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Shri Abhisheksinh Versus The DCIT, Central Circle-2, Surat

2016 (8) TMI 315 - ITAT AHMEDABAD

Disallowance u/s. 40A(3) - proof of payment of expenditure through banking channel - Journal entries - Held that:- We find that the ld. CIT(A) has deleted disallowance of ₹ 21.50 lacs as made by the Assessing Officer u/s. 40A(3) of the act by concluding that the same does not apply. He holds that the assessee has made FDR payment of ₹ 1 lacs over and above that agreed with the vendor and the same is not allowable as business expenditure. We find that the CIT(A) takes note of the case .....

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We feel it appropriate in larger interest of justice that the ld Assessing Officer needs to re-adjudicate the entire issue in view of all these developments as per law after affording adequate opportunity of hearing to the assessee. - ITA Nos. 2849/Ahd/2012 & 146/Ahd/2016 - Dated:- 29-6-2016 - Shri Pramod Kumar, Accountant Member and Shri S. S. Godara, Judicial Member For The Revenue : Shri O.P. Chaudhary, Sr. D.R. For The Assessee : Shri S.K. Kabra, A.R. ORDER PER : S. S. GODARA, JUDICIAL MEMBE .....

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owance of expenditure of ₹ 1 lacs made by the CIT(A) by reversing Assessing Officer s action invoking section 40A(3) of the Act qua FDR payments of ₹ 1,50,000/- . Latter ground challenges the lower appellate order confirming unverifiable purchase claim of ₹ 20 lacs made by both the lower authorities. We proceed further and find that the assessee s second appeal challenges section 271(1)(c) penalty of ₹ 7,13,790/- imposed by both the lower authorities corresponding to abov .....

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construction, borewell and fencing etc. through journal entry dated 15-11-2008 and claimed the same as land development expenses. The Assessing Officer invoked section 40A(3) of the act to disallow the entire sum of ₹ 21,50,000/- in assessment order dated 28-12-2011. 4. It further transpires from the case file that the Assessing Officer thereafter sought to verify the land development expenditure in question. He found the same to have remained outstanding as on 31-03-2009. The assessee s .....

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section 40A(3) disallowance to ₹ 1 lacs only by partly agreeing with the assessee s contention that the above stated statutory provision does not apply in facts of the case as follows: 2.4 I have considered the basis of disallowance of ₹ 1.50 lacs made by the Assessing Officer and submissions made by the Ld. AR and also perused and considered the order for permission of tribal land sale passed by the collector, Dadra and Nagar Haveli, Silvassa dt. 23-12-2008. It is clear from the ord .....

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ri Budhia Kurkutia was required to keep an amount of ₹ 1.00 lacs in FDR in a nationalized bank. From the perusal of receipt issued by Shri Budhia Kurkutia seller of the land, it is clear that the appellant Shri Abisheksingh Chauhan made the full and final payment towards sale consideration of total land admeasuring 10.85 hectares of village Kala bearing survey No. 41/2/4 and 5 and this includes FDR of ₹ 50,000 issued on 30-12-2008 and FDR of ₹ 1.00 lac issued on the same date. .....

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s, the appellant has claimed that it has paid ₹ 1.50 lacs in addition to the sale consideration of ₹ 97.65 lacs which is factually wrong claim on the basis of order of the collector and the registered sale deed. The appellant has put ₹ 50,000 in FDR in the name of Shri Budhia Kurkutia by issuing cheque no. 003411 dt. 29-12-2008 on IDBI Bank against which the bank has issued an FDR in favour of Shri Budhia Kurkutia. Another cheque No. 003410 for ₹ 1.00 lac was issued by th .....

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he name of seller, was against the purchase consideration of ₹ 97.65 lacs. This expenditure of ₹ 1.00 lac was debited in land cost by the assessee which was actually not in the nature of expenditure to be borne by the appellant. This payment of ₹ 1.00 lac was made to the bank for issuing an FDR on behalf of the seller of the land. Hence, the expenditure of ₹ 1.00 lac claimed by the appellant is required to be disallowed as it was not incurred by the assessee for wholly an .....

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/s. 40A[3]. Thus, the disallowance of ₹ 1.00 lac is confirmed on the ground that assessee has wrongly claimed the amount of ₹ 1.00 lac even though it was not in the nature of additional expenditure and was not borne by the appellant. The appellant gets the relief of ₹ 50,000. 6. We find that the lower appellate findings thereafter hold that section 40A(3) disallowance does not apply qua the latter sum of ₹ 20 lacs being in the nature of a journal entry in question. The CI .....

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o the sale deed dt 30-12-2008 for 8 hectares of land in village Parzai bearing S. No. 63 sold by the appellant Shri A. F. Chauhan to Shri Budhia Kurkutia. I have also perused the order of the collector of D&N Haveli dt. 11-9-2008 regarding grant of permission to sell the agricultural land bearing S. No. 63 by Shri A. F. Chauhan in favour of Shri Budhia Kurkutia of Parzai. Before adjudicating the issued under consideration, it will be better to briefly mention the facts of the case, which are .....

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; 98.15 lacs. As per page no. 7 of the registered sale deed, the title of the said agricultural land with all rights and the possession of the said land was handed over to the purchaser on the date of registered sale document. As per receipt enclosed with the sale deed, total payment of ₹ 98.15 lacs was made to the seller Shri Budhia Kurkutia from 5-1-2008 to 29-12-2008. As per the permission order by the collector dt. 23-12-2008, the sale consideration of the land was settled @ ₹ 3. .....

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rties mutually. As per receipt issued by the appellant, he has received payment of ₹ 80 lacs [100,000 X 8 cheques bearing Nos. 030201 to 03208 dt 29-12-2008]. As per the order dt 11-9-2008 by the collector, D&N.H., Silvassa, issued for grant of sale permission in respect of his agriculture land bearing S. No. 63 admeasuring 8 hectares of village Parzai in favour of Shri Budhia Kurkutia the settled sale consideration was @ ₹ 9000 per Aare. As per MoU dt 18-6-2008 between M/s Havel .....

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the appellant •has agreed to make an expenditure of not more than ₹ 20 lacs or pay the same to the present vendor i.e. Shri Budhia Kurkutia only after the present vendor has fully vacated the said property and demolished his as well as his sister's old existing house situated on the said property at village Kala. The appellant has claimed expenditure of ₹ 20 lacs as part of the land cost by passing JV entry on 15-11-2008. It is also admitted by the appellant that the appell .....

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nditure of ₹ 20 lacs debited to the cost of land without incurring any expenditure. The appellant has not filed any confirmation from Shri Budhia Kurkutia for incurring any expenditure till the date of assessment order and no expenditure was incurred on the said land. As per copy of accounts filed by the appellant, it is clear that as on 31-3-2009, 31-3-2010 and 31-3-2011, ₹ 20 lacs was outstanding. The payment of ₹ 20 lacs is claimed to have been made on 14-5-2012 and 15-5-201 .....

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chaser Shri Budhia Kurkutia on the date of registered sale deed dt 29-12-2008 and 30-12-2008. No payment against sale consideration of land was outstanding in case of both the sale transaction of land. In the registered sale documents, no where any condition for incurring any expenditure on account of land leveling, fencing, compound wall, and to make useful for agricultural purpose is mentioned. The MOU is written only on a stamp paper of ₹ 10 and the same is not registered document and e .....

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sale to the appellant, the price for agricultural land was settled at ₹ 9000 per Aare where as, as per the registered sale deed the land rate of agricultural land bearing S. No. 63 is mentioned at ₹ 10,000 per Aare which comes to ₹ 8 lacs more than the price settled as per collector's order. However, that payment has been made as per registered sale deed and the Assessing Officer has accepted the same. The appellant has shown payment of ₹ 20 lacs on 14-5-2012 and 15-5 .....

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e Assessing Officer was justified in disallowing claim of expenditure of ₹ 20 lacs on the basis of facts and circumstances of the case and relying on the various judgements mentioned in para 7.9 of the assessment order which have been reproduced on page No. 3 to 5 of this order. It is also held that the appellant has prepared and signed into MOU with alleged purchaser to increase the cost of land by making false claim of expenditure to be incurred on the land sold by the appellant so that .....

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ence, the addition of ₹ 20 lacs made by the Assessing Officer on account of disallowance of alleged expenditure being unverifiable, unconfirmed and unsubstantiated is hereby confirmed and the related Ground of Appeal is dismissed. 7. We have heard both the parties and perused the case file. Relevant facts narrated hereinabove qua the two issues in question are not repeated for the sake of brevity. We find that the ld. CIT(A) has deleted disallowance of ₹ 21.50 lacs as made by the Ass .....

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