THE THE HIGH COURT OF PUNJAB ARH CHANDIGARH NJAB AND HARYANA AT v. Ghanshyam (HU reme HUF) 315 ITR 1

cretion to capital. The High Court als se of urt also passed orders in the case of Jagmal S al Singh and another vs. State of H No. of Haryana and another in CR No. 7740 of 2 of 2012 restraining petitioners from ngly, from deducting TDS. Accordingly, TDS wa S was not being deducted upon in on interest disbursed on enhanced compens mpensation in view of various judgme ourt, udgments passed by the High Court, MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case and there d therefore, after October, 2012, the L S in , the LAO stopped deducting TDS in view of t w of the High Court’s order.

4. A survey survey under Section 133A of the d on f the Act, 1961 was conducted on

16.03.20 .03.2015 and the income tax authoritie rd to horities raised queries with regard to non-dedu deduction of tax at source on t t on on the payments of interest on compens mpensation/enhanced compensation. ation. Judgments and orders passed the High Court were therefor erefore, made available responde pondent/department whereafter a q r a questionnaire was put to the petitione titioner with regard to deduction of tax of tax at source. It was queried that income ome by way of interest received ceived on compensation/enhanced compens mpensation would form part of the i es in f the income from other sources in terms of ms of Section 56(2)(viii) of Act, 1 ct, 1961 and therefore, TDS was required uired to be deducted and deposited, to y the ited, to which it was answered by the petitione titioner as under: “"We were deducting TDS up S upto September, 2012 on payment interest compensation/enhanced c compensation u/s 194A. But vario various landholder whose land was acquired started filing leg g legal cases with various courts including Hon'ble High Cou Court for refund of TDS deducted from that payment i.e. inte . interest payments. As per instruction from Sh. M.S. Sangwan, an, DRO vide order dated

09.10.2012 on the noting sheet (copy 09 (copy of it being provided), I was directed "As per opinion of AD I w of ADA (P), therefore, TDS may not be deducted". This view o ew of DRO was based on ADS (P) opinion as well as vario AD arious court decisions on section 28 of the Land Acquisition A on Act, 1894 wherein it has been held in one of the cases CIT V IT Vs Ghanshyam (HUF) that interest u/s 28 of the Land A nd Acquisition Act, 1894, unlike interest u/s 34 is an accretion etion to the value, hence, it MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case is a part of enhanced compensation o ion or consideration. Copy of order is given to you. Further, in the case of Sh. Sat . Satpal & others Vs. St. of Haryana, ADJ, Faridabad, has held Ha s held that Joint Defendant (JDA) have illegally deducted Inc (JD Income Tax(TDS) out of compensation amount and JD's (LA (LAO) are directed to pay the same to the landowner i.e. refun refund the TDS vide order dated 20.09.2014. This decision has has been relied on HUDA v/s Mandir Nar Singh Puri & others. v/s ers."

5. Learned arned counsel for the petitioner subm as in r submits that the petitioner was in bona fide fide belief that there is no liability t bility to deduct tax at source in view of the le the legal opinion of the Additional D ional District Attorney. Show cause notice w tice was served upon the petitioner f ee in oner for treating him as assessee in default, , and assessment was finalized alized on 22.03.2016 treating the petitione titioner as assessee in default under Se f the der Section 201 and 201(1A) of the Act, 196 t, 1961. Separately, a notice under Sec er Section 156 of the Act, 1961 was o issued directing the petitione titioner to deposit a sum of Rs.1,28,1 .1,28,19,35,845/-. The petitioner has t r has therefore, preferred the present tition. petition.

6. Learned arned counsel for the petitioner submi ot be submits that the petitioner cannot be penalized nalized for failure of TDS. It has bee at no as been vehemently argued that no TDS was S was deductible on the interest of e r the st of enhanced compensation for the relevant evant period. Further, it is stated tha ed that the Income Tax Department filed rev ed review applications seeking review y the review of the orders passed by the High Co gh Court restraining from deducting d on ucting TDS on interest received on enhanced hanced compensation, and the same w d on same were subsequently decided on

02.02.20 .02.2016. MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case

7. Learned arned counsel therefore submits th t be its that the petitioner cannot be penalized nalized, and the order dated 22.03.201 t for 3.2016 passed by the respondent for Assessm sessment Year 2015-16 imposing liability Rs.1,28,1 .1,28,19,35,845/- was unjustified.

8. On the other hand, d learned counsel appearing Departm partment/Assistant Commissioner of ner of Income Tax, TDS Circle has vehemen hemently argued, and has also sub ts in o submitted written arguments in support pport of the order impugned. It is sta g on is stated that the LAO working on behalf o half of HUDA (Haryana Urban D an Development Authority) was debarred barred from withholding tax from all m all the assesses whose land was compulso mpulsorily acquired. It is further su her submitted that the HUDA was required uired to contact the Income Tax dep ax department as amendments were made in de in the Act in 2002.

9. Learned arned counsel for the Revenue also Tax also submits that the Income Tax Departm partment was not a party to the case o vs. case of Jagmal Singh and another vs. State of e of Haryana and another in CR N High R No. 7740 of 2012 in the High Court, w wherein the interim order was pas as passed. It was further argued that review p iew petition was filed in the year 201 High ar 2014 seeking review of the High Court’s o urt’s order by the respondent, and at and at the same time, Field Officers and Offi Officers working in the system cam came to know that the banks had huge dep ge deposits of money without corresp orresponding TDS reflecting in their counts. accounts

10. Learned earned counsel for the Revenue also re also relies upon the judgment passed in Attar ttar Singh and others vs. State of WP e of Haryana and others in CWP No.1012 0125 of 2015, decided on 03.09.201 .2015. MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case

11. Learned earned counsel relies upon Section 4 ction 4(1) of the Act, 1961, which relates to ates to charge of income tax, and as p e tax d as per section 4(2), the income tax was requ s required to be deducted at source. urce. Therefore, it is submitted that the petiti petitioner/LAO who was disbursing lf of rsing the compensation on behalf of HUDA w DA was a ‘person’ and was require ce in required to deduct tax at source in terms of ms of Section 4 read with section 2(31 n 2(31)(vi) of the Act.

12. Learned earned counsel submits that in the cas F), he case of CIT vs. Bir Singh (HUF), ITA No.2 No.209 of 2004, decided on 27.1 F) 27.10.2010, Manjet Singh (HUF) Karta M ta Manjeet Singh vs. Union of India dia and others, CWP No.15506 of 2013 de decided on 14.01.2014, the Hig e High Court held that additional compens mpensation and interest are liable to t ) and le to tax as per Section 45(5)(b) and also as p o as per section 2(28A) which define t the defines interest. It is stated that the petitione titioner had wrongfully unilaterally rally decided to withhold tax and therefore refore, was liable to penalty under sec er section 201 of the Act.

13. It was fu was further submitted that the review s eview applications filed in the cases of Jagma agmal Singh and another vs. State o CR ate of Haryana and another in CR No. 7740 7740 of 2012, Satbir Singh vs. State CR tate of Haryana and another in CR No. 7736 7736 of 2012 were allowed and the o d the order was recalled holding that interest o erest on additional award is taxable a to be xable and income tax is liable to be deducted ducted at the time of deposit. The ord he order has been passed in review applicati plications on 02.02.2016 and therefor le to erefore, the petitioner was liable to pay inter y interest under section 201(1A) of the of the Act.

14. Learned earned counsel for the Revenue reli t of ue relies upon earlier judgment of Bikram S am Singh and others vs. Land Acq rs, Acquisition Collector and others, 1997 (10 10) SCC 243, CIT vs. Bir Singh F) ngh (supra), Manjet Singh (HUF) MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case Karta M ta Manjeet Singh (supra), and pra nd prays for dismissal of the writ tition. petition.

15. Actus C us Curiae Neminem Gravabit, name r due , namely, no party should suffer due to the act the act of the Court.

16. The afor he aforesaid maxim is the complete an n the lete answer to the issue raised in the present p esent petitions. It is an admitted posit n the d position that on the day when the Land Ac nd Acquisition Officer was disburs t on disbursing the interest element on enhanced hanced compensation to the concerned cerned landowners whose lands have been acq en acquired, litigation had been tak en taken up before the Court with regard to ard to the action of the LAO in dedu n deducting TDS upon such interest upto Sep to September, 2012 under Section 194 n 194LA of the Act, 1961.

17. It is also is also an admitted position that vario High t various Courts including this High Court gr urt granted stay and also held that o be d that TDS is not required to be deducted ducted from the interest payments. ents. The LAO asked for a legal opinion inion and as per the instructions da dated 09.10.2012 issued by the District R strict Revenue Officer on the noting s ing sheet, he was directed that “as per the o the opinion of the ADA(P) i.e. Add DS Additional District Attorney, TDS may not not be deducted”. The document w ent was produced by the petitioner before th fore the Income Tax Authorities. In ter y the . In terms of directions issued by the superior perior officer, the deductions were ther re therefore not made.

18. In the c the case of Sh. Satpal & others V rs Vs. St. of Haryana, Additional District J strict Judge, Faridabad held that the at the deduction of TDS was illegal and the d the LAO was directed to pay the y the same to the landowners vide order da der dated 20.09.2014. In another cas er case of HUDA v/s Mandir Nar Singh Pu h Puri & others, C.R. No. 7953 of 013, 3 of 2013, decided on 21.12.2013, MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case the High High Court passed orders of restrai DS. restraining from deduction of TDS. Thus, it us, it is apparent that the TDS deduc d on deductions were not made based on orders of ders of the Court. It is also noticed th High iced that orders passed by the High Court w urt were later on reviewed at the Tax the instance of the Income Tax Departm partment.

19. Learned earned counsel for the Revenue has a has attempted to submit that there were oth re other judgments of the High Court Court wherein a different view had been tak en taken holding that TDS can be pra). n be deducted (as referred supra). However wever, she does not deny that the LA ad at the LAO and his department had at the time time of enquiry submitted the reason S as reasons for non-deduction of TDS as noticed b ticed by this Court hereinabove. There t the . Therefore, it cannot be said that the LAO wa O was at fault. He was genuinely foll ly following the advice given to him by his s his superior officer who was a Dis a District Revenue Officer, whose direction ections of not deducting TDS were ba ere based on legal advice. The legal advice w vice was given on the basis of the direc e this e directions of this Court. While this Court ma urt may have passed order which was was not in conformity with some other ord er orders passed by the High Court r the Court, it was not available for the LAO to i O to ignore or flout the Court’s order ed to orders, which are to be presumed to be corre correct till they are set aside in ap n be in appeal. Thus, no fault can be attributed ficials. ributed on the LAO or on his officials.

20. In the ab the absence of there being any fault an fault and there being a genuine belief based on sed on judgment of the High Court th to be urt that TDS was not required to be deducted ducted on the interest paid, the action id to action of the LAO cannot be said to be wron wrongful or illegal. The action of n of releasing the interest amount without thout deducting TDS therefore, cann cannot be a reason for imposing MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document CWP-14794-2016 2016 (O&M) and connected case penalty i nalty in terms of Section 201 and 2 and 201(1A) of the Act, 1961 and cannot be nnot be justified.

21. The Lan he Land Acquisition Officer cannot be nt of not be made to suffer on account of the orde orders passed by the Court. Pena . Penalty imposed on him by the Assistant sistant Commissioner of Income Tax s e Tax, TDS Circle vide its orders dated 22. ted 22.03.2016 and 31.03.2016 are liab liable to be set aside.

22. Accordin ccordingly, these writ petitions are s are allowed. The orders dated

22.03.20 .03.2016 (Annexure P-5 in CWP 2016 CWP-14794-2016) and 31.03.2016 (Annexu nnexure P-5 in CWP-14811-20 2016) passed by Assistant Commiss mmissioner of Income Tax, TDS Circ de. If S Circle are quashed and set aside. If any amo y amount has been deposited, the sa the same shall be refunded to the petitione titioner along with interest @6% per an per annum.

23. No costs o costs.

24. All pend ll pending applications also stand dispo d disposed of accordingly. (SANJE ANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE 2024 August 09, 2024 Mohit goyal

1. Whether 2. Whether ether speaking/reasoned? ether reportable? Ye Yes/No Yes/No Ye MOHIT GOYAL 2024.08.12 11:22 I attest to the accuracy and integrity of this document