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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 ..... sale as well as the sale deeds, one Shri Kalyan babu, is the owner of the lands and he has entered into an unregistered agreement of sale in favour of Shi Masthan Rao, but he executed registered sale deeds in favour of the assessee company. Assessee company never entered into any agreements of sale with Shri Kalyan Babu. There are no recitals in the agreements of sale that the assessee company has purchased the land. Therefore, one thing is clear that there is no seller and buyer relationship between Shri Punna Rao and the assessee company. Thus, the contention of the revenue has no legs to stand. Some portion of payments were made through cheques which were issued by the assessee company and the said cheques photostat copy was affixed on the agreement of sale as acknowledgement - 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 consideration on account of sale of agricultural land to the assessee for more than the amount mentioned in registered deeds, whereas the books of accounts of the assessee depicts only the registered value. Hence, the AO worked out the difference of amount as per sale agreement and registered deed at ₹ 2,88,26,250/- (3,24,00,250 35,74,000). The assessee has contended that the agricultural lands were purchased from Shri G.Kalyan Babu for the purpose of construction of spinning mill, but not entered into any agreement with Shri G.Kalyan Babu before purchase of the property. The assessee further contended that the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 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 ₹ 2.88 cr. which appears to be incorrect. In view of the above, unexplained income should have been assessed by the AO at ₹ 81,25,000/- only on evidence basis. The agreement holder, Sri S.Masthan Rao admitted by acceptance letter that the entire amount was paid as agreed in instalments and the entire land was registered in the name of the company. In view of this it has to be concluded that the assessee could have paid ₹ 1.36 cr. and ₹ 43 lakhs as per the agreements during the year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. 7. Ground No.2 is related to sustaining an addition of ₹ 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 agreements of sale between Shri Kalyan Babu and Shri Masthan Rao. The AO himself is not able to identify the signature of Shri Masthan Rao on the agreement of sale. Therefore, there is no valid documentary evidence to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ₹ 38,25,000/- and ₹ 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 ₹ 1,14,75,000/- and ₹ 1,71,00,250/-. We have also examined the registered sale deeds dated 14.03.2011 and 25.07.0211, wherein, the sale consideration was shown at ₹ 17,00,000/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly, 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 AO as well as Ld.CIT(A) have done guess work while coming to conclusion that the price of the property is more than mentioned in the sale deed. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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