AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 402
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....all the said disallowances and aggrieved with the order of the CIT(A), the revenue is in appeal before us. 4. As regards the disallowance of payment of on-money for purchase of land amounting to Rs. 12,14,50,000/-, it is observed that during survey in the business premises of the assessee on 20.10.2008, an agreement of sale dated 07.08.2006 was found. As per this agreement, land of 20 acres at Hafeezpet was supposed to be purchased at Rs. 5 crore per acre by M/s Om Metal Developers Pvt Ltd., Mumbai from 11 vendors. Out of the 11 vendors, 8 individual vendors were represented by 9th person, Mrs Indrani Prasad, who is also a Director of M/s Gold Stone Exports Pvt Ltd (10th vendor). The 10th and 11th vendors, being companies, were represented by Dr. P.S. Prasad and Sri R. Subramanyam. Smt Indrani Prasad is wife of Dr. P.S. Prasad. The vendee as per this agreement is M/s Om Metal Developers Pvt. Ltd., represented by Sri Raj Kumar Malpani. Sri Malpani was also the Managing Director of the assessee-company and M/s Maheswari Mega Ventures Ltd. It is here based on the multifaceted positions of the vendors and vendees their representatives, the Assessing Officer had drawn a conclusion that....
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....ce (partly in cash and partly in cheques) on signing the agreement for sale. Finally, it was concluded that the assessee-company made undisclosed investment in M/s OMDPL in the form of capital to the tune of Rs. 12,14,50,000/- and brought this amount to tax. 5. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). 6. During appeal proceedings, the assessee submitted that they had not purchased any property in Hafeezpet and that the alleged unrecorded payment of on-money in purchasing the above land should not be considered in its hands. The assessee further contended that there is no material to indicate that they had paid part of money for purchase of land by M/s Om Metal Developers Private Limited and that the same was treated as their share holding. The scribbling relied by the Assessing Officer in the assessment, in no way pertain to them and the AO also without explaining the source of the said scribbling had simply concluded that they had made unexplained investment in the share capital of M/s OMDPL. It was also contended that the Assessing Officer failed to demonstrate the circumstances under which the alleged addition is made in their hands....
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....sale agreement and another amount of Rs. 18 crores on the date of registration, totaling to Rs. 48 crores. The assessee contends that even considering that the registered document indicate that M/s OMDPL had parted Rs. 48 crores for purchase of land, the same should be clarified from M/s OMDPL and not from the assessee, who is only a share holder with 35% stake holding in M/s OMDPL. Without any verification from the actual purchaser or from the sellers, the Assessing Officer concluded that the assessee had paid consideration outside books and added Rs. 1214.50 lakhs. The applicant finally concluded that what all the material referred to by the Assessing Officer for making the above addition is agreement of sale and registered sale deeds, indicating that M/s OMDPL had paid some consideration for purchase of land, then it is open for the Department to question the purchaser and the assessee cannot be said to have paid any on-money. 7. After considering the submissions of the assessee as well as the assessment order, the CIT(A) observed that ordinarily, any finding of the Assessing Officer shall be based on the material he possesses and conclusions could be drawn emanating from the ....
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....per book). In absence of any such link, it is wrong to bring the assessee's involvement in those transactions. It is contended that the assessee's name was involved in those transactions merely because assessee is holding 35% share holding in M/s OMDPL. Otherwise, there is no other evidence to show that assessee had actually involved in those transactions. He relied on the decision in the case of CIT Vs. Salora International Ltd., [2016] 386 ITR 58(Delhi). 10. Considered the rival submissions and perused the material facts on record. As understood from the facts, during the survey an agreement of sale was found in the business premises of the assessee, as per which, M/s OMDPL proposed to buy land from 11 vendors. In the above company, the assessee is holding 35% of shares. In a separate search proceedings in Delhi, similar agreement of sale was found in the premises of M/s Shiv-vani group, which is having interest in M/s Metro Management Services Pvt. Ltd. (MMSPL). M/s MMSPL is holding 65% shares in M/s OMDPL. The AO brought to tax the on money payment which was made by M/s OMDPL to the land owners based on the shareholders in M/s OMDPL. AO failed to appreciate that company is an ....
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..... AR submitted that there is no evidence to show that assessee had actually incurred the above expenditure and these are not in the nature of expenditure in which the assessee is normally dealing with. 16. Considered the rival submissions and perused the material facts on record. AO has not brought any cogent material to prove that assessee has actually incurred these expenses except finding loose sheet in the premises in which such details were recorded. We are inclined to accept the findings of ld. CIT(A). Accordingly ground raised by the revenue is dismissed. 17. As regards the disallowance of Rs. 3,78,875/- under section l4A read with Rule 8D, the AO observed that the assessee invested huge amounts as share capital in different companies out of borrowed funds and interest of Rs. 69,07,096/- was debited as interest on these loans. Accordingly, the Assessing Officer had worked out the disallowance under section l4A read with Rule 8D and disallowed an amount of Rs. 3,78,878/-. 18. Before the CIT(A), the assessee submitted that (i) the said investments were not made during the year under consideration and were accumulated over a period of time, (ii) in the absence of any exempte....