Assistant Commissioner of Income Tax, Circle-43, Kolkata v. Krishna Prasad Bagaria
[Citation -2016-LL-1004-75]

Citation 2016-LL-1004-75
Appellant Name Assistant Commissioner of Income Tax, Circle-43, Kolkata
Respondent Name Krishna Prasad Bagaria
Court ITAT-Kolkata
Relevant Act Income-tax
Date of Order 04/10/2016
Assessment Year 2005-06
Judgment View Judgment
Keyword Tags reassessment proceedings • acquisition proceeding • revenue receipt • capital receipt • house property
Bot Summary: The said property was acquired by Delhi Administration in 1987 and when the assessee challenged the acquisition proceedings initiated by the Delhi Administration, Hon ble Delhi High Court quashe d the said acquisition proceedings and also held the assessee to be entitled to damages to be determined by an Arbitrator. Thereafter the Delhi I. T. A. N o. 2 2 7 7 / KO L. / 2 0 1 3 Assessment year: 2005-2006 Page 2 of 6 Administration filed an appeal before the Division Bench of the Hon ble Delhi High Court, which stayed the proceedings on the condition that the Delhi Administration should deposit Rs.4,00,00,000/- as damages and also permitted the assessee to withdraw his share of Rs.1,00,00,000/- from the said deposit. According to the Assessing Officer, the said amount was chargeable to tax in the hands of the assessee in the previous year relevant to A.Y. 2005-06 as the matter regarding acquisition proceeding had attained finality in that year by virtue of the order of the Hon ble Supreme Court and there was escapement of income of the assessee from assessment to that extent. The Assessing Officer presumed that the assessee had nothing to say in the matter and proceeded to bring to tax the amount of Rs.1,00,00,000/- received by the assessee as his share of damages in his hands vide assessment completed under section 144/147 of the Act vide order dated 08.12.2010. Counsel for the assessee, ad hoc payment of Rs.4,00,00,000/- was made by the Delhi Administration on account of damages to the four joint owners of the property including the assessee as per the direction of the Hon ble Delhi High Court and each of them was allowed to withdraw their respective I. T. A. N o. 2 2 7 7 / KO L. / 2 0 1 3 Assessment year: 2005-2006 Page 5 of 6 shares of Rs.1,00,00,000/- each. Counsel for the assessee, the said claim of the assessee was accepted by the Assessing Officer in the order dated 28.12.2011 passed under section 143(3) and although the ld. The nature of the amount in question received by the assessee as his share of damages from Delhi Administration thus has been finally accepted by the Assessing Officer himself as capital receipt not chargeable to tax and the Tribunal also by implication has approved the said view taken by the Assessing I. T. A. N o. 2 2 7 7 / KO L. / 2 0 1 3 Assessment year: 2005-2006 Page 6 of 6 Officer.


I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 1 of 6 IN INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member and Shri K. Narasimha Chary, Judicial Member I.T .A. No. 2277 /KOL/ 2013 Assessment Year: 2005-2006 Assistant Commissioner of Income Tax,.... ...............................Appellant Circle-43, Ko lkata, 3, Government Place (West), Kolkata-700 001 -Vs.- Shri Krishna Pras ad Bagari a,..................................................Respondent 165, C.R. Avenue, Ko lkata-700 007 [PAN: ADZPB 4942 N] Appearances by: Shri Sallong Yaden, Addl. CIT, D.R., for Department Shri Miraj D. Shah , Advocate, fo r th e assessee Date of concluding th e hearing : September 19, 2016 Date of pronouncing order : October 04, 2016 O R D E R Per Shri P.M. Jagtap, A.M.: This appeal is preferred by Revenue against order of ld. Commissioner of Income Tax (Appeals)-XXX, Kolkata dated 26.03.2013, whereby he deleted addition of Rs.1,00,00,000/- made by Assessing Officer to total income of assessee on account of his share of ad hoc damages received from Delhi Administration. 2. assessee in present case is individual, who is joint owner (one-fourth share) of house property situated at 3, Tilak Marg, New Delhi. said property was acquired by Delhi Administration in 1987 and when assessee challenged acquisition proceedings initiated by Delhi Administration, Hon ble Delhi High Court quashe d said acquisition proceedings and also held assessee to be entitled to damages to be determined by Arbitrator. Thereafter Delhi I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 2 of 6 Administration filed appeal before Division Bench of Hon ble Delhi High Court, which stayed proceedings on condition that Delhi Administration should deposit Rs.4,00,00,000/- as damages and also permitted assessee to withdraw his share of Rs.1,00,00,000/- from said deposit. assessee accordingly withdrew sum of Rs.1,00,00,000/- in financial year 1995-96 relevant to assessment year 1996-97. Subsequently Division Bench of Hon ble Delhi High Court dismissed appeal filed by Delhi Administration and even SLP filed by Delhi Administration against same was dismissed by Hon ble Supreme Court in F.Y. 2004-05 relevant to A.Y. 2005-06. In return of income filed for year under consideration originally on 31.07.2005, which was processed under section 143(1) of Act, amount of Rs.1,00,00,000/- received as his share of damages was not offered to tax by assessee. According to Assessing Officer, said amount was chargeable to tax in hands of assessee in previous year relevant to A.Y. 2005-06 as matter regarding acquisition proceeding had attained finality in that year by virtue of order of Hon ble Supreme Court and there was escapement of income of assessee from assessment to that extent. He, therefore, reopened assessment for year under consideration and issued notice under section 148 on 28.08.2010 after recording reasons. In reply, letter was filed by assessee on 08.02.2010 requesting Assessing Officer to treat return originally filed on 31.07.2008 as return filed in response to notice under section 148. During course of reassessment proceedings, there was no compliance on part of assessee to notices issued by Assessing Officer fixing his case for hearing from time to time. Assessing Officer, therefore, presumed that assessee had nothing to say in matter and proceeded to bring to tax amount of Rs.1,00,00,000/- received by assessee as his share of damages in his hands vide assessment completed under section 144/147 of Act vide order dated 08.12.2010. I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 3 of 6 3. Against order passed by Assessing Officer under section 144/147, appeal was preferred by assessee before ld. CIT(Appeals) challenging addition of Rs.1,00,00,000/- made by Assessing Officer on account of his share of damages and after considering submissions made by assessee as well as material available on record, ld. CIT(Appeals) deleted said addition made by Assessing Officer for following reasons given in paragraph no. 3 of his impugned order:- 3. submissions of Appellant have been considered and it is seen th at identical issue was considered in my o rder in case of anot her joint owner of same propert y, Sudarshan Prasad Bagaria for Assessment Year 2005-06 in Appeal No . CIT (A)-XXX/Cir-43/10-11.Furth er issue h as been discussed in det ail in order dated 29.08.2011, operational part of th e abo ve o rder is repro duced as under: "Thus it h as been held by Special Bench after considering decisions of various High Courts on issue including contrary views of Hon Madras High Court in P. Marriappa Go under (147 IT R 676), th at compensation damages received by assessee for wrongfuI occupation of propert y was capital receipt and not liable to tax. High Court Order in case of disput ed pro perty is very clear and Hon'ble single Judge while del ivering th e order h as clearl y held that notification issued by Delhi Administ ration is illegal and bad in l aw. She went on to h old that "the possession of petitioner's pro pert y by Delhi Administ rat ion through its office is illegal and is in nature of trespass on propert y". It h as been furth er held that petitio ners are entitled to damages f rom 18.3.1987 till payment and Arbit rato r was appointed to determine damages payable by Delhi Administ rat ion. From above it is clear that nature of amount in question was in form of damages awarded by Hon 'ble Court for "illegal possession" and therefore decision of Hon'ble Kolkata High Court in CIT Vs. Smt. Lila Gho sh is di rectl y applicable and amount is capit al receipt and not liable to t ax. Although it has been held that as above th at damages awarded were in nature of capital receipts However regarding th e year of taxability, it is seen th at AO has not addressed issue correctly. AO has himself issued no tice u/s. 148 in Assessment Year 2009-10 on basis of damages received by appellant in Financial Year 2008-09 of amount of I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 4 of 6 damages awarded by Arbit rato r. T herefo re his stand is cont radicto ry, on one hand he is t axing ad-hoc amount of damages on basis of Supreme Court's dismissal of SLP in current year and on other he is issuing notice for t axation of damages received by appellant in 2008 from Delhi Administration, whereas amount was awarded by Arbit rator in 2006 and thus t he damages accrued to Appell ant in this Financial Year. AO was therefo re not justified in considering ad-hoc payment of damages Rs 1 Crore (the appel lant's sh are) for taxation in this year. Acco rdingly, co nsidering all above additio n made by th e AO of Rs. 1 Cro re is deleted." Therefo re considering abo ve decision it is held th at inco me is not taxable in Assessment Year 2005-06 and addition made by AO of Rs.1 C rore is delet ed.(Relief Rs.1,00,00,000/-). As result appeal is allowed . Aggrieved by order of ld. CIT(Appeals), Revenue has preferred this appeal before Tribunal. 4. At outset, it is noticed that there is delay of 11 days on part of Revenue in filing this appeal before Tribunal. In this regard, Revenue has moved applied seeking condonation of said delay and keeping in view reasons given therein, we are satisfied that there was sufficient cause for delay on part of revenue in filing this appeal before Tribunal. Even ld. counsel for assessee has not raised any objection in this regard. We, therefore, condone said delay and proceed to dispose of this appeal of Revenue on merit. 5. We have heard arguments of both sides and also perused relevant material available on record. As submitted by ld. counsel for assessee, ad hoc payment of Rs.4,00,00,000/- was made by Delhi Administration on account of damages to four joint owners of property including assessee as per direction of Hon ble Delhi High Court and each of them was allowed to withdraw their respective I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 5 of 6 shares of Rs.1,00,00,000/- each. issue relating to quantum of damages to be paid, however, was decided by Arbitrator finally in previous year relevant to A.Y. 2009-10 awarding total damages of Rs.24.36 crores and after adjusting ad hoc payment of Rs.4,00,00,000/- made in advance, balance amount of Rs.20.36 crores was paid by Delhi Administration to all four co-owners of property. assessee s share in total damages as quantified finally by Arbitrator was Rs.6.09 crores and same was declared by him in return of income filed for A.Y. 2009-10 claiming exemption for same on ground that it constituted capital receipt not chargeable to tax. As pointed out by ld. counsel for assessee, said claim of assessee was accepted by Assessing Officer in order dated 28.12.2011 passed under section 143(3) and although ld. CIT under section 263 set aside said order passed by Assessing Officer, Assessing Officer in fresh order passed under section 143(3)/263 on 27.03.2015 again accepted claim of assessee that amount in question received as his share of damages from Delhi Administration was exempt from tax being in nature of capital receipt. Even appeal filed by assessee against order passed by ld. CIT under section 263 was allowed by Tribunal setting aside order passed by ld. CIT under section 263 vide its order dated 28.05.2015 passed in ITA No. 923/KOL/2014. copy of said order is also placed on record before us by ld. counsel for assessee and perusal of same shows that Tribunal has specifically noted in paragraph no. 21 therein that claim of assessee on account of his share of damages received from Delhi Administration being capital receipt exempt from tax was accepted by Assessing Officer himself after due examination except to extent of Rs.14,18,806/- which assessee himself had accepted to be revenue receipt being in nature of interest. nature of amount in question received by assessee as his share of damages from Delhi Administration thus has been finally accepted by Assessing Officer himself as capital receipt not chargeable to tax and Tribunal also by implication has approved said view taken by Assessing I . T. . N o. 2 2 7 7 / KO L . / 2 0 1 3 Assessment year: 2005-2006 Page 6 of 6 Officer. issue involved in this appeal of Revenue thus is squarely covered in favour of assessee and this position is accepted even by ld. D.R. at time of hearing before us. We, therefore, find no infirmity in impugned order of ld. CIT(Appeals) deleting addition of Rs.1,00,00,000/- made by Assessing Officer on account of his share of ad hoc damages received from Delhi Administration and upholding same, we dismiss this appeal filed by Revenue. 6. In result, appeal of Revenue is dismissed. Order pronounced in open Court on October 04, 2016. Sd/- Sd/- (K. Narasimha Chary) (P.M. Jagtap) Judicial Member Accountant Member Kolkata, 4 t h day of October, 2016 Copies to : (1) Deputy Commissioner of Income Tax, Circle-43, Ko lkata, 3, Government Place (West), Kolkata-700 001 (2 ) Shri Krishna Pras ad Bagari a, 165, C.R. Avenue, Ko lkata-700 007 (3) Commissioner of Income Tax (Appeals)-XXX, Kolkata; (4) Commissio ner of Income Tax- , (5) Depart ment al Represent ative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Assistant Commissioner of Income Tax, Circle-43, Kolkata v. Krishna Prasad Bagaria
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