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TMI Blog2018 (1) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... ), allowed the claim of the assessee on these facts and circumstances, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. CIT(A) was justified in restricting the disallowance of expense @ 10% amounting to ₹ 18,78,161/- was justified on presumptive basis. 4. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 called sale consideration of ₹ 3,50,00,000/-. 10) There was a time gap of only 5 months in the so called purchase and sale agreements of land. 11) The assessee did not have any right over the said immovable property on the date of sale since the land was not registered with any sub registrar in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 application the assessee had not entered into any agreement with M/s. A One Agro Pvt. Ltd. As a prudent business man the assessee could have allowed the vendor to forfeit the said amount of ₹ 9,00,000/- and there was no occasion to enter into further agreement for sale of land and that too at a loss of ₹ 3,55,50,000/-. It is also noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (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(3) will be attracted in respect of payment of ₹ 7 lakh in cash to the so called vendors of land." 5. On appeal the ld. First Appellate Authority, allowed the claim of the assessee by observing as follows:- "After going through the finding of the A.O. and written submission filed by the A.R. it is clear that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 enclosing herewith the relevant page of the our cash book to prove that there was sufficient cash to pay ₹ 7,00,000/- to the vendors vide Annexure-6." 6.1 At best the assessee could have acquired certain rights against the intermediaries/brokers/land pooling agents. There is no purchase of land. Such agreements cannot form part of "stock-in-trade" of the assessee. These argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Section 40A(3) of the Act. we direct him to do so. 6.3 In view of the above discussion, the issue is restored to the file of the ld. CIT(A) for fresh adjudication, in accordance with law. In the result, this ground of the revenue is allowed for statistical purposes. 7. Ground No. 2, is on the issue as to whether the ld. CIT(A) was right in allowing as an expense, the claim of the assessee on payment of non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 57,27,558/-. 9.1 The ld. CIT(A), disallowed the claim of the assessee by holding as follows:- "Appeal on ground No. 6 is against the disallowance of ₹ 57,27,558/- out of assessee's claim towards leveling and fencing expenses. The AO has disallowed ₹ 57,27,558/- out of ₹ 82,66,742/- for leveling and fencing expenses on the ground that the assessee company could not produce relevant documents. The A.R. during the appellate proceed has submitted that the A.O. in his assessment order itself has mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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