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2015 (10) TMI 79 - ITAT HYDERABAD

2015 (10) TMI 79 - ITAT HYDERABAD - TMI - Unexplained investment - CIT(A) granted partial relief - the only reason for which ld. CIT(A) has sustained the addition of an amount, such payments were made after registration of the sale deed - Held that:- n this regard, assessee’s explanation that the registered sale deed was not for the entire extent of land as mentioned in the agreement of sale, hence, the amount was withheld and subsequently paid after the transfer of land, in our view, is believa .....

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-08, such payments, if at all, are to be treated as unexplained investment of assessee, they cannot be considered for addition in the impugned AY. Accordingly, we delete the addition sustained by ld. CIT(A). - Decided in favour of assessee. - ITA No. 741/Hyd/2014, ITA No. 754/Hyd/2014 - Dated:- 4-9-2015 - SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER For The Assessee : Shri Sunil Kumar & Sanjay Kumar Sharda For The Revenue : Shri Konda Ramesh ORDER PER SAKTIJIT D .....

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mmercial space (warehouse) including equipments and providing logistics and infrastructure facility. Pursuant to search and seizure operat ion u/s 132 of the Act carried out in case of M/s MBS Jewellers Pvt. Ltd. and its group concerns, a search operation was also conducted in the of f ice premises of M/s Eggwood Boards and Panels Pvt. Ltd. In course of such search action, certain documents relating to assessee was found and seized. Such seized material contained agreement of sale for purchase o .....

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36 acres of land from Smt. Yashoda and 17 others for total considerat ion of ₹ 5,17,50,000. However, as per the registered sale deed dated 29/05/08, the said property was registered for considerat ion of ₹ 4 crores only. When assessee was called upon to explain the difference, it was submitted that the actual amount recorded in the books of account is much higher than the consideration of ₹ 5,17,50,000. While examining the details submitted, it was not iced by AO that the amoun .....

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t was further stated that the land owners being agriculturists and many in number had appointed one Shri Syed Asif as their representat ive for dealing on their behalf . Accordingly, all amounts have been paid by assessee through cheque to Shri Syed Asif , who, inturn was supposed to distribute the money to the land owners. It was submitted, the amount paid to Shri Syed Asif in this regard is ₹ 50 lakhs, which has been accounted for in the books of account under the head land development c .....

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e price mentioned in the registered sale deed at ₹ 4 crores, an amount of ₹ 34,05,000 was paid to Shri G. Ranganath and the amount of ₹ 83,50,000 was paid to Shri Syed Asif for distributing to other land owners. AO af ter considering the submissions of assessee, however, observed that the general power of attorney given to Shri Syed Asif , is only in respect of 10 guntas of land for total consideration of ₹ 3,75,000, hence, it cannot be stated that ₹ 50 lakhs paid t .....

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Asif either as commission or otherwise cannot be considered to have been made to land owners. AO f inally concluded that over and above sale consideration recorded in the registered sale deed, assessee has paid an amount of ₹ 28,51,250 each to four families. He further noted that explanation submitted by assessee is only an attempt to camouf lage the subsequent expenditure incurred to explain the gap between the amount mentioned in agreement of sale and registered sale deed. Accordingly, a .....

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had disclosed and accounted all the payments made in the books. (b) The assessing officer accepted that the payment to G.Ranganath (Rs 34.05 lakhs) is related to land purchase but did not accept the payment to Syed Asif as related to land. The assessing officer acknowledges and even gave a finding that there was an MOU dated 17.09.2007 for acquiring land on behalf of the appellant by Sri Syed Asif yet does not acknowledge that the payment made to Sri Asif is related to land acquisition. (c) The .....

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s that Sri Syed Asif will acquire the propert ies and get the same registered after conversion from agricultural to Industrial in the name of the appellant. Page 3 also states that Sri Syed Asif will verify the title deed and it is his responsibility to clear off any disputes or litigat ion before executing the sale deed. Finally page 6 of the MOU also states that Sri Syed Asif will pay all the vendors through demand drafts as applicable and the balance amount of agreed sale consideration by way .....

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ur District, Karnataka 2 20/11/07 Agreement of sale entered between Coowners of land and Mr.Pramod Kumar Gupta for purchase of land admeasuring 15 acres 06 quntas 3 01/03/08 GPA entered between Co-owners and Mr.Pramod Kumar Gupta (g) As the land owners were too many (19), it was difficult to the company to interact with them and follow up legal formalit ies. Sri Syed Asif, (an Advocate in Karnataka) was appointed as mediator to interact with the company and the co-owner as agricultural land cann .....

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of the asst. order quoted a GPA between the land owners and Syed Asif and which was only for 10 guntas (Rs.3,50,000). This GPA is dated 29.08.2009 which is much after the executed of sale deed dated 29.05.2008. The appellant has nothing to do with this transaction of sale of 10 guntas of land. (i) No mediator would be paid such a high amount of "about ₹ 80 lakhs" for providing mediator services. (j) A notorized affidavit given by Sri Syed Asif clarifying the transaction was also .....

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rvey No. 74/2, Guvalakanahalli Village, Chikballapur under Sale Deed no. 500/08-09, dated 29.05.2008 between Musaddilal projects Limited and Land owners. 3. That I have been regular in filing my Income Tax Returns. In support of such contention, assessee also submitted following documents: (i) General Power of Attorney dated 29.07.2009 between Sri Syed Asif and the other land owners for 10 guntas of agricultural land and 3 acres of kharab land" which remained with the original land owner af .....

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t company. (vii) Account copy of land in the books of appellant company indicating value of 5.89 crores by 31.03.2009. (viii) Detailed land account copy indicating value of 4.20 crore and which is part of 5.89 crores mentioned supra 5. Af ter considering the submissions of assessee in the light of the materials placed on record, ld. CIT(A) observed that af ter the registration of sale deed on 29/05/08, assessee has made payments of ₹ 33,50,000 on different dates to Shri Syed Asif . He obse .....

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d Asif towards purchase of land is acceptable as long as the entire payment is between the date of agreement of sale and the date of registration of sale deed. Therefore, when the payments made between agreement of sale and sale of registration of sale deed to Shri Syed Asif was to the tune of ₹ 50 lakhs. The subsequent payment of ₹ 33,50,000 af ter registration of sale deed cannot be accepted as towards purchase of land. He, therefore, directed AO to restrict the addition to ₹ .....

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He submitted, ld. CIT(A) has sustained the addition of ₹ 33,50,000 only on the ground that the payments were made af ter the sale deed. He submitted, this was never the ground of addition by AO. He submitted, when ld. CIT(A) does not dispute the memorandum of understanding between assessee and Shri Syed Asif and payments to be made by him to the land owners on behalf of assessee, there is no reason to sustain a part of addition. Ld. AR submitted, initially the agreement of sale was made fo .....

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of ₹ 33,50,000 withheld at the time of registration of sale deed. Thus, it was submitted by ld. AR, when the entire payments have been ref lected in the books of account and assessee has made payment in cheque to Shri Syed Asif , there is no reason to disallow a part of such payment and treat it as unexplained investment. 7. Ld. DR, on the other hand, relied upon the reasoning of the AO. 8. We have considered the submissions of the parties and perused the orders of revenue authorities as .....

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tatements has shown an amount of ₹ 5.89 crores towards expenditure incurred for acquiring land. In fact, AO as would be evident, out of the amount of ₹ 1,14,05,000 treated to have been paid outside the books of account has accepted payment of ₹ 34,05,000 to Shri G. Ranganath through cheque. He only disputed the payments made to four families for an amount of ₹ 80 lakhs, which according to him, has been paid through cash. On a perusal of receipts purportedly seized during .....

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, before ld. CIT(A), assessee has claimed that out of the differential amount of ₹ 1,14,50,000 between the agreement of sale and registered sale deed, assessee has paid amount of ₹ 34,05,000 to shri G. Ranganath and family directly through cheque and since the other land owners were not willing to get the amount in cash whereas assessee company follows the principles of not making any payment in cash, the amount of ₹ 83,50,000 was paid to GPA holder Shri Syed Asif for distribut .....

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