Naresh Kumar Vs PCIT (ITAT Jaipur)
₹1.49 Crore Land Acquisition Interest: A Possible View Cannot Be Revised Under Section 263
An Exemption Examined by the AO, but Reopened by the PCIT
The Jaipur Tribunal, deciding the appeal in accordance with a Third Member majority opinion, held that an assessment could not be revised under Section 263 merely because the PCIT disagreed with a legally possible view adopted by the Assessing Officer. The dispute concerned ₹1,48,69,136 received as interest under Section 28 of the Land Acquisition Act, 1894, on enhanced compensation for compulsory acquisition of agricultural land.
The decision is significant on two counts. It protects an assessment where the AO had actually examined the disputed claim, and it accepts, on the facts of this case, that the Section 28 receipt formed part of compensation and was not taxable in the assessee’s hands.
The Assessment and the Revision
The assessee filed his return declaring income of ₹9,81,530 and claimed exemption for the amount received on enhanced land acquisition compensation. His case was selected for complete scrutiny concerning the refund claim.
During assessment, the AO issued notices under Sections 143(2) and 142(1). The questionnaire specifically sought an explanation for the exemption claimed on the land acquisition interest, together with relevant orders and supporting evidence.
