired by the Haryana Urban Development Authority (HUDA) and the assessee was awarded compensation in lieu of that by the Land Acquisition Officer. Not satisfied with the rate of compensation, the assessee filed a reference application under Section 18 of the Land Acquisition Act before the Additional District Judge, Faridabad, who enhanced the compensation and also ordered HUDA to pay interest on the enhanced compensation. The respondent -assessee filed a return declaring income of Rs. 29,646 on November 19, 1999. However, the assessee did not declare the receipt on account of additional compensation and interest on the enhanced compensation to tax, appending a note in the return stating therein that the HUDA has not accepted the judgment of the Additional District Judge, Faridabad, and has filed appeal in this High Court and in case the appeal of the HUDA is allowed by the High Court, the amount so received would be liable to be refunded. So the amount so received would assume the character of capital gain/income only when the appeal is finally determined and hence the amount received is on account and not the income of the assessee. It was noticed by the Assessing Officer that Sohan Pal is a karta of the Hindu undivided family was paid the following amount by the Land Acquisition Collector: Enhanced compensation : Rs. 27,62,344 Interest on enhanced compensation : Rs. 12,66,298
(3.) THE assessee relied upon a judgment of the hon'ble Supreme Court of India cited as CIT v. : [1986]161ITR524(SC) . The hon'ble Supreme Court in the said judgment has held that the right to receive compensation would accrue only after final determination by the court and the decision was rendered in the context of deciding the issue on accrual of compensation. However, the Assessing Officer completed the assessment under Section 143(3) on January 8, 2001, and accordingly capital gain on the enhanced compensation and interest on the enhanced compensation was taxed. Against the order of the Assessing Officer, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) set aside the. assessment order of the Assessing officer and directed him to verify the issue of the Hindu undivided family and the claim of deduction under Sections 54B and 54F if admissible. As per the direction, the Assessing Officer completed the assessment under Section 143(3) on February 11, 2002, in the status of the Hindu undivided family holding that the lands were acquired by the assessee from his fore -fathers and the asses -see himself filed the return in the Hindu undivided family status and accordingly capital gain on the enhanced compensation and interest on the enhanced compensation was taxed as it was already taxed in the original assessment under Section 143(3) dated January 8, 2001. Penalty proceedings under Section 271(1)(c) were also initiated.;