2023 (6) TMI 666 - AT - Income Tax

Validity of notice proposing levy of penalty - Addition of interest received on land compensation from Noida Authority - notice u/s 148 issued to assess the escapement of income on account of interest on land compensation - revised return in response to 148 proceedings included the escaped income in terms of provision of Section 56(2)(vii) r.w. Section 45A of the Act and 50% of the interest received on compensation was offered for tax - AO treated revised return in response to Section 148 is invalid due to error in e-verification and no ITR-V (acknowledgement of ITR) was sent for verification - HELD THAT - As the present appeal filed by the assessee in quantum proceedings is infructuous as both assessee and the Revenue are ad idem on taxability of the interest on income compensation from NOIDA Development Authority. Hence, mere initiation of penalty proceedings cannot be challenged unless some formal order on the point has been passed in accordance with law. The assessee may challenge the imposition of penalty if so legally advised at appropriate stage. The present appeal is infructuous in effect and substance and thus dismissed in limine.

Summary

Issues Involved:
The appeal against the order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi concerning AY 2015-16.

Summary:

Issue 1: Addition of Interest on Land Compensation
The assessee appealed against the addition of Rs 9,13,100 made on account of interest received on land compensation from Noida Authority. The assessee contended that the income was already shown in the ITR filed against the notice, and applicable taxes were adjusted resulting in a refund. The revised return under Section 148 included the escaped income, but was not e-verified or sent for verification due to inadvertence. The Assessing Officer treated the revised return as invalid and added the amount to the taxable income. The assessee had no objection to the assessed income and had paid taxes on it. The appeal was primarily to challenge the initiation of penalty proceedings, seeking relief from penalty imposition.

Issue 2: Assessment and Penalty Proceedings
The counsel for the assessee submitted that the appeal was filed to seek exoneration from penalty proceedings, as the assessment of interest on compensation amount was not objected to. Both the assessee and the Revenue agreed on the taxability of the interest on income compensation. The Tribunal found that the appeal in quantum proceedings was infructuous since there was agreement on taxability, and challenging penalty proceedings was premature without a formal order. The appeal was dismissed as infructuous, allowing the assessee to challenge penalty imposition at the appropriate stage.

In conclusion, the appeal against the addition of interest on land compensation was dismissed as infructuous, as both parties agreed on taxability, and challenging penalty proceedings was premature without a formal order.