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TMI Blog2025 (3) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of Rs. 4,96,38,080/- which included interest on enhanced the compensation of Rs. 4,94,29,200/- after claiming 50% deduction u/s 57 of the Act. Thereafter, the return was revised u/s 139(5) wherein the assessee has withdrawn the income declared on account of interest on enhanced compensation by claiming it exempt u/s 10(37) of the Act by placing reliance on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Ghanshyam (HUF) reported in [2009] (8) SCC 412, Faridabad. The revised returned so filed by the assessee and was processed and the revision claimed by the assessee was allowed to him. Thereafter, a notice u/s 148 of the Act was issued on 30/03/2023 after the judgment of Hon'ble Supreme Court dismissing the SLP of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, assessee has received interest of Rs. 9,88,58,400/- as enhanced the compensation which was offered for tax in the return of income filed u/s 139(1) of the Act after claiming deduction for expenses @ 50% as provided u/s 57(iv) of the Act. Thereafter, on the advice of some counsel, and relying upon the judgment of the Hon'ble Supreme Court in the case of Ghanshyam (HUF) (supra) the assessee claimed the interest income on enhanced compensation as exempted in the revised return filed. The Ld. AR submitted that when the assessee received the notice u/s 148 of the Act, it was advised to the assessee that the law has now been settled against the assessee in view of the recent judgment of Hon'ble Supreme Court in the case of Mahender Pal Naran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and untenable in the eyes of law. He thus prayed that the penalty order passed u/s 270A is bad in law and deserves to be quashed. 5. On merits of issue, the Ld. AR argued that land acquired was the agricultural land in nature and any compensation received under compulsory acquisition after 01/01/2015 is exempted u/s 96 of the RFCTLARR ACT, 2013 and further submit that the issue of claiming exemption of interest on enhanced compensation is highly debatable issue where contrary judgment are available, therefore, the assessee could not be punished when he acted bonafidely by relying one of the view expressed by the Hon'ble Supreme Court. The Ld. AR further submit that various benches of the ITAT have held that not only compensation on compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for tax and paid the taxes and, therefore, the AO has rightly levied the penalty u/s 270A of the Act. With regard the immunity available to assessee u/s 270AA, the Ld. Sr. DR submitted that the assessee has not filed the application as envisaged u/s 270AA of the Act, therefore, the assessee was not entitled for immunity. 7. We have heard the rival submissions and perused the materials available on record. Before dwelling upon the issue, we first understand the charges for under reporting the income. The said charges are defined in sub-section 2 of section 270A of the Act which are as under: "2. A person shall be considered to have under-reported his income, if- (a) the income assessed is greater than the income determined in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation offered, no penalty u/s 270A should be levied on such amount on account under reporting of income. In the instant case, it is seen that assessee has originally declared the interest on enhanced the compensation in the return filed u/s 139 of the Act and paid the due taxes thereon. Thereafter, based on some legal advise and by placing reliance upon the judgment of the Hon'ble Supreme Court in the case of Ghanshayam (HUF) (supra), the assessee claimed such interest as exempt u/s 10(37) of the Act. The assessee also placed reliance upon certain judgments of various benches of the Tribunal wherein it is held that interest received on enhanced compensation is exempt u/s 10(37) of the Act. When the assessee received the notices u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee could be held as under reported is invoked. Nor the same was not communicated to the assessee so as to allow him an opportunity to explain his case. Under these circumstances, the entire penalty proceedings are invalid and, thus, untenable in the eye of law. Consequently, the penalty imposed u/s 270A of the Act being bad in law is liable to be quashed, we ordered accordingly. On merits also, as observed above, the assessee has acted bonafidely and followed the judgments of the Hon'ble Supreme Court which was directly applicable and was in his favour, therefore, where the issue is highly debatable and assessee has opted to choose one of the possible view, it cannot be said that assessee is having any intention to evade any tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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