आयकर अपीलीय अिधकरण, ‘बी’ (एस एम सी) , (cid:7008)यायपीठ,चे(cid:7382)ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ (SMC) BENCH, CHENNAI (cid:7088)ी जॉज(cid:6981) जॉज(cid:6981), उपा(cid:7007)य(cid:6979) के सम(cid:6979)

BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT आयकर अपील सं./ITA No.: 1756/CHNY/2025 िनधा(cid:6981)रण वष(cid:6981)/Assessment Year: 2018-19 Shri Veeraswamy Jotheeswaran, The Income Tax Officer, Plot No.23, Sri Lakshmi Narayana, Vs. Ward 1, Nivasam Santhosh Nagar 89, Tiruvallur Veppambattu B.O, Veppampattu, Tiruvallur – 602 024. PAN: AORPJ 2510H (अपीलाथ(cid:7278)/Appellant) ((cid:7079)(cid:7004)यथ(cid:7278)/Respondent)

अपीलाथ(cid:7278) क(cid:7409) ओर से/Appellant by : Shri N.V. Krishnan, Advocate (cid:7079)(cid:7004)यथ(cid:7278) क(cid:7409) ओर से/Respondent by : Shri Y. Sudarshan, JCIT सुनवाई क(cid:7409) तारीख/Date of Hearing : 11.09.2025 घोषणा क(cid:7409) तारीख/Date of Pronouncement : 12.09.2025 आदेश/ O R D E R This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 16.04.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.

2. Brief facts of the case are as follows:

The assessee is an individual. For the assessment year 2018-

19, assessee did not file the return of income within the due date prescribed. The Department had information that assessee had received compensation for land acquisition of Rs.58,49,228/- during the relevant assessment year 2018-19 from Special District Revenue Officer, National Highway Authority of India (NHAI). Since no return of income was filed by the assessee, the AO initiated proceedings u/s.148 of the Act and notice u/s.148A(b) of the Act was issued on 21.03.2022 by giving assessee seven days’ time to respond to the notice. However, there was no response to the notice issued u/s.148A(b) of the Act. Hence the AO passed order u/s.148A(d) of the Act on 07.04.2022 and notice u/s.148 of the Act was also issued on 07.04.2022. In response to the notice issued u/s.148 of the Act, assessee filed the return of income on 07.05.2022 admitting total income of Rs.2,79,480/- after claiming exemption u/s.10(37) of the Act. On receipt of the return of income, the AO issued notice u/s.143(2) of the Act on 31.05.2022. Thereafter, notices were issued u/s.142(1) of the Act. On perusal of the replies filed by the assessee, the AO noticed that assessee had received enhanced compensation of Rs.93,28,713/- which included interest on enhanced compensation amounting to Rs.35,99,509/- received from NHAI, Tiruvallur District. The AO noticed that interest on enhanced compensation was not offered for taxation. The AO completed the assessment u/s.147 r.w.s. 144 r.w.s.144B of the Act vide order dated 19.02.2024, wherein he treated 50% of such interest income as taxable u/s.56(2)(viii) r.w.s.57(iv) of the Act. Therefore, a sum of Rs.17,99,975/- was treated as ‘income from other sources’ (50% of Rs.35,99,509/-).

3. Aggrieved by the order passed u/s.143(3) r.w.s. 144 r.w.s.144B of the Act, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, assessee had raised legal contentions that notice issued u/s.148 of the Act by the Jurisdictional AO is bad in law as the same ought to have been issued by the AO of faceless unit. On merit, the assessee contended that he is entitled to the benefit of section 10(37) of the Act. The FAA however rejected the contentions raised by the assessee both on legal grounds as well as on merits. The relevant finding of the FAA deciding the issue against the assessee on merits read as follows:-

8.1 In these grounds, the appellant claimed that interest of Rs.17,99,975/- is exempt u/s 10(37) of the IT Act as it is a capital receipt. Further, the appellant claimed that the compensation received under FRCTLAR Act 2013 is also exempt. The appellant also relied upon the decision of Hon'ble Supreme Court in the