Ashok Kumar Dhingra vs. ACIT, Gurgaon: Dismissal of Income Tax Appeal ITA No. 1061/Del/2022 – An Analysis

Introduction

This article provides a thorough examination of the Income Tax Appellate Tribunal’s judgment in the case involving Ashok Kumar Dhingra and the Assistant Commissioner of Income Tax, Circle-1(1), Gurgaon, under case number ITA No. 1061/DEL/2022 for the assessment year 2017-18. The appeal was dismissed by the tribunal, marking a significant decision in the realm of income tax appeals.

Background

The appellant, Ashok Kumar Dhingra, challenged the order under section 263 of the Income Tax Act, 1961, passed by the Principal Commissioner of Income Tax (PCIT), Faridabad, pertaining to the assessment year 2017-18. The primary contention revolved around the taxability of interest received on enhanced compensation for land acquisition under the Income Tax Act.

Case Summary

During the proceedings, it was observed by the ld Revisional Authority that the original and revised returns filed by the assessee lacked clarity on the declaration of income received as interest on enhanced compensation during the year under review. The absence of disclosure was deemed as a non-disclosure of income, leading to the issuance of a show cause notice under section 263.

The appellant’s main argument was centered on various judicial precedents, asserting that the interest received on enhanced compensation of land at Harsaru, Gurugram, Haryana, should be exempt from taxation under section 10(37) of the Act, or alternatively, not taxable under the head ‘Income from Other Sources’ as argued by the revenue.

Legal Analysis

The tribunal, after careful consideration of the facts, legal positions, and arguments presented by both parties, observed that the issue at hand had been subject to divergent views in various precedents. However, the consistent view of the jurisdictional Punjab and Haryana High Court was that such interest is taxable as ‘Income from Other Sources’. The tribunal noted that the assessment order was silent on this critical aspect, indicating a lack of due inquiry on part of the assessing officer. Therefore, it was concluded that the assessment order was erroneous and prejudicial to the interests of the revenue.

Conclusion

The dismissal of the appeal emphasizes the importance of diligent disclosure of income and adherence to judicial precedents applicable within the jurisdiction. This case serves as a critical reminder of the binding nature of decisions rendered by jurisdictional High Courts on Assessing Officers and the significance of providing reasoned orders.

Ashok Kumar Dhingra vs. ACIT, Gurgaon: Dismissal of Income Tax Appeal ITA No. 1061/Del/2022 – An Analysis