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TMI Blog2019 (3) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... l rights whereas the property sold in question is first floor flat without roof rights. The various decisions relied on by the assessee also supports his case. In this view of the matter of the considered opinion that the sale consideration at ₹ 58,19,000/- adopted by the CIT(A) being stamp duty value as against actual sale consideration of ₹ 30 lacs shown by the assessee is not sustainable - assessee ground allowed. Commission paid to two related parties - applicability of section 40A(2)(b) - HELD THAT:- Despite summons issued u/s 131 they never appeared before the AO to substantiate the nature of service rendered by them for getting commission. Merely because tax has been deducted and payment has been made by account payee cheque will not absolve the assessee from the onus cast on it. It is the settled proposition of law that for any expenditure claimed to be an allowable deduction, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the incurring of such expenditure wholly and exclusively for the purpose of business. However, in the instant case the assessee could not prove the same since the two persons wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the purchasers Dr. Ajay Sharma if so required. Moreover the onus is on the revenue to prove that the assesee company received money over and above the sale price of ₹ 30 lacs. Various decisions were also brought to the notice of the Assessing Officer. 4. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that the summons issued to Dr. Ajay Sharma remained uncomplied with. Since he did not appear before the department but merely filed certain papers, therefore, the contents of these papers cannot be verified in absence of getting any answer from Dr. Ajay Sharma about the nature of transaction, who introduced him to the assessee company and what were the circumstances in which he got the commercial property at below the market rate in which he is running a successful clinic. Moreover the party did not file the copy of the bank statement and therefore, the source of money to assessee remained unverified. So far as the various decisions relied by the assessee to the proposition that over and above ₹ 30 lacs, the addition cannot be made on the basis of suspicion and presumption is concerned, he noted that although t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Following up his observation, the A.O. issued Summons to the relevant parties with a view to examine them on oath, made enquiries from the Registrar Meerut, carried out enquiries in the property market and gathered details of other similar transactions, summoned the alleged commission agents, carried out inspectorial enquiries from the purchaser of the property and confronted the assessee company with all the evidences collected through the departmental enquiries. The A.O. also considered and weighed other registries of the area submitted to him by the assessee company before arriving at his conclusions. The manner of the investigation carried out by A.O. is indeed praiseworthy. 4.4 The disclosed sale price by the assessee company is ₹ 30Lacs. The two receipts for commission are in respect of one flat each and total up to a sale considering of ₹ 60 lacs in respect of two units sold. The Stamp Duty value is ₹ 58,19,000/-. The A.O. has made an addition of ₹ 30 Lacs. 4.5 After carefully considering the entire circumstances, I direct the A.O. to adopt the market value for Stamp Duty valuation viz. 58,19,000/- for working out the disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the provision of section 43 CA are also not applicable to the instant case since those provisions were introduced in the statue book by the Finance Act 2013 w.e.f. 01.04.2014 and the assessment year involved in the instant case is assessment year 2012-13. Further, the two sale instances given by the AO are also not applicable since in one case the property sold was ground floor, 1st floor, 2nd floor i.e. 3 storeyed shop including land and roof rights whereas in the instant case, the assessee has sold the property in the first floor flat without roof right. Similarly the second sale instance given by the AO is a partly constructed land with all rights whereas the property sold by the assessee is a first floor flat without roof right. Therefore, the sale instances of the two properties considered by the AO cannot be compared with that of the two flats sold by the assessee. 10. Referring to the decision of Mumbai Bench of the Tribunal in the case of M/s. Neel Kamal Realtors and Erectors India Pvt. Ltd. Vs. DCIT in ITA No.1143/Mum/2013 order dated 16.08.2013 for A. Y. 2009-10 and the decision of the Delhi Bench of the Tribunal in the case of Sh. Satish Arora Vs. ITO vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re inserted by the Finance Act 2013 w.e.f. 01.04.2014 and therefore, these provisions are also not applicable to the assessee since the assessment year involved is assessment year 2012-13. 14. I find identical issue had come up before the coordinate bench of the Tribunal in the case of Shri Sastish Arora (supra) where in the Tribunal has deleted the addition made by the Assessing Officer and sustained by the CIT(A) by observing as under :- 8. Admittedly in the relevant assessment year the provisions of section 50C were not applicable in case a property was held as stockin- trade, because section 43CA has been inserted by the Finance Act, 2013, w.e.f. 1.4.2014. The AO has not pointed out any defect in the books of account and has merely rejected the books of account on the basis of lower sale consideration being received for the ground floor property as compared to first floor property. This is not permissible in law, because there has to be some concrete evidence to come to the conclusion that assessee has not declared his full sale consideration. Reliance placed by Id. counsel for the assessee on the decision of Hon'ble Supreme Court in the case of A. Raman Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 58,19,000/- adopted by the CIT(A) being stamp duty value as against actual sale consideration of ₹ 30 lacs shown by the assessee is not sustainable I, therefore, set aside the order of CIT(A) on this issue and direct the AO delete the addition of ₹ 28,19,000/-. The ground No. 1 of the assessee is accordingly allowed. 16. Now, coming to the 2nd ground of appeal, i.e. the addition of ₹ 3 lacs made by the AO on account of commission paid to two related parties is concerned, it is an admitted fact that the above two persons are related parties as per provision of section 40 A (2)(b) of the IT Act, 1961. Despite summons issued u/s 131 they never appeared before the AO to substantiate the nature of service rendered by them for getting commission. Merely because tax has been deducted and payment has been made by account payee cheque will not absolve the assessee from the onus cast on it. It is the settled proposition of law that for any expenditure claimed to be an allowable deduction, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the incurring of such expenditure wholly and exclusively for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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