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TMI Blog2007 (10) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer observed that the assessee received interest on enhanced compensation from HUDA at Rs. 1,37,027 during the previous year relevant to assessment year 1988-89 but has not offered the same for tax on the ground that the interest related to period 10-11-1976 to 9-12-1986 and no interest for the accounting year was received during the year. The assessee has further contended that in view of Hon ble Supreme Court decision in the case of Smt. Rama Bai v. CIT [1990] 181 ITR 400 and K.S. Krishna Rao v. CIT [1990] 181 ITR 408, the same is not taxable. The Assessing Officer did not accept the assessee s contention and held that the interest received by the assessee at Rs. 1,37,027 during the accounting year relevant to assessment year 1988-89 was taxable on receipt basis in assessment year 1988-89. The Assessing Officer also levied penalty under section 271(1)( c ) in respect of the interest income alleged to be concealed. The Assessing Officer also levied penalty under section 271(1)( a ) for delay in filing of the return. Penalty was also levied under section 273 amounting to Rs. 5,447. 3. By the impugned order, the CIT (Appeals) deleted all the three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for charging enhanced compensation but also contains a machinery for computation of income by providing that cost of acquisition and cost of improvement in such a case would be nil . It further provides that in case of a death, enhanced compensation shall be deemed to be the income of the person receiving it. The amount is to be taxed in the year of the receipt. Sub-section (5) is an overriding provision and quite different from sub-section (1) of section 45 in content and texture. It is not possible to disregard change introduced by the Legislature by applying old scheme to cases of enhanced compensation. There is no good reason why scheme of sub-section (5) should not be applied to receipt of enhanced or further enhanced compensation as envisaged by the sub-section. Why the amount received should not be brought to tax in the year of the receipt when language and intention of the Legislature is absolutely clear. Why Court should not give effect to the legislative intent and follow its mandate. There is no scope to whittle down applicability of the provision by introducing philosophy that gain has not accrued or arisen. The right to receive compensation has not attained finality. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The clause was inserted to make entire scheme workable and to supply an obvious omission in the provision. The situation envisaged as per clause ( c ) above was required to be given reasonable construction to accomplish purpose and object of the enactment. Accordingly, it is retrospective in operation. As far as question of interest income on enhanced compensation is concerned, the Legislature had made no change in the statutory provision. The interest is to be assessed on accrual basis from year to year. However, question of assessment of such interest on accrual basis would not arise unless it is finally determined. In case a dispute relating to interest payable on enhanced compensation is pending before a Court of Law and not attained finality, the same will not accrue and not liable to tax. Only after it is finally determined, the same can be subjected to tax." In the instant case, the interest related to the period 10-11-1976 to 9-12-1986 and the assessee was not in receipt of any interest for the relevant assessment year under consideration. Furthermore, the Hon ble Supreme Court in case of Smt. Rama Bai ( supra ) had held that interest cannot be brought to tax in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the Explanations are taken recourse to, a finding has to be arrived at having regard to clause ( a ) of Explanation1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide , it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income. The explanation must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the ITO must arrive at a satisfaction in this behalf. Primary burden of proof, therefore, is on the revenue. The statute requires satisfaction on the part of the Assessing Officer. He is required to arrive at a satisfaction so as to show that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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