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2020 (2) TMI 256 - AT - Income TaxAddition for interest received on compensation for compulsory acquisition of the agricultural land of the assessee - exemption under section 10(37) as part of the land compensation or it is taxable under section 56(2)(viii) - HELD THAT - As relying on CHET RAM (HUF) 2017 (9) TMI 1532 - SUPREME COURT interest received on compulsory acquisition of land under section 28 of Land Acquisition Act (LAA) would be in the nature of compensation and not interest, which is taxable under the Income from other sources. Accordingly, we restore the issue to the file of the learned CIT(A) to decide the taxability in accordance with law after verifying whether the interest received is in respect of land acquired u/s 28 of the LAA or interest under section 34 of the LAA. It is needless to mention that adequate opportunity of being heard shall be afforded to both the parties, i.e., the Assessee and the Assessing Officer. The ground Nos. 1 to 3 of the appeal of the assessee are accordingly allowed for statistical purposes. Addition for cash deposits appearing in the bank account as unexplained - HELD THAT - Assessee did not provide any explanation or statement in respect of the cash deposits. One can understand of not having ready availability of the documentary evidence but the assessee was not prevented from explaining the source of deposits which according to him was money received from his mother and uncle. No such explanation was even offered by the assessee before the AO. Thus, the explanation and documentary evidence filed before the ld. CIT(A) are result of afterthought only. The Ld. CIT(A) has rejected the additional evidences as same were not in accordance with Rule 46A of the Rules. In view of the facts and circumstances of the case, we are of the considered opinion that assessee failed to discharge its onus to explain the source of the cash deposits and therefore, Ld. CIT(A) is justified in sustaining the addition. We, accordingly, uphold the same. The grounds of the appeal of the assessee are accordingly dismissed. Penalty u/s 271(1)(c) - non granting of credit of TDS - HELD THAT - As far as the issue of initiation of the penalty proceeding is concerned, the ground raised is premature at this stage and, therefore, same is dismissed as infructuous. However, as far as granting of the credit of the TDS is concerned, we direct the Assessing Officer to examine the claim of the assessee and if same is found in accordance with law, the assessee should be allowed the credit of tax deducted at source. The ground of the appeal of the assessee is accordingly partly allowed.
Issues Involved:
1. Taxability of interest received on enhanced compensation for compulsory acquisition of agricultural land. 2. Addition of cash deposits in bank account. 3. Initiation of penalty proceedings under section 271(1)(c) and non-granting of credit of TDS. Issue-wise Detailed Analysis: 1. Taxability of Interest on Enhanced Compensation: The primary issue pertains to whether the interest received on enhanced compensation for compulsory acquisition of agricultural land is exempt under section 10(37) of the Income-tax Act, 1961, or taxable under section 56(2)(viii). The assessee treated the interest as exempt, relying on the Supreme Court's decision in CIT Vs Ghanshyam (HUF). However, the Assessing Officer (AO), referencing the amended provisions of section 56(2)(viii) effective from assessment year 2010-11, taxed the interest under 'income from other sources'. The AO allowed a 50% deduction under section 57(iv), adding the balance to the assessee's income. The CIT(A) upheld this decision, citing various judicial precedents, including the Punjab & Haryana High Court's decision in Manjeet Singh (HUF) and the Supreme Court's dismissal of the SLP in the same case. The Tribunal, considering subsequent decisions of the Supreme Court in CIT Vs Chet Ram (HUF) and Union of India Vs Hari Singh, restored the issue to the CIT(A) for verification and decision in accordance with law, emphasizing the need to ascertain whether the interest was under section 28 or section 34 of the Land Acquisition Act. 2. Addition of Cash Deposits: The second issue involves the addition of ?31,93,000/- in the assessee's bank account, which the AO added to the income due to the assessee's failure to explain the source. The assessee claimed the deposits were from the sale of land and gifts from relatives, submitting additional evidence to the CIT(A). However, the CIT(A) rejected the additional evidence, stating the assessee did not meet the conditions under Rule 46A of the Income Tax Rules and had ample opportunities to provide the evidence during the assessment. The Tribunal upheld the CIT(A)'s decision, noting the assessee's failure to explain the deposits during the assessment and the afterthought nature of the explanations and evidence provided later. 3. Initiation of Penalty Proceedings and Non-granting of TDS Credit: The final issue concerns the initiation of penalty proceedings under section 271(1)(c) and the non-granting of credit for TDS. The Tribunal deemed the penalty proceedings premature and dismissed this ground as infructuous. However, it directed the AO to examine the TDS credit claim and allow it if found in accordance with the law. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, remanding the issue of interest on enhanced compensation to the CIT(A) for further verification and decision, while upholding the addition of cash deposits and directing the AO to examine the TDS credit claim. The penalty initiation issue was dismissed as premature.
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