NFAC order should be a speaking one, with adjudication on assessee’s submissions and applicability of laws therein – ITAT
In a recent judgment, ITAT has laid down that order of NFAC should be a speaking one, with adjudication on assessee’s submissions and applicability of laws therein. The thought process which ultimately forms the result of the order should be brought out specifically in that order itself.
ABCAUS Case Law Citation:
ABCAUS 3928 (2024) (04) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) of National Faceless Appeal Centre (NFAC) in confirming the amount of interest received u/s 28 of the Land Acquisition Act and thereby taxing it after giving 50% deduction u/s 57(iv) of the Income Tax Act, 1961 (the Act).
The assessee was an individual and his ancestral agricultural land was compulsory acquired by Special Land Acquisition Officer. The assessee filed two civil suits for enhancement of compensation. Accordingly, the Civil Court passed order awarded total compensation under the Land Acquisition Act.
Though the Civil Court had passed the order in favour of all five family members, but Land Acquisition Officer had deducted TDS in the hands of the assessee only.
While filing the return of income for the year under consideration, assessee had claimed full refund of TDS on behalf of all the family members. The AO issued notice u/s 143(2) & 143(1) and sought clarification from the assessee.
In reply, assessee submitted that acquired land was rural agricultural land and the compensation was of all the family members which was totally tax free. In support of his clam, he furnished tax free income, copy of civil court judgment, copy of award by the Collector, joint bank account etc. Since the assessee was unable to establish the fact of transfer of compensation to other joint owners of the property and also assessee himself claimed the refund of entire TDS, the AO made the addition of 50% of income u/s 57(iv) of the Act.
The NFAC, after considering the detailed submissions made by the assessee as well as assessment order, upheld the assessment and dismissed the appeal.
The Tribunal observed that the NFAC while passing the order had not dealt with specifically with the submissions made by the assessee vis-à-vis various referred case-laws applicable in the case of the assessee. There had not been any independent application of mind and the NFAC had failed to come out with a speaking order.
The Tribunal emphasised that as a quasi judicial authority, it is a matter of common knowledge that the order passed by the NFAC should have to be a speaking order and the thought process which ultimately forms the result of the order should be brought out specifically in that order itself.
However, the Tribunal noted that the NFAC had passed a cryptic order bereft of any discussion on merits nor there is any adjudication vis-à-vis the submissions of the assessee and the applicability of laws therein.
In view thereof, the Tribunal set aside the order of NFAC and remand the matter back to its file for de novo adjudication and to pass a speaking order with application of mind as per law through proper verification and examination of facts and documents, complying with the principles of natural justice.
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