TMI Blog2023 (3) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... :- The assessee produced before us copy of conversion premium pay order issued by the City Mamlatdar - assessee also produced before us approval letter by Government Authority for conversion of agricultural land to non-agricultural land at page 9 of the paper book. The assessee also produced before us details of payment of conversion premium along with copies of cheques issued by Shri Shanti Lal Patel and Shri SM Bharwad to the concerned Government Authority. On going through the relevant documents placed before us and the flow of transactions which has been elaborated before us, CIT(Appeals) erred in facts and in law in confirming the addition in the hands of the assessee as unexplained income under section 68 of the Act. From the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income during the year under consideration. The assessee had purchased a plot of land jointly with Mrs. Nittalben Patel for a total consideration of ₹ 1,74,26,500/- on 09-04-2013 vide registered deed. The said plot of land was purchased from 23 co-owners. The said plot of land was converted into non-agricultural land by the 23 sellers by paying the premium of ₹ 80,45,000 to the concerned Authorities. The said premium was paid by the sellers to the Government Authority by borrowing loan from Shri Shanti Lal Patel and Shri SM Bharvad. The said premium of ₹ 80,45,000/- was paid to the Government directly from the bank accounts of Shri Shanti Lal Patel and Shri SM Bharvad directly. The copies of approval letter from the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation regarding the transaction as narrated above. However, the AO held that the amount of ₹ 80,45,000/- shown as unsecured loan in the name of M/s VRS infrastructure by the assessee and the co-owner is the unexplained income in the hands of assessee and made addition of ₹ 40,22,500/- being 50% of the aforesaid amount (since the assessee was 50% as co-owner of the aforesaid land) in the hands of the assessee under section 68 of the Act. While making the addition, the AO made the following observations in the assessment order: On going through the submission submitted by the assssee, it is gathered that the payment to the seller parties made by the M/s. VRS Infrastructure on behalf of the assessee of full sale considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the assessee submitted that the action of the AO in not considering the said amount as purchase cost and adding ₹ 40,22,500/- to the total income of assessee s is unjustified in the instant set of facts. However, Ld. CIT(Appeals) dismissed the appeal of the assessee by holding that the transactions have been arranged in such a way so as to circumvent various laws as Shri Shanti Lal Patel and Shri SM Bharwad are not part of transaction directly and indirectly. The assessee had purchased land from 23 co-owners and Shri Shanti Lal Patel and Shri SM Bharwad appear to have some relationship with VRS infrastructure. While dismissing the appeal of the assessee, the Ld. CIT(Appeals) observed as under: 4.2 I have carefully consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her behalf. As per facts on record S.M. Bharwad and Shantilal K. Patel appear to have some relationship with VRS Infrastructure. The appellant had purchased the land from 23 Co-owners and S.M. Bharwad and Shantilal K. Patel are not part of this ground of 23 persons. It is not known as to what was the liability created against M/s. VRS infrastructure and haw the same were paid by M/s. VRS infrastructure. For instance, the cash in hand/funds have to be shown by the appellant before any such liability if at all legally to be paid. The appellant neither has funds nor legal liability to be met at the time of purchase of land in this transaction. In other words, if cash payments above Rs, 20.000/- each have been made by M/s, VRS Infrastructure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of conversion premium along with copies of cheques issued by Shri Shanti Lal Patel and Shri SM Bharwad to the concerned Government Authority. On going through the relevant documents placed before us and the flow of transactions which has been elaborated before us, we are of the considered view that Ld. CIT(Appeals) erred in facts and in law in confirming the addition of ₹ 40,22,500/- in the hands of the assessee as unexplained income under section 68 of the Act. From the facts, it is evident that the said amount was taken as unsecured loan from VRS Infrastructure and which was paid directly to Shri Shanti Lal Patel and Shri SM Bharwad towards conversion charges of agricultural land to non-agricultural land. Accordingly, in light of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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