Chandrakant Viththal Bhopi Vs ITO (ITAT Pune)
ITAT quashes reassessment for want of valid sanction u/s 151(ii) – Approval by PCIT Instead of PCCIT/CCIT held invalid – When notice issued beyond 3 years– Entire 148 proceedings set aside; Interest u/s 28 of Land Acquisition Act (₹2.60 Cr) taxability issue rendered academic
Assessee, an individual, received ₹2.60 crore as interest on enhanced compensation u/s 28 of the Land Acquisition Act, 1894 in respect of compulsory acquisition of rural agricultural land. He did not file a return for A.Y. 2016-17. On the basis of Form 26AS information, AO reopened the case by issuing a notice u/s 148 on 31.03.2021, later converted into a proceeding under the new regime (post Ashish Agrawal SC ruling). AO completed reassessment u/s 147 r.w.s. 144, taxing 50% of the interest (₹1.30 crore) as “income from other sources” u/s 56(2)(viii) r.w.s. 57(iv). Penalty proceedings were also initiated. CIT(A) confirmed the addition, relying on non-jurisdictional High Court rulings & held that exemption u/s 10(37) was not available as it applies only to capital gains on compensation, not on interest.
Assessee’s Arguments
Jurisdictional Defect: Notice u/s 148 was invalid as the approval required u/s 151(ii) (when more than three years have elapsed from the end of the relevant A.Y.) should have been from the Principal Chief Commissioner / Chief Commissioner / Director General, but in this case approval was taken only from the PCIT. Hence, reassessment was bad in law.
