2014 (6) TMI 246 - AT - Income Tax

Rectification of mistake apparent on record Disallowance of deduction Extra amount paid for rescission of sale agreement Held that - Tribunal upheld the order of the CIT(A) that as per the A.O. Sh. Vijay Kumar Umat, CA has absolutely denied of entering into any such agreement with the assessee - he has received in advance earnest money of Rs. 45 lacks from S/Sh. Vijay Kumar Umat and Kanwar Jagdip Sing of Amritsar and non-maturity of sale agreement whereas Rs. 40 lacs having been repaid on 27.11.2007, another instalment of repayment of Rs.40 lakh in cash has further been paid on 02.04.2008 and Rs. 10 lakh has been brought in cash for repayment in full and final settlement of the Howra/agreement - the second sale transaction remained unmatured/unmaterialized Decided against Assessee. Facts not properly appreciated Held that - The order of the CIT(A) is upheld, as the additional ground under Rule 46A of the I.T. Rules,1962 not admitted - all the documents were fresh which were not furnished before the AO and were not rightly admitted and entertained - all the documents are not registered with the Land Revenue Authorities - No sufficient cause has been established for not submitting them before the AO Decided against Assessee.

Summary

Issues:
1. Disallowance of deduction of Rs.45.00 lacs paid extra for rescinding the sale agreement.
2. Addition of one half share in the hands of the assessee.

Analysis:

Issue 1: Disallowance of deduction of Rs.45.00 lacs
The appellant filed a Miscellaneous Application to decide grounds No. 4 & 5 not addressed in the previous order for the assessment year 2007-08. Ground No. 4 pertained to disallowance of deduction of Rs.45.00 lacs paid extra for rescinding the sale agreement with Sh. Vijay Umat. The AO and the Ld. CIT(A) had rejected this claim. The appellant contended that the amount was paid to rescind the agreement, but the CA of Sh. Vijay Umat denied entering into any such agreement. The appellant's statement indicated repayment of the amount, showing the transaction remained unmatured. The ITAT concurred with the Ld. CIT(A) and dismissed ground No. 4, finding no infirmity in the order.

Issue 2: Addition of one half share in the hands of the assessee
Regarding ground No. 5, the appellant disputed the addition of one half share in his hands, arguing it belonged to Sh. Mohit Kumar Garg and Sh. Harjinder Singh. The AO deemed the plea an afterthought and rejected it, citing inconsistencies in the appellant's transactions. The Ld. CIT(A) also dismissed this ground. The ITAT upheld the decision, stating that the additional documents submitted were fresh and not furnished before the AO. As these documents were not registered with the Land Revenue Authorities, the ITAT found no sufficient cause for their delayed submission. Consequently, ground No. 5 was dismissed, and the appeal was rejected.

In conclusion, the ITAT dismissed the appeal filed by the assessee regarding both grounds No. 4 & 5 for the assessment year 2007-08. The judgment was pronounced on 20.5.2014 by the ITAT Amritsar.