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TMI Blog2024 (1) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to cancellation of the earlier agreement and therefore, the registered cancellation of the sale deed with the SRO is not valid in the eye of law. Further, on perusal of the material available on record, it is clear that there is no cogent material before me to evidence and suggest that without passing the consideration, the land owner registered an agreement of sale-cum-GPA in favour of the assessee. But, the recitals are very clear that the vendor has received the sale consideration and executed the document. Therefore simply cancelling the registered agreement of sale-cum- GPA by way of a registered deed of cancellation is not enough to come to a conclusion that the assessee has not paid the consideration to the land owner. Moreover, the assessee himself admitted before the Ld. AO for making an addition whatsoever the reason, and therefore the assessee is precluded to say that he has not paid any amount to the land owner and hence there is no any unexplained investment made by the assessee. Moreover, the Ld. AO has considered the creditworthiness of the 30 investors and the assessee got relief to the extent of Rs. 63,03,790/-. Apart from this, the assessee has also faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee explained that he paid the purchase consideration out of the amounts received as advances from 30 persons and produced the confirmation letters from them. Thereafter, it was noticed by the Ld. AO that the 30 persons who stated to have been advanced to the assessee are agriculturists having no other source of income except agricultural income, the Ld. AO caused enquiries with the Income Tax Inspector [ITI] and came to the conclusion that the creditworthiness of the 30 persons worked out to not more than 63,03,790/-. Accordingly, the Ld. AO came to the conclusion that the differential amount of Rs. 35,96,210/- [Rs. 98,91,000 Rs. 63,03,790] was paid by the assessee out of his unexplained sources of income and the assessee was asked to explain the source for the differential consideration amount of Rs. 35,96,210/-. In reply, the assessee contended that there is no lapse on the part of the assessee as he discharged his onus of establishing the creditworthiness of the 30 persons by submitting their confirmation letters. However, the assessee accepted for the addition of Rs. 35,96,210/- to buy peace with the Department on a condition that there would not be any penal proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Rs. 35,96,210/- made in the original assessment order towards unexplained investment. Against the consequential order of the Ld. AO, dated 30/12/2011, the assessee preferred an appeal before the Ld. CIT(A), Vijayawada. On appeal, the Ld. CIT(A) discussed the issues at length and dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT (A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal: 1. The order of the Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) ought to have considered the fact that the sale documents were cancelled by the transferor on the ground that no consideration was paid. 3. The Ld. CIT (A) ought to have seen that the cancellation deeds were already in the knowledge of the AO at the time of making assessment and that therefore the AO s order is erroneous as the AO treated a part of the sale consideration paid as the income of the appellant inspite of the fact that the AO was in possession of information that no part of the sale consideration was passed to the vendor. 4. The Ld. CIT (A) ought to have found that when from the information available on record no pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee which was sustained by the Ld. CIT(A). He therefore pleaded that the addition made by the Ld. AO and confirmed by the Ld. CIT(A) is not sustainable in law and therefore the same may be deleted because while passing the consequential order, the Ld. AO has not considered the directions issued by the ITAT. 5. On the other hand, the Ld. Departmental Representative heavily relied on the orders of the Ld. Revenue Authorities. The Ld. DR further submitted that the Ld. AO has examined the cancellation deeds and in his order adhering to the directions of the ITAT, the Ld. AO has categorically mentioned that the sale agreements-cum-GPA were examined by him and there was no creditworthiness of the 30 persons who stated to have paid total consideration of Rs. 98,91,000/- to the vendor Mr. M. Subba Reddy and there is no proof to establish that these 30 investors have paid the amounts directly to the owner of the land. He further submitted that the registered agreement of sale-cum-GPA clearly established that the assessee had paid the amount of Rs. 98,91,000/-. The Ld. DR also further submitted that the cancellation of the registered sale agreement unilaterally by either of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the assessee is that the land owner cancelled the initially registered sale agreement-cum-GPA (dated 08/07/2003) by executing a registered cancellation deed dated 29/11/2005 before the SRO on the ground that he has not received any sale consideration under the original sale agreement-cum-GPA. Therefore, the question of passing of any sale consideration by the assessee does not arise. Per contra , the contention of the Revenue is that any registered instrument can be cancelled only by way of a Decree of the Civil Court and it cannot be cancelled arbitrarily by either of the parties of the registered agreement and cannot get registered with the SRO unless there is a direction by way of Decree from the Civil Court. Now, to the question before me is whether the land owner can himself execute and cancel the agreement of sale-cum-GPA and register the cancellation deed arbitrarily with the SRO? The Specific Relief Act, 1963 vide Chapter-V, sections 31, 32 33 has laid down certain procedure with respect to cancellation of Instruments. For the sake of reference, the relevant sections of 31, 32 and 33 of the Specific Relief Act, 1963 are extracted herein below for reference: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1908 (16 of 1908) has to be cancelled by the Civil Court by way of Decree only and then only the SRO can implement the cancellation of the earlier instrument so registered with them. In the present case on hand, there is no Decree obtained from the Civil Court by the Land Owner with regard to cancellation of the earlier agreement and therefore, the registered cancellation of the sale deed with the SRO is not valid in the eye of law. Further, on perusal of the material available on record, it is clear that there is no cogent material before me to evidence and suggest that without passing the consideration, the land owner registered an agreement of sale-cum-GPA in favour of the assessee. But, the recitals are very clear that the vendor has received the sale consideration and executed the document. Therefore simply cancelling the registered agreement of sale-cum- GPA by way of a registered deed of cancellation is not enough to come to a conclusion that the assessee has not paid the consideration to the land owner. Moreover, the assessee himself admitted before the Ld. AO for making an addition of Rs. 35,96,210/-, whatsoever the reason, and therefore the assessee is precluded to say ..... X X X X Extracts X X X X X X X X Extracts X X X X
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