Pawan Kumar Vs PCIT (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal considered whether the Principal Commissioner of Income Tax could exercise revisionary jurisdiction under section 263 where the Assessing Officer had examined the assessee’s claim concerning interest received under section 28 of the Land Acquisition Act, 1894 and accepted the claim that such interest formed part of enhanced compensation eligible for exemption under section 10(37) of the Income-tax Act, 1961.
The assessee, an individual, filed his return for AY 2018-19 on 29.08.2018 declaring income of Rs. 6,35,470/-. His case was selected for complete scrutiny under the e-assessment Scheme, 2019 on the issues of refund claim and winnings from lottery/crossword puzzle/horse races. During assessment proceedings, the Assessing Officer issued notice under section 142(1) specifically requiring documentary evidence regarding Rs. 6,86,17,767 received under section 28 of the Land Acquisition Act. The assessee explained that the amount included Rs. 3,97,56,460 as interest under section 28, which formed part of enhanced compensation following the Supreme Court decision in CIT v. Ghanshyam HUF. The Assessing Officer accepted the explanation and completed the assessment without making an addition.
The PCIT subsequently invoked section 263, treating the assessment as erroneous and prejudicial to the interests of the Revenue. The PCIT relied principally upon the Punjab & Haryana High Court decision in Mahender Pal Narang v. CBDT, which had considered the effect of amendments concerning interest on compensation and enhanced compensation. The PCIT also noted that the Supreme Court had dismissed the SLP against that decision. The assessment was therefore set aside with directions for fresh enquiry and verification.
