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TMI Blog2022 (3) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... lands. 3. Brief facts of the case are that the assessee is a company, e-filed its return of income for the A.Y.2011-12 on 09.11.2011 admitting total income at Nil. Thereafter return was processed u/s 143(1) of the Income Tax Act, 1961 (in short 'Act'). The Assessing Officer (AO) was in receipt of certain information from DDIT (Inv.), Guntur that the assessee purchased agricultural lands admeasuring 17.87 cents from Shri G.Punna Rao and his son Shri G.Kalyan Babu for more than the consideration mentioned in the registered sale deeds executed. During the course of enquiry proceedings before the DDIT (Inv.), Guntur, Shri G.Punna Rao was stated to have submitted copies of sale agreements entered along with his son Shri G.Kalyan Babu with Shri S.Masthan Rao, supervisor of the assessee company, in support of receipt of on money over and above the registered value from the assessee as mentioned in sale deeds. Subsequently, the AO initiated proceedings u/s 147 of the Act and issued notice u/s 148 of the Act to the assessee mentioning the reasons for such reopening. On receipt of information from Investigation Wing, Guntur, the AO found that Shri G.Punna Rao has shown receipts from conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- for the A.Y.2011-12. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and submitted that the actual investment made in purchase of lands were recorded in books of account which is matching with registered deed and hence the addition made by the AO on protective basis, invoking sec.69 of the Act is incorrect. After considering the arguments of the assessee, the Ld.CIT(A) partly allowed the assessee's appeal. The order of the Ld.CIT(A) reads as follows : "In view of the above, the appellant paid Rs. 1.93 cr. by way of cash over and above the registered value to the seller. This fact is supported by the copies of documents as referred above. It is a fact that during the year under consideration, the appellant paid Rs. 81,25,000/- in excess of the amount mentioned in the sale deeds as per the evidences. The AO considered certain amounts pertaining to the F.Y.2011-12 corresponding to the A.Y.2012-13 and arrived at unexplained income at Rs. 2.88 cr. which appears to be incorrect. In view of the above, unexplained income should have been assessed by the AO at Rs. 81,25,000/- only on evidence basis. The agreement holder, Sri S.Masthan Rao admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned investment u/s 69 of the Act for A.Y.2011-12 only. 3. Any other ground(s) that may be urged at the time of hearing. 6. Ground No. 1 and 3 of assessee's appeal are general in nature which does not require specific adjudication. 7. Ground No.2 is related to sustaining an addition of Rs. 1,79,00,000/- made by the AO on protective basis u/s 69 of the Act. 8. The Ld.Counsel for the assessee argued that the contention of Shri Punna Rao regarding receipt of on money payment is false since the assessee company neither entered into any agreement nor purchased any piece of land from Shri Punna Rao. Therefore, the question of payment of sale consideration by way of cash to Shri Punna Rao does not arise. The Ld.AO as well as the Ld.CIT(A) have relied on the photostat copy of unregistered agreements of sale and wrongly reopened and concluded the protective assessment in the hands of the assessee company. He further submitted that the assessee company has not given any authorisation to Shri Masthan Rao, who is the supervisor of the company for the purpose of purchase of agricultural land at any point of time. Therefore, the assessee company is no way concerned with the unregistered agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive basis. 10.1. The contention of the revenue is that there are two unregistered agreements for sale with regard to ancestral agricultural lands which were subsequently registered in the name of the assessee company. The agreements were between one Shri Kalyan Babu, S/o Sri G.Punna Rao and Shri S.Masthan Rao, who is the supervisor of the assessee company. The said Masthan Rao has given the acceptance letter, wherein, it was mentioned that the entire amount was paid in instalments to the seller as per the agreements and both the lands were registered in the name of the assessee company. The advances given of Rs. 38,25,000/- and Rs. 43,00,000/- for two properties were more than the value of the said properties as per the sale deed. The amounts which were received by way of cash were deposited by Shri G.Punna Rao in his bank account. Based on the above statement, the AO concluded the protective assessment in the hands of the assessee company. Now it is necessary to examine the unregistered agreements of sale dated 22.12.2010 and 05.03.2011 between Shri G.Kalyan Babu and Shri Masthan Rao. The sale consideration was shown in the agreement of sale dated 22.12.2010 at Rs. 1,14,75,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained from Sri S.Masthan Rao are difficult to tally and thereby the veracity of the sale agreement could not be established beyond reasonable doubt." Admittedly, the assessee company has not given any authorisation to the said Masthan Rao for the purpose of purchase of land in the name of the assessee company. Therefore, we are of the view that there is no satisfactory evidence to establish that the assessee company has entered into agreement of sale through one of it's employees by name Shri Mastan Rao. The AO had relied only on the photostat copy of unregistered agreement of sale. Hence, we are of the firm view that unregistered agreement for purchase of the property cannot be material to rely on, when the registered sale deed has been produced and the same shows that the property was purchased at particular price. According to us, the agreement of sale loses it's character, the moment, the registered sale deed is executed. The property has been purchased at a higher price than that of amount mentioned in the purchase deed, the burden to prove is heavily placed on the AO to establish the said fact. After considering the above said facts, we are of the considered view that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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