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TMI Blog2012 (9) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... d income and confirmed by learned CIT(A) are erroneous both in law and as well as on facts of the case. 1.1 The learned CIT(A) erred in approving the action of the Assessing Officer in invoking the provisions of section 69C of the I.T. Act and making addition thereto when the assessee-company disowned the subject payment. 1.2 The learned Assessing Officer and as well as the learned CIT(A) failed to understand the facts pertaining to the alleged sale agreement of land in the right perspective. The conclusions reached by AO that the sale agreement belongs to the company are on mere surmise and suspicion, hence, invoking the provisions of section 69C of the IT Act are against the provisions of law. 1.3 The action of the Assessing Officer by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-company and Shri M. Sudhakar Reddy on the other hand. As per the agreement of sale, agricultural land admeasuring 12 acres 38 guntas in Survey No. 830 of Medchal village, R.R. Distinct was to be sold to the assessee-company and Shri M. Sudhakar Reddy for a total consideration of Rs. 1.95 crores. As revealed from the Agreement of Sale a sum of Rs. 38 lakhs was paid in cash on the date of execution of the Agreement of Sale as part sale consideration and another sum of Rs. 52 lakhs was to be paid on 17.3.2007. From the cash receipt impounded during the survey operation, it was found that the entire amount of Rs. 1.95 crores was paid in cash by the assessee-company and Shri M. Sudhakar Reddy. During the scrutiny assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of land as per the Agreement of Sale dated 3.3.2007. The Assessing Officer further observed that the cash receipt impounded in the course of the survey operation also clearly reveals the fact that the entire sale consideration of Rs. 1.95 crores including the advance of Rs. 90 lakhs was paid by the assessee-company in cash. It was found by the Assessing Officer from the books of account of the assessee company that there is no entry regarding receipt of money from Mr. V. Mahindra as claimed by the assessee. In the Agreement of Sale also there is no mention about Mr. V. Mahindra. Since the Agreement of Sale clearly indicates that Shri N.R. Srinivas and others are the absolute owners and possessors of the land admeasuring 12 acre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3.3.2007 for the purchase of land admeasuring 12 acres 38 guntas. Considering the fact that the company came into existence only on 28.2.2007, it cannot be said that within a matter of 2 to 3 days the company has generated so much profit as to make payment of Rs. 1.95 crores in cash for purchase of the land in question. The learned AR submitted that Mr. V. Mahindra, one of the promoters of the Victory Group has submitted a confirmation letter stating therein that the amount of Rs. 1.95 crores was paid by him. Therefore, it was not open for the Assessing Officer to reject the explanation of the assessee regarding the source of payment without making any enquiry in this regard. The learned AR further submitted that even assuming the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venues Pvt. Ltd and Shri M. Sudhakar Reddy. When the Agreement of Sale as well as the cash receipts indicate that the assessee-company is not the only one but transaction for purchase was made jointly with Shri M. Sudhakar Reddy and payment in cash has also been made by the assessee-company as well as Shri M. Sudhakar Reddy, addition should not have been made at the hands of assessee alone. It is also a fact that Mr. V. Mahindra, one of the promoters of the company, had claimed that the entire amount of Rs. 1.95 crores was advanced by him for payment to the vendors. When such confirmation letter was filed during the assessment proceedings, it was the duty of the Assessing Officer to make proper enquiry for finding out the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find from the assessment order as well as the order of the CIT(A) that the Revenue Authorities have recorded a finding of fact that the assessee-company has paid the amount without deducting tax. Since the amount has been paid during the relevant previous year, no disallowance could be made u/s. 40(a)(ia) of the Act in view of the ITAT Visakhapatnam Special Bench decision in the case of Merilyn Shipping & Transports in ITA No. 477/Viz/2008 dated 29th March, 2012. In view of the aforesaid, we direct the deletion of the addition of Rs. 2,20,842. Assessee's ground is allowed. 16. The assessee has also filed a Stay Application in SA No. 151/Hyd/2011. Since we have disposed of the appeal of the assessee, the Stay Application becomes infruc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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