TMI Blog2018 (1) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee submitted that the entire amount has been paid to the vendors of the land by the assessee. This submission of the ld. A/R, is contrary to the recording of fact by the Assessing Officer at page 4 of his order, where he states that the assessee has not made the said payments as specified in the said agreement of sale. Similarly, there is no proof of M/s. A One Agerco Pvt. Ltd. fulfilling its obligation under the agreements. All these documents in our view are self-serving documents. This is neither a purchase nor a sale of land. The finding of AO has force. A plain examination of the documents take us to a conclusion that this is a false and bogus claim. CIT(A) has in a slipshod manner allowed such huge claim of the assessee. In any event, as there is contradiction in the facts of the case, as has been presented by assessee and that recorded by the AO, we set aside this issue to the file of the CIT(A), with a direction to verify whether the assessee company had made payments to the tune of ₹ 7,05,37,500/-, to the group of brokers for acquisition of land. CIT(A), is also directed to verify whether M/s. A One Agerco Pvt. Ltd. had paid the entire money to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It filed its return of income on 30/09/2009, disclosing income of ₹ 10,42,91,660/-. The Assessing Officer completed assessment u/s. 143(3) of the Act, determining total income at ₹ 16,52,56,120/-, inter alia disallowing the claim of the assessee of expenditure on account of payment of non-compete fee to M/s. Mittal Corporation Ltd., of ₹ 1,51,00,000/-. Disallowance of loss on sale of land to the tune of ₹ 3.55 Crores, a disallowance out of leveling and fencing expenditure of ₹ 57.27 Lakhs, etc. 2.1 Aggrieved the assessee carried the matter in appeal. The ld. First Appellate Authority, granted part relief. The revenue filed this appeal disputing the findings of the ld. First Appellate Authority on the following grounds:- 1. Whether in facts and circumstances, Ld. CIT(A) was justified in allowing the loss from sale of ₹ 3,55,37,500/- despite the fact that the Land was not registered in the name of the assessee. 2. Whether in facts and circumstances, Ld. CIT(A) was justified in allowing the non-compete fee of ₹ 1,51,00,000/- as expense. 3. Whether in facts and circumstances, the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale was executed on 31.10.08 between 5 persons and the assessee company. 2) The said agreement to sale was executed on non-judicial stamp of ₹ 100/-. 3) The said documents was signed by one M/s. Kavita, only. 4) There is no signature of any witness on the said document. 5) The details of ownership of specific piece of land is not mentioned in, the said documents. 6) Against the said agreement a nominal amount of ₹ 7,00,000/- only was paid in cash to the said vendors. 7) Photocopy of possession letter was also furnished. On perusal it is noticed that the said letter is signed by only Shri Abhisek Modi, Director of the assessee company. Neither by any vendor nor any witness signed this possession letter. 8) An agreement to sale was also claimed to be executed on 24.03.09 on a non-judicial stamp of ₹ 100/- between the assessee company and one M/s. A One Agro Pvt. Ltd. New Delhi for a consideration of ₹ 3,50,00,000/-. 9) The said M/s. A One Agro Pvt. Ltd. paid a nominal sum of ₹ 1,00,000/- only in cash to the assessee against the so call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ru Village he sold it at a loss to M/s. A One Agro Pvt. Ltd. with a view to minimize its further loss. On perusal of the so called agreement dt. 30.02.08 it is noticed that as per clause-III the assessee was supposed to pay an amount of ₹ 3,00,00,000/- to the vendor at the time of application for CLU to the appropriate authorities. The balance payment of ₹ 3,48,37,000/- was supposed to be paid to the vendor within 1 month of CLU application or within 15 days from the date of receipt of CLU. The assessee has not made the said payments as specified in the said agreement to sale. Further it is noticed that as per clause 7 of the said agreement to sale - In case the vendee fails to pay the balance consideration to the vendor within a stipulated time (even after received the intimation regarding the sheet of permission) the vendor serve any title to forfeit the earnest money being paid herein. Even if the plea of the assessee that he was forced to sale land due paid as the assessee could not get CLU permission, the assessee could have allowed the vendor to forfeit the said earnest money paid to the assessee. It is further noticed that even on date of rejection of CLU applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. In another landmark judgment, the Hon'ble Supreme Court in the case of C.I.T. Vs. Durga Prasad More (1971) 82 I.T.R., 540, has held that it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. The ratio of the above decisions are squarely applicable in the case of the assessee. Considering the above facts and circumstances the loss of ₹ 3,55,50,000/- cannot be allowed and the same is added to the total income. Penalty proceedings u/s. 271(1)(c) read with explanation 1 and section 274 are initiated separately for furnishing inaccurate particulars of income. Without prejudice to the above discussion, if the claim of the assessee is allowed then the provisions of section 40A( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers and entering into an agreement of sale with just one of the group members, cannot be said to have acquired all the rights in the said land of 6.41 Acres for ₹ 7,05,37,500/-, at Tauru, District Gurgaon, Haryana. The facts are clear from the following submissions made by the assessee before the Assessing Officer, which is extracted for ready reference:- Further it is still a prevailing practice not only in the state of Haryana, but also in other states like West Bengal, UP, Bihar and so on, that a group of persons engage themselves in purchase and sale of land for big customers. In that case, while booking the land one or two members of the group use to make small advance against an unregistered agreement for purchase of land mainly from the farmers just to take the land in their grip and after finding suitable customer they execute the conveyance deed in favour of the customer directly from the owners of the land. The main purpose behind this to restrict the sale of land to other parties. Since these persons work in group and they are not at all owner of the land the signature of the each every person in agreement to sale is not necessary. We are en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order, where he states that the assessee has not made the said payments as specified in the said agreement of sale. Similarly, there is no proof of M/s. A One Agerco Pvt. Ltd. fulfilling its obligation under the agreements. All these documents in our view are self-serving documents. 6.2.1 In our view, this is neither a purchase nor a sale of land. The finding of the Assessing Officer has force. A plain examination of the documents take us to a conclusion that this is a false and bogus claim. The ld. CIT(A) has in a slipshod manner allowed such huge claim of the assessee. In any event, as there is contradiction in the facts of the case, as has been presented by the ld. Counsel for the assessee and that recorded by the Assessing Officer, we set aside this issue to the file of the ld. CIT(A), with a direction to verify whether the assessee company had made payments to the tune of ₹ 7,05,37,500/-, to the group of brokers for acquisition of land. The ld. CIT(A), is also directed to verify whether M/s. A One Agerco Pvt. Ltd. had paid the entire money to the assessee and acquired the land in question. As the ld. CIT(A) failed to examine the applicability of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., under the head legal and professional service and hence the statement of the ld. A/R, to that effect, has no bearing on the claim of the assessee. As the assessee has paid the amount to M/s. Mittal Corporation Ltd. and as the amount received was offered to tax by M/s. Mittal Corporation Ltd., the revenue should have no grievance in this regard. In the result, this ground of the revenue is dismissed. 8. Ground No. 3, is on the issue of the ld. CIT(A), restricting the disallowance of expenses claimed at 10 per cent in the place of 1/3rd, disallowed by the Assessing Officer. 8.1 These are ad-hoc disallowances. As the ld. D/R, did not controvert the finding of the ld. CIT(A) which are at para 7 page 24 25 of the Order, we find no reason to interfere in this issue of percentage of ad-hoc disallowance of administrative expenditure. In the result, this ground of the revenue is dismissed. 9. Ground No. 4 is on the issue of allowability of expenditure claimed towards leveling and fencing. The Assessing Officer disallowed the claim as the assessee did not furnish supporting documents for the expenditure claimed to the tune of ₹ 57,27, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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