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TMI Blog2019 (4) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to remove the encumbrances on the land purchased under the registered deed of purchase dated 19th April, 2007 were not registered in spite of the amount paid was by way of account payee cheques? (iv) Whether on the facts and circumstances of the case and in law, the learned Tribunal, being the final fact finding authority, can disallow expenses under section 37(1) of the Income Tax Act, 1961 without verifying genuinity of the agreement more so when all the payments were made under cross cheques and there is no evidence to prove the amount have returned back to the Appellant? (v) Whether the learned Tribunal, being the final fact finding authority, was justified in not appreciating that the Assessing Officer did not use his power under the Income Tax Act, 1961 by issuing notices under section 133(6) to find the truth and authenticity of transactions? (vi) Whether on the facts and circumstances of the case and in law, the learned Tribunal passed an order which is perverse as it did not give any cogent reasons for rejecting expenses claimed by the Appellant?" 2. Though as many as 6 questions are framed, the disputed issues are only 2, namely of the disallowance of expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditures were genuine and were made wholly and exclusively for the purpose of business. The payments were made through cheques. The trust as well as the individual payees had admitted having received the said amount. The Assessing Officer cannot question the wisdom of the Assesee in making such payment. He submitted that to clear the land of all encumbrances, such payments had to be made. With respect to the trust, he submitted that the compensation had to be paid for delayed refund of the amount received from the trust since the Assessee could not fulfill the promise of providing the land clear of all title and with nonagricultural use permission. He submitted that merely because when the first MOU was executed between the Assessee and the trust, Assessee was not yet the owner of the land, would not be relevant. Likewise, in relation to payments made to the individuals, the learned Senior Counsel submitted that merely because such parties were claiming right over the land under unregistered documents, would not establish that they had no right over the land. 7. The learned Senior Counsel relied on the decisions in the case of Commissioner of IncometaxIII Vs. Panc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from BRACT, an amount of Rs. 1.64 crores was adjusted as advance for land at Survey No.45 in the year under consideration. Although the account extract of BRACT in the books of the appellant for the year ended 31.03.2009 mentions that the advance of Rs. 1,64,40,000/ was given on the basis of the MoU dated 26/02/2017, the MoU does not make any mention of payment of the same amount. The advance was also not indicated in the cancellation deed dated 01.04.2008. It appears that the amount of Rs. 1,64,40,000/was taken out of the available opening balance of Rs. 7,53,00,000/ as on 01.04.2008 and was shown as advance against property at S. No.45 by way of journal entry on 01.04.2008 as an afterthought in the books of a/c of the appellant to justify the quantum of said compensation of Rs. 6,00,60,000/." He further observed that : "(v) The basis of the compensation as stated by the appellant is that she paid half the amount received firm M/s. Riverview properties as sale consideration since the trust was to be given half of the subject land i.e. 6.5 acres of land. While on one hand Shri Jugraj Palresha was given a compensation of Rs. 1,45,00,000/ on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of BRACT and book fictitious expenditure of Rs. 6,00,60,000/in the guise of payment of settlement consideration / compensation for removal of alleged rights In such circumstances, mere payment by cheque to BRACT would not by itself entitle the appellant to deduction of the alleged expenditure." 13. In further appeal, the Tribunal confirmed these findings with following observations : "13. In so far as the payment of Rs. 6,00,60,000/ to BRACT is concerned, the authorities below have highlighted the deficiencies in the transactions, and the documents executed. In our considered opinion the discrepancies highlighted by the Commissioner of Income Tax (Appeals) are very relevant and material. As we have pointed out earlier, the assessee had entered into MOU with BRACT in respect of the land on 26022007. On the said date the assessee had neither any interest nor any right in the land. It was only on 19042007 when the assessee entered into an agreement with owners of the land, the interest of assessee was created in the land. In the first instance it has not been explained as to in what capacity the MOU was entered into by the assessee with BRACT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Kalathe, Shri Ajit Mutha and Shri Kishor Gundecha for removal of their so called rights. Although the appellant has furnished the breakup of payment of Rs. 4.07 crores during the assessment proceedings, this Tabdil Patra does not mention any such bifurcation between M/s Paramount Infrastructures and other persons. Further, the nature of rights held by each of these persons and the basis for arriving at the compensation to each person is neither indicated in the Tabdil Patra nor furnished subsequently by the appellant. It is also not known why the appellant agreed to pay Rs. 4.07 crores to M/s Paramount Infrastructures and other persons when the total consideration agreed upon between Ajit Mutha and M/s Paramount Infrastructures was Rs. 40 Lakhs as per the above mentioned agreement dated 7th December 2007. iv) Fourthly, M/s Paramount Infrastructures have not even responded to the summons issued by the Assessing Officer. It is also not known whether M/s Paramount Infrastructures and others admitted the alleged compensation in their respective return of income or adjusted against losses, if any, or these persons or claimed as exempted income. The appellant, except furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay P. Kalate Rs.74,00,000/ v. M/s. Paramount Infrastructure Rs.2,10,00,000/ Total Rs.4,07,00,000/ 7. The Assessing Officer and the Commissioner of Income Tax (Appeals) after appreciating the facts and documents on record concluded that the aforesaid payments to the parties are not genuine and the documents in support of the payments are fabricated. We have thoroughly examined the documents that have been placed on record before us in the form of paper book. The land measuring 13.5 acres comprising in Survey No.45, VillageMhalunge, TehsilMulshi, Pune was jointly owned by the families of Pashankars, Padales and some other persons. The Kalate family entered into an agreement with the owners of the land in December, 2005. A 'Visar Pavti' dated 07032005 was executed by the owners of the land in favour of Kalate family, consideration of the land was fixed at Rs. 1,20,00,000/. The Kalate family paid Rs. 20,00,000/to the owners of the land through various cheques. Thereafter, on 25012007 the Kalate family entered into an agreement for sale of the land with Shri Ajit Bandhu Mutha. The agreement betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions sacrosanct. The payments have to be corroborated with cogent evidence which is missing in the transactions in the present case. The ld. AR of the assessee has placed reliance on various decisions in support of his submissions that notarized document cannot be disbelieved or rejected without bringing on record the evidence to show that the agreements were sham, fabricated or not genuine. In the present case it has been unambiguously brought out that various documents placed on record are not genuine. Two parallel sets of transaction have been carried out. After the execution of one transaction in the one limb of transactions, it has been mentioned that there has been n encumbrances on the land. The documents executed throughout are unregistered and suffer from various contradictions and shortcomings. The only documents registered in the entire gamut of transactions is to an agreement of sale between the owners of the land and the assessee in favour of M/s. River View Properties Pvt. Ltd. These registered transactions are not in dispute and have resulted in huge gain to the assessee. The other peripheral transactions have been induced to reduce the tax liability. Thus, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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