Abhisheksinh Fatehsinh Chauhan, SILVASSA V. The Income Tax Officer, Ward-1, Vapi

ITA 146/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1321 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHARY
• Assessee Lawyers: S K KABRA
• Keywords: Business expenditure; Wrong claim
• Section: 40A(3); 143(3); 133(6); 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SHRI ABHISHEKSINH FATEHSINH CHAUHAN HAVELI, SWAMI NARAYAN MARG, SILVASSA - 396230 PAN: AFQPC9648P (APPELLANT) VS THE DCIT, CENTRAL CIRCLE - 2, SURAT (RESPONDENT) REVENUE BY : S H RI O.P. CHAUDHARY , SR. D . R. ASSESSEE BY: S H RI S.K. KABRA , A.R. DATE OF HEARING : 30 - 05 - 2 016 DATE OF PRONOUNCEMENT : 29 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE ASSESSEE HAS FILED INST ANT QUANTUM AND PENALTY APPEALS FOR A.Y. 2009 - 10 AGAINST SEPARATE ORDERS OF THE CIT(A) - II, AHMEDABAD AND CIT(A), VALSAD DATED 18 - 10 - 2012 & 16 - 11 - 2015 RESPECTIVELY; IN APPEAL NOS. CIT(A) - II/CC - 2/254/2011 - 12 AND I T A NO S . 2849 / A HD/20 12 & 146/AHD/201 6 A SSESSMENT YEAR 200 9 - 10 I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 2 CIT(A)/VLS/ 08/14 - 15 , IN PROCEEDINGS UNDER SECTION 143(3) AND SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME TO ASSESSEE S PLEADINGS FIRST. HIS FORMER APPEAL RAISES TWO SUBSTANTIVE GROUNDS. THE FIRST ONE SEEKS TO DELETE DISALLOWANCE OF EXPENDITURE OF RS. 1 LACS MADE BY THE CIT(A) BY REVERSING ASSESSING OFFICER S ACTION INVOKING SECTION 40A(3) OF THE ACT QUA FDR PAYMENTS OF RS. 1,50,000/ - . LATTER GROUND CHALLENGES THE LOWER APPELLATE ORDER CONFIRMING UNVERI FI ABLE PURCHASE CLAIM OF R S. 20 LACS MADE BY BOTH THE LOWER AUTHORITIES. WE PROCEED FURTHER AND FIND THAT THE ASSESSEE S SECOND APPEAL CHALLENGES SECTION 271(1)(C) PENALTY OF RS. 7,13,790/ - IMPOSED BY BOTH THE LOWER AUTHORITIES CORRESPONDING TO ABOVE STATED QUANTUM DISALLOWANCE OF RS. 20 LACS 3. WE COME TO QUANTUM APPEAL FIRST. THE ASSESSEE HAD ACQUIRED LAND MEASURING 10.85 HECTARES AT VILLAGE KALA FOR RS. 98,15,000/ - . HE DEBITED THESE SUMS IN P & L ACCOUNT AS DIRECT EXPENDITURE THEREBY TREATING THE LAND IN QUESTION AS STOCK IN TRADE. THE ASSESSING OFFICER NOTICED THE EXPENDITURE IN QUESTION 1.5 LACS AS PAID TO THE VENDOR SHRI B. KURTUTIA TH R OUGH FDR ON 30 - 12 - 2008. THE ASSESSEE HAD DEBITED A SUM OF RS. 20 LACS FOR RRC HOUSE CONSTRUCTION, BORE - WELL AND FENCING ETC. THROUGH JOURN AL ENTRY DATED 15 - 11 - 2008 AND CLAIMED THE SAME AS LAND DEVELOPMENT EXPENSES. THE ASSESSING OFFICER INVOKED SECTION 40A(3) OF THE ACT TO DISALLOW THE ENTIRE SUM OF RS. 21,50,000/ - IN ASSESSMENT ORDER DATED 28 - 12 - 2011. I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 3 4 . IT FURTHER TRANSPIRES FROM THE CA SE FILE THAT THE ASSESSING OFFICER THEREAFTER SOUGHT TO VERIFY THE LAND DEVELOPMENT EXPENDITURE IN QUESTION . HE FOUND THE SAME TO HAVE REMAINED OUTSTANDING AS ON 31 - 03 - 2009 . THE ASSESSEE S ALLEGED PAYEES SHRI KURKUTIA DID NOT RESPOND TO SECTION 133(6) NOTICES. H E EXPLAINED THAT THE ABOVE STATED OUTSTANDING AMOUNT WAS DUE TO THE FACT THAT HIS PAYEES HAD NOT DEMOLISHED THE CONSTRUCTION RAISED UPON THE LAND IN QUESTION. THE ASSESSING OFFICER REJECTED ALL THIS EXPLANATION TO TREAT THE IMPUGNED EXPENDITURE AS UNVERIF IABLE LIABLE TO BE DISALLOWED. HE HOWEVER ADOPTED TELESCOPING FORMULA QUA THE FORMER SUM OF RS. 21,50,000/ - ONLY. 5 . THE ASSESSE PREFERRED APPEAL. THE CI T(A) RESTRICTS SECTION 40A(3) DISALLOWANCE TO R S. 1 LACS ONLY BY PARTLY AGREEING WITH THE ASSESSEE S CONTENTION THAT THE ABOVE STATED STATUTORY PROVISION DOES NOT APPLY IN FACTS OF THE CASE AS FOLLOWS: 2.4 I HAVE CONSIDERED THE BASIS OF DISALLOWANCE OF RS. 1.50 LACS MADE BY THE ASSESSING OFFICER AND SUBMISSIONS MADE BY THE LD. AR AND ALSO PERUSED AND CONSIDERED THE ORDER FOR PERMISSION OF TRIBAL LAND SALE PASSED BY THE COLLECTOR, DADRA AND NAGAR HAVELI, SILVASSA DT. 23 - 12 - 2008. IT IS CLEAR FROM THE ORDER OF THE COLLECTOR GRANTING PERMISSION TO SELL THE TRIBAL LAND THAT THE LD. AR HAS FILED A WRONG EXPL ANATION THAT APPELLANT WAS BOUND TO PUT IN FD R OF RS. 1.00 LACS AND RS. 50,000 IN FAVOUR OF SHRI BUDHIA KURKUTIA AS PER THE CONDITIONS LAID DOWN IN NON AGRICULTURE USE PERMISSION GRANTED BY REVENUE DEPT OF ADMINISTRATION OF DADRA AND NAGAR HAVELI. IN FACT, THE APPELLANT WAS REQUIRED TO P UT AN AMOUNT OF RS. 50,000 IN FD R IN A NATIONALIZED BANK FOR 5 YEARS AND THE TRIBAL SELLER I.E. SHRI BUDHIA KURKUTIA WAS REQUIRED TO KEEP AN AMOUNT OF RS. 1.00 LACS IN FD R IN A NATIONALIZED BANK. FROM THE PERUSAL OF RECEIPT ISSUED BY SHRI BUDHIA KURKUTIA SELLER OF THE LAND, IT IS CLEAR THAT THE APPELLANT SHRI ABISHEKSINGH CHAUHAN MADE THE FULL AND FINAL PAYMENT TOWARDS SALE I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 4 CONSIDERATION OF TOTAL LAND ADMEASURING 10.85 HECTARES OF VILLAGE KALA BEARING SURVEY NO. 4 1/2/4 AND 5 AND THIS INCLUDES FD R OF RS. 50 ,000 ISSUED ON 30 - 12 - 2008 AND FD R OF RS. 1.00 LAC ISSUED ON THE SAME DATE. AS PER REGISTERED SALE DEED DT. 30 - 12 - 2008, TOTAL PRICE OF LAND ADMEASURING 10.85 HECTARES WAS RS. 97.65 LACS [AT THE RATE OF RS. 9000 PER AARE]. IN A DDITION TO THIS, THE PURCHASER I.E. THE APPELLANT HAS K EPT RS. 50,000 IN THE FORM OF FD R IN THE FAVOUR OF SELLER AS AN ADDITIONAL AMOUNT AND RS. 1.00 LAC HAS BEEN KEPT BY THE SELLER IN A FD R FROM THE SALE PROCEEDS. THE TOTAL CONSIDERATION, AS PER PAGES NO. 4 AND 5 OF THE REGISTERED SALE DEED IS MENTIONED AT RS. 98.15 LACS WHEREAS, THE APPELLANT HAS CLAIMED THAT IT HAS PAID RS. 1.50 LACS IN ADDITION TO THE SALE CONSIDERATION OF RS. 97.65 LACS WHICH IS FACTUALLY WRONG CLAIM ON THE BASIS OF ORDER OF THE COLLEC TOR AND THE REGISTERED SALE DEED. THE APPELLANT HAS PUT RS. 50,000 IN FDR IN THE NAME OF SHRI BUDHIA KURKUTIA BY ISSUING CHEQUE NO. 003411 DT. 29 - 12 - 2008 ON IDBI BANK AGAINST WHICH THE BANK HAS ISSUED AN FDR IN FAVOUR OF SHRI BUDHIA KURKUTIA. ANOTHER CHEQU E NO. 003410 FOR RS. 1.00 LAC WAS ISSUED BY THE APPELLANT ON 29 - 12 - 2008 FOR ISSUING AN FDR IN FAVOUR OF SHRI BUDHIA KURKUTIA ON BEHALF OF THE SELLER. IN VIEW OF THESE FACTS, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING DISALLOWANCE OF RS. 1.50 LACS U/S. 40A[3]. HOWEVER, AS IT IS CLEAR FROM THE ABOVE MENTIONED FACTS THAT APPELLANT WAS NOT REQUIRED TO MAKE PAYMENT OF RS. 1,00 LAC FOR ISSUING FDR OF RS. 1.00 LACS ON BEHALF OF THE SELLER. THE ADDITIONAL CHEQUE OF RS. 1.00 LACS WAS ISSUED FO R MAKING FDR IN THE NAME OF SELLER, WAS AGAINST THE PURCHASE CONSIDERATION OF RS. 97.65 LACS. THIS EXPENDITURE OF RS. 1.00 LAC WAS DEBITED IN LAND COST BY THE ASSESSEE WHICH WAS ACTUALLY NOT IN THE NATURE OF EXPENDITURE TO BE BORNE BY THE APPELLANT. THIS P AYMENT OF RS. 1.00 LAC WAS MADE TO THE BANK FOR ISSUING AN FDR ON BEHALF OF THE SELLER OF THE LAND. HENCE, THE EXPENDITURE OF RS. 1.00 LAC CLAIMED BY THE APPELLANT IS REQUIRED TO BE DISALLOWED AS IT WAS NOT INCURRED BY THE ASSESSEE FOR WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS. THIS WAS SIMPLE PAYMENT TOWARDS PURCHASE CONSIDERATION AND WAS PART OF COST OF THE LAND. THE APPELLANT WAS REQUIRED TO PAY ADDITIONAL AMOUNT OF RS. 50,000 FOR FDR AND WAS REQUIRED TO BEAR THAT ADDITIONAL EXPENDITURE OF RS. 5 0,000. THIS WAS PAID BY THE APPELLANT THROUGH CHEQUE NO. 003411 DT. 29 - 12 - 2008 TO THE BANK FOR ISSUING FDR IN FAVOUR OF THE SELLER. HENCE, THE EXPENDITURE OF RS. 50,000 IS TO BE ALLOWED AND THE SAME CANNOT BE DISALLOWED U/S. 40A[3] . THUS, TH E DISALLOWANCE OF RS. 1.0 0 LAC IS CONFIRMED ON THE GROUND THAT ASSESSEE HAS WRONGLY CLAIMED THE AMOUNT OF RS. 1.00 LAC EVEN THOUGH IT WAS NOT IN THE I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 5 NATURE OF ADDITIONAL EXPENDITURE AND WAS NOT BORNE BY THE APPELLANT. THE APPELLANT GETS THE RELIEF OF RS. 50,000. 6 . WE FIND THAT THE LOWER APPELLATE FINDINGS THEREAFTER HOLD THAT SECTION 40A(3) DISALLOWANCE DOES NOT APPLY QUA THE LATTER SUM OF RS. 20 LACS BEING IN THE NATURE OF A JOURNAL ENTRY IN QUESTION. THE CIT(A) DELETES THE CORRESPONDING DISALLOWANCE . HE HOWEVER PR OCEEDS TO CONFIRM THE CORRESPONDING UNVERI FI ABLE PURCHASE DISALLOWANCE OF RS. 20 LACS AS UNDER: - 2.8 I HAVE CONSIDERED THE BASIS OF DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE SUBMISSIONS MADE BY THE LD. AR AND ALSO PERUSED THE COPY OF MOU DT 18 - 6 - 2008, THE COPY OF REGISTERED SALE DEED DT 30 - 12 - 2008 FOR LAND BEARING S. NO. 41/2/4 AND 5 ADMEASURING 10.85 HECTARES AT VILLAGE KALA SOLD BY SHRI BUDHIA KURKUTIA TO THE APPELLANT AND ALSO THE SALE DEED DT 30 - 12 - 2008 FOR 8 HECTARES OF LAND IN VILLAGE PARZAI BEARING S. NO. 63 SOLD BY THE APPELLANT SHRI A. F. CHAUHAN TO SHRI BUDHIA KURKUTIA. I HAVE ALSO PERUSED THE ORDER OF THE COLLECTOR OF D&N HAVELI DT. 11 - 9 - 2008 REGARDING GRANT OF PERMISSION TO SELL THE AGRICULTURAL LAND BEARING S. NO. 63 BY SHRI A. F. CHAU HAN IN FAVOUR OF SHRI BUDHIA KURKUTIA OF PARZAI. BEFORE ADJUDICATING THE ISSUED UNDER CONSIDERATION, IT WILL BE BETTER TO BRIEFLY MENTION THE FACTS OF THE CASE, WHICH ARE NARRATED AS UNDER. 2.9 AS PER REGISTERED SALE DEED DT 30 - 12 - 2008, SHRI BUDHIA KUR KUTIA, A TRIBAL AND AGRICULTURIST OF VILLAGE KALA IN U.T. OF D&NH SOLD HIS LAND BEARING S. NO. 41/2/4 ADMEASURING 4 HECTARES AND LAND BEARING S. NO. 41/2/5 ADMEASURING 6.85 HECTARES [TOTAL LAND 10.85 HECTARES] FOR RS. 97.65 LACS I.E. AT THE RATE OF RS. 900 0 PER AARE. IN ADDITION TO THIS PRICE, THE APPELLANT PAID RS. 50,000 TO THE PURCHASER IN THE FORM OF FOR MAKING TOTAL SALE CONSIDERATION OF RS. 98.15 LACS. AS PER PAGE NO. 7 OF THE REGISTERED SALE DEED, THE TITLE OF THE SAID AGRICULTURAL LAND WITH ALL RIGH TS AND THE POSSESSION OF THE SAID LAND WAS HANDED OVER TO THE PURCHASER ON THE DATE OF REGISTERED SALE DOCUMENT. AS PER RECEIPT ENCLOSED WITH THE SALE DEED, TOTAL PAYMENT OF RS. 98.15 LACS WAS MADE TO THE SELLER SHRI BUDHIA KURKUTIA FROM 5 - 1 - 2008 TO 29 - 12 - 2008. AS PER THE PERMISSION ORDER BY THE COLLECTOR DT. 23 - 12 - 2008, THE SALE CONSIDERATION OF THE LAND WAS SETTLED @ RS. I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 6 3.60 LACS PER ACRE I.E. RS. 9000 PER AARE, WHICH WAS EXISTING CIRCLE RATE OF AGRICULTURAL LAND, SITUATED AT VILLAGE KALA. THIS PERMISSIO N WAS GIVEN BY THE COLLECTOR FOR SALE OF AGRICULTURAL LAND FROM TRIBAL PERSON TO NON TRIBAL PERSON. SIMILARLY, AS PER SALE DEED DT 30 - 12 - 2008, SHRI A. F. CHAUHAN, THE APPELLANT SOLD HIS LAND BEARING S. NO. 63 ADMEASURING 8 HECTARES AT VILLAGE PARZAI IN U.T . OF D&N.H. FOR RS. 80 LACS I.E. RS. 10,000 PER AARE AS PER CONSIDERATION FIXED BY BOTH THE PARTIES MUTUALLY. AS PER RECEIPT ISSUED BY THE APPELLANT, HE HAS RECEIVED PAYMENT OF RS. 80 LACS [100,000 X 8 CHEQUES BEARING NOS. 030201 TO 03208 DT 29 - 12 - 2008]. A S PER THE ORDER DT 11 - 9 - 2008 BY THE COLLECTOR, D&N.H., SILVASSA, ISSUED FOR GRANT OF SALE PERMISSION IN RESPECT OF HIS AGRICULTURE LAND BEARING S. NO. 63 ADMEASURING 8 HECTARES OF VILLAGE PARZAI IN FAVOUR OF SHRI BUDHIA KURKUTIA THE SETTLED SALE CONSIDERAT ION WAS @ RS. 9000 PER AARE. AS PER MOU DT 18 - 6 - 2008 BETWEEN M/S HAVELI PROPERTIES, PROPRIETARY CONCERN OF SHRI A F CHAUHAN AND SHRI BUDHIA KURKUTIA, THE PURCHASER HAS AGREED TO GIVE IN EXCHANGE, HIS AGRICULTURAL LAND BEARING S. NO. 63 ADMEASURING 8 ACRES AT VILLAGE PARZAI AGAINST LAND ADMEASURING 10.85 HECTARES OF VILLAGE KALA, BEARING S. NO. 41/2/4 AND 5. THE PURCHASER, THE APPELLANT HAS AGREED TO BEAR THE EXPENDITURE OF LAND LEVELING AND LAND DEVELOPING, FOR CONSTRUCTION OF HOUSE, AND TO MAKE A COMPOUND WALL AND MAKE IT USEFUL FOR AGRICULTURAL PURPOSE FOR WHICH THE APPELLANT HAS AGREED TO MAKE AN EXPENDITURE OF NOT MORE THAN RS. 20 LACS OR PAY THE SAME TO THE PRESENT VENDOR I.E. SHRI BUDHIA KURKUTIA ONLY AFTER THE PRESENT VENDOR HAS FULLY VACATED THE SAI D PROPERTY AND DEMOLISHED HIS AS WELL AS HIS SISTER'S OLD EXISTING HOUSE SITUATED ON THE SAID PROPERTY AT VILLAGE KALA. THE APPELLANT HAS CLAIMED EXPENDITURE OF RS. 20 LACS AS PART OF THE LAND COST BY PASSING JV ENTRY ON 15 - 11 - 2008. IT IS ALSO ADMITTED BY THE APPELLANT THAT THE APPELLANT HAS NOT MADE PAYMENT OF RS. 20 LACS TO SHRI BUDHIA KURKUTIA AND THAT REMAINED OUTSTANDING AS ON 31 - 3 - 2009. THE ASSESSMENT ORDER WAS PASSED ON 20 - 8 - 2011 I.E. AFTER THREE AND HALF YEARS FROM THE DATE OF MOU AND TILL THAT DATE , NO PAYMENT OF RS. 20 LACS WAS MADE BECAUSE SHRI BUDHIA KURKUTIA HAS NOT FULFILLED HIS OBLIGATION. CONSIDERING THE ABOVE FACTS ON RECORD AND AFTER CONSIDERING ALL THE ARGUMENTS, IT IS HELD THAT THE ASSESSING OFFICER WAS FULLY JUSTIFIED TO DISALLOW THE ALL EGED EXPENDITURE OF RS. 20 LACS DEBITED TO THE COST OF LAND WITHOUT INCURRING ANY EXPENDITURE. THE APPELLANT HAS NOT FILED ANY CONFIRMATION FROM SHRI BUDHIA KURKUTIA FOR INCURRING ANY EXPENDITURE TILL THE DATE OF ASSESSMENT ORDER AND NO EXPENDITURE WAS INC URRED ON THE SAID LAND. AS PER COPY OF ACCOUNTS FILED BY THE APPELLANT, IT IS CLEAR THAT AS ON 31 - 3 - 2009, 31 - 3 - 2010 AND I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 7 31 - 3 - 2011, RS. 20 LACS WAS OUTSTANDING. THE PAYMENT OF RS. 20 LACS IS CLAIMED TO HAVE BEEN MADE ON 14 - 5 - 2012 AND 15 - 5 - 2012 LEAVING THE D EBIT BALANCE OF RS. 1.15 LACS IN THE ACCOUNT OF SHRI BUDHIA KURKUTIA. EVEN DURING THE APPELLATE PROCEEDINGS NO DETAILS OF EXPENDITURE INCURRED FOR THE AGRICULTURAL LAND SOLD BY THE APPELLANT WAS FILED. IT IS CLEARLY MENTIONED IN THE REGISTERED SALE DEED OF LAND BEARING S. NO. 41/2/5 THAT THE TITLE WITH ALL THE RIGHTS AND POSSESSION OF LAND WAS HANDED OVER TO THE PURCHASER. SIMILARLY, POSSESSION OF THE LAND BEARING S. NO. 63 SOLD BY THE APPELLANT WAS ALSO HANDED OVER TO THE PURCHASER SHRI BUDHIA KURKUTIA ON THE DATE OF REGISTERED SALE DEED DT 29 - 12 - 2008 AND 30 - 12 - 2008. NO PAYMENT AGAINST SALE CONSIDERATION OF LAND WAS OUTSTANDING IN CASE OF BOTH THE SALE TRANSACTION OF LAND. IN THE REGISTERED SALE DOCUMENTS, NO WHERE ANY CONDITION FOR INCURRING ANY EXPENDITUR E ON ACCOUNT OF LAND LEVELING, FENCING, COMPOUND WALL, AND TO MAKE USEFUL FOR AGRICULTURAL PURPOSE IS MENTIONED. THE MOU IS WRITTEN ONLY ON A STAMP PAPER OF RS. 10 AND THE SAME IS NOT REGISTERED DOCUMENT AND EVEN NOT A NOTARIZED DOCUMENT. ONCE THE TITLE OF LAND AND POSSESSION OF LAND GOT TRANSFERRED IN THE NAME OF THE PURCHASER, AFTER COMPLETE PAYMENT MADE BY THE PURCHASER, THE APPELLANT WAS UNDER NO OBLIGATION TO INCUR ANY EXPENDITURE. NO DESCRIPTION OF ANY EXISTING HOUSE OF SHRI BUDHIA KURKUTIA WAS MENTIO NED IN THE REGISTERED SALE DEED. POSSESSION OF LAND WAS HANDED OVER TO THE APPELLANT, ONLY AFTER FULLY VACATED BY SHRI BUDHIA KURKUTIA. AS PER THE ORDER OF THE COLLECTOR FOR GRANTING PERMISSION OF SALE TO THE APPELLANT, THE PRICE FOR AGRICULTURAL LAND WAS SETTLED AT RS. 9000 PER AARE WHERE AS, AS PER THE REGISTERED SALE DEED THE LAND RATE OF AGRICULTURAL LAND BEARING S. NO. 63 IS MENTIONED AT RS. 10,000 PER AARE WHICH COMES TO RS. 8 LACS MORE THAN THE PRICE SETTLED AS PER COLLECTOR'S ORDER. HOWEVER, THAT PA YMENT HAS BEEN MADE AS PER REGISTERED SALE DE ED AND THE ASSESSING OFFICER HAS ACCEPTED THE SAME. THE AP PELLANT HAS SHOWN PAYMENT OF RS. 20 LACS ON 14 - 5 - 2012 AND 1 5 - 5 - 2012 ONLY AFTER ASSESSMENT ORDER AND ADDITION OF RS. 20 LACS MADE BY THE ASSESSING O FFICER AND EVEN DURING THE APPELLATE PROCEEDINGS, THE APPEL LANT HAS NOT PRODUCED ANY EVIDENCE OF ACTUAL INCURRENCE OF THE EXPENDITURE ON THE SAID LAND BY THE APPELLANT OR BY SHRI BUDHIYA KURKUTIA. THE EXPENDITURE CLAIMED BY JV ENTRY REMAINS UNVERIFIABLE, UNCONFI RMED AND UNSUBSTANTIATED EVEN AFTER PROVIDING ADEQUATE OPPORTUNITIES DURING THE ASSESSMENT ORDER AND APPELLATE PROCEEDINGS. HENCE, IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING CLAIM OF EXPENDITURE OF RS. 20 LACS ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON THE I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 8 VARIOUS JUDGEMENTS MENTIONED IN PARA 7.9 OF THE ASSESSMENT ORDER WHICH HAVE BEEN REPRODUCED ON PAGE NO. 3 TO 5 OF THIS ORDER. IT IS ALSO HELD THAT THE APPELLANT HAS PREPARED AND SIGNED INTO MOU WITH ALLEGED PURCHASER TO INCREASE THE COST OF LAND BY MAKING FALSE CLAIM OF EXPENDITURE TO BE INCURRED ON THE LAND SOLD BY THE APPELLANT SO THAT THE INCOME CHARGEABLE TO TAX ARISING ON SALE OF LAND CAN BE REDUCED. THE ALLEGED MOU WAS NEITHER A NOTARIZED NOR A REGISTER ED DOCUMENT. THE APPELLANT FAILED TO SUBSTANTIATE AND AUTHENTICATE THE MOU BY PRODUCING SHRI BUDHIA KURKUTIA IN PERSON AS REQUIRED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT HAS EVEN NOT FILED ANY CONFIRMATION LETTER TO AUTHE NTICATE AND TO SUBSTANTIATE THE EXPENSES AND THE PAYMENT OF RS. 20 LACS AS CLAIMED ON THE BASIS OF THE ALLEGED MOU. HENCE, THE ADDITION OF RS. 20 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF ALLEGED EXPENDITURE BEING UNVERIFIABLE, UNCON FIRMED AND UNSUBSTANTIATED IS HEREBY CONFIRMED AND THE RELATED GROUND OF APPEAL IS DISMISSED. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. RELEVANT FACTS NARRATED HEREINABOVE QUA THE TWO ISSUES IN QUESTION ARE NOT REPEATED FOR THE SAKE O F BREVITY. WE FIND THAT THE LD. CIT(A) HAS DELETED DISALLOWANCE OF RS. 21.50 LACS AS MADE BY THE ASSESSI NG OFFICER U/S. 40A(3) OF THE AC T BY CONCLUDING THAT THE SAME DOES NOT APPLY. HE HOLDS THAT THE ASSESSEE HAS MADE FDR PAYMENT OF RS. 1 LACS OVER AND AB OVE THAT AGREED WITH THE VENDOR AND THE SAME IS NOT ALLOWA BLE AS BUSINESS EXPENDITURE. WE FIND THAT THE CIT(A) TAKES NOTE OF THE CASE THAT THE ASSESSEE HAS MADE PAYMENTS OF RS. 20 LACS ON 14 - 05 - 2012 AND 15 - 05 - 2012 TO SHRI KURKUTIA AS LAND DEVELOPMENT EXPE NSES. HE ALSO PLACED ON RECORD RELEVANT LEDGER ACCOUNT TO PROVE THAT THE SAME ARE PAID THROUGH BANKING CHANNEL. THIS PRIMA - FACIE REBUTS CASE OF THE LOWER AUTHORITIES THAT THERE WAS NO LAND DEVELOPMENT AGREEMENT BETWEEN ASSESSEE AND HIS PAYEES. WE I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 9 FURTHER NOTICE THA T THESE LEDGER ACCOUNT COULD NOT BE PRODUCED BEFORE THE CIT(A) IN CO USE OF THE LOWER APPELLATE PROCEEDINGS. WE FEEL IT APPROPRIATE IN LARGER INTEREST OF JUSTICE THAT THE LD ASSESSING OFFICER NEEDS TO RE - ADJUDICATE THE ENTIRE ISSUE IN VIEW OF ALL THESE DEV ELOPMENTS AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ACCORDINGLY ACCEPT BOTH OF THE ASSESSEEE S GROUNDS FOR STATISTICAL PURPOSES ITA 2849/AHD/2012 IS ALLOWED FOR STATISTICAL PURPOSES. 8. WE COME TO ASSESSEE S PENALTY APPEAL ITA 146/AHD/2016 CHALLENGING PENALTY O F RS. 7,13, 790/ - IMPOSED U/S. 271(1)(C) OF THE ACT AS PERTAINING TO THE A BOVE STATED DISALLOWANCE OF RS. 20 LACS. WE ARE OF THE OPINION THAT THIS PENALTY IN QUESTION HAS NO LEGS TO STAND IN VIEW OF OUR REMAND DI RECTIONS IN QUANTUM PROCEEDINGS HEREINABOVE. THE SAME IS ACCORDINGLY DELETED WITH A LIBERTY TO THE ASSESSING OFFICER TO INITIATE AFRESH PROCEEDINGS AS PER LAW AFTER FINALIZING CONSEQUENTIAL ASSESSMENT. ITA 146/AHD/2016 SUCCEEDS. 9. ASSESSEE S APPEAL ITA 2849/AHD/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ITA 146/AHD/2016 IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /06 /2016 I.T.A N O S . 2849 /AHD /2012 & 146/AHD/2016 A.Y. 2009 - 10 PAGE NO SHRI ABHISHEKSINH FATEHSINH C HAUHAN VS. DCIT 10 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,