AI Drafter 
TaxTMI 
TaxTMI 
2015 (10) TMI 79
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....MBS Jewellers Pvt. Ltd. and its group concerns, a search operation was also conducted in the of f ice premises of M/s Eggwood Boards and Panels Pvt. Ltd. In course of such search action, certain documents relating to assessee was found and seized. Such seized material contained agreement of sale for purchase of land by assessee at Survey No. 74/2, Gavalakanahalli village, Chikballapur, Karnataka. On the basis of such seized material, notice u/s 153C was issued to assessee calling for return of income. In response to the said notice, assessee f iled its return of income on 25/11/11 declaring 'nil' Income. During the assessment proceeding, AO referring to the agreement of sale found and seized in course of search operat ion, observed that as per the said agreement of sale, assessee agreed to purchase 14.36 acres of land from Smt. Yashoda and 17 others for total considerat ion of Rs. 5,17,50,000. However, as per the registered sale deed dated 29/05/08, the said property was registered for considerat ion of Rs. 4 crores only. When assessee was called upon to explain the difference, it was submitted that the actual amount recorded in the books of account is much higher than the consider....
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....ing to Rs. 1,14,05,000 apart from cheque issued of Rs. 34,05,000 to Shri G. Ranganath. He, therefore, concluded that all other payments made to Syed Asif either as commission or otherwise cannot be considered to have been made to land owners. AO f inally concluded that over and above sale consideration recorded in the registered sale deed, assessee has paid an amount of Rs. 28,51,250 each to four families. He further noted that explanation submitted by assessee is only an attempt to camouf lage the subsequent expenditure incurred to explain the gap between the amount mentioned in agreement of sale and registered sale deed. Accordingly, accepting the payment of Rs. 34,05,000 made through cheque to Shri G. Ranganath out of excess payment of Rs. 1,14,05,000, the balance amount of Rs. 80 lakh was treated as unexplained investment of assessee and added to the income returned. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A). 4. Before ld. CIT(A), assessee contended as under: "(a) The addition was made as unexplained investment but there is no "unexplained" investment as the appellant had disclosed and accounted all the payments made in the books. (b....
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....mediator to interact with the company and the co-owner as agricultural land cannot be purchased by company for purpose other than agricultural in Karnataka, Sri Syed Asif was appointed to get the property registered in the name of the company after conversion from agricultural to industrial. The land was therefore purchased only after conversion to industrial land. An MOU was also signed with him. The payment to the land owners were also routed through Syed Asif. Sri Syed Asif was paid by cheque and he in turn distributed in cash to the land owners. (h) The AO in para 5.1.3 of the asst. order quoted a GPA between the land owners and Syed Asif and which was only for 10 guntas (Rs.3,50,000). This GPA is dated 29.08.2009 which is much after the executed of sale deed dated 29.05.2008. The appellant has nothing to do with this transaction of sale of 10 guntas of land. (i) No mediator would be paid such a high amount of "about Rs. 80 lakhs" for providing mediator services. (j) A notorized affidavit given by Sri Syed Asif clarifying the transaction was also filed in course of the appellate proceedings, which reads as under: I, the above named deponent solemnly affirm and dec/a....
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....if towards purchase of land is acceptable as long as the entire payment is between the date of agreement of sale and the date of registration of sale deed. Therefore, when the payments made between agreement of sale and sale of registration of sale deed to Shri Syed Asif was to the tune of Rs. 50 lakhs. The subsequent payment of Rs. 33,50,000 af ter registration of sale deed cannot be accepted as towards purchase of land. He, therefore, directed AO to restrict the addition to Rs. 33,50,000. 6. Ld. AR submitted before us, though, AO treated the amount of Rs. 1,14,05,000 to be the payments out of the books of account, however, he select ively allowed Rs. 34,50,000 whereas ld. CIT(A) allowed further sum of Rs. 46,50,000 as accounted in the books of account. He submitted, the aforesaid fact proves that AO and ld. CIT(A) accepts that payments of Rs. 1,14,05,000 are accounted for in the books of account, otherwise, the total amount would have been disallowed. He submitted, ld. CIT(A) has sustained the addition of Rs. 33,50,000 only on the ground that the payments were made af ter the sale deed. He submitted, this was never the ground of addition by AO. He submitted, when ld. CIT(A) do....
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....n the reverse side of the agreement of sale, but, it is the contention of assessee that receipts are not part of the agreement of sale, but, are separate documents. In any case of the matter, since seized materials were not produced before us, we are not in a position to render any f inding on this factual aspect. Be that as it may, before ld. CIT(A), assessee has claimed that out of the differential amount of Rs. 1,14,50,000 between the agreement of sale and registered sale deed, assessee has paid amount of Rs. 34,05,000 to shri G. Ranganath and family directly through cheque and since the other land owners were not willing to get the amount in cash whereas assessee company follows the principles of not making any payment in cash, the amount of Rs. 83,50,000 was paid to GPA holder Shri Syed Asif for distribution to the respective land owners. It is clearly evident that the aforesaid explanation of assessee was found believable/acceptable by ld. CIT(A). The only reason for which ld. CIT(A) has sustained the addit ion of an amount of Rs. 33,50,000 is, such payments were made to Shri Syed Asif af ter registration of the sale deed. In our view, when ld. CIT(A) accepts the payment of R....