Ashok Raghunath Mane, Pune V. Asst. CIT, Circle-9, Pune

ITA 2091/PUN/2012

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4894 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-02-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Business income; Salary income; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.2091/PUN/12 / ASSESSMENT YEAR : 2009-10 ASHOK RAGHUNATH MANE, SECTOR 25, PLOT NO.55, SINDHUNAGAR, PRADHIKARAN, NIGDI, PUNE 411 044 PAN : AEQPM5955A VS. ACIT, CIRCLE-9, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 13-08-2012 IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,05,64,282/- PAID TO AGARWAL BROTHERS. APPELLANT BY SHRI PRAMOD S. SHINGTE RESPONDENT BY SMT. SHABANA PARVEEN DATE OF HEARING 14-02-2019 DATE OF PRONOUNCEMENT 15-02-2019 ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS A DEALER IN LANDS. HE FILED HIS RETURN DECLARING TOTAL INCOME O F RS.74,46,700/- CLAIMING DEDUCTION, INTER ALIA, FOR A SUM OF RS.1,28,44,282/- PAID AS COMMISSION, WHICH WAS SUBSUME D UNDER THE HEAD DIRECT EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSE RVED THAT THE SAID COMMISSION AMOUNT INCLUDED A SUM OF RS.1,05,64,282/-. ON BEING CALLED UPON TO EXPLAIN THE NATU RE OF SUCH COMMISSION, THE ASSESSEE SUBMITTED THAT THE AMOUNT O F RS.1.05 CRORE AND ODD PAID TO SH. SURENDERA AGARWAL AND SH. NARENDRA AGARWAL (HEREINAFTER ALSO REFERRED TO AS `THE AG ARWAL BROTHERS) WAS WRONGLY DEPICTED AS COMMISSION, WHEREAS IT WAS, IN FACT, IN THE NATURE OF THEIR SHARE IN THE SALE CONSIDERATION. BACKGROUND FACTS WERE REVEALED THAT THE GOVERNMENT OF MAHARASHTRA FORMED AN AUTHORITY CALLED PIMPRI CHINCHWAD NEW TOWNSHIP DEVELOPMENT AUTHORITY (HEREINAFTER ALSO CALLED AS THE AUTHORITY) WHICH FORMULATED A SCHEME FOR ACQUISITION OF LAND FROM FARMERS FOR THE PURPO SE OF DEVELOPMENT OF TOWNSHIP AND IN LIEU OF SUCH ACQUISITION, FARMERS WERE TO BE GIVEN DEVELOPED AREA OF LAND EQUIVALE NT TO 12.5% OF THEIR TOTAL LAND AREA ACQUIRED AND THAT THE FARMERS HAD THE OPTION OF SELLING SUCH 12.5% DEVELOPED AREA. SIN CE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 3 SEVERAL GOVERNMENT PROCEDURES WERE INVOLVED, TWO SETS OF PARTIES, NAMELY, THE SANE FAMILY AND SH. SUBHASH ANAND ENTERED INTO SEPARATE MEMORANDUM OF UNDERSTANDINGS (MOUS) WITH THE ASSESSEE ON DIFFERENT DATES FOR TRANSFER OF THEIR 12.5% AREA OF THE DEVELOPED LAND TO THE ASSESSEE, IN ADVANCE, AT A PRE-DETERMINED PRICE. IN RESPECT OF GUT NO.1259, THE SANE FAMILY AGREED TO TRANSFER 66336 SQ.FT. DEVELOPED LAND, TO BE ALLOTTED TO THEM BY THE AUTHORITY, TO THE ASSESSEE AT A PRICE OF RS.201.42 PER SQ.FT. THE OTHER PARTY NAMELY, SH, SUBHASH ANAND, AGREED TO TRANSFER HIS 12.5% AREA OF THE DEVELOPED LAND, TO BE ALLOTTED AT 24325 SQ. FT., TO THE ASSESSEE @ RS.237/- PER SQ.FT. THE ASSESSEE SUBMITTED THAT HE, IN TURN, AGREED TO TRANSFER 50% OF SUCH DEVELOPED LANDS TO THE AGARWAL BROTHERS AT A PRICE OF RS.335/- PER SQ.FT. TH E 12.5% DEVELOPED LAND WAS ALLOTTED (LEASED OUT) TO THE FARMERS AND, IN TURN, TO THE ASSESSEE, WHO SOLD TOTAL AREA FOR A SUM OF R S.3.64 CRORE IN RESPECT OF GUT NO.1259 AND RS.1.51 CRORE IN RE SPECT OF PLOT NO.29. 50% OF SUCH SALE CONSIDERATION WAS CLAIMED AS PERTAINING TO THE AGARWAL BROTHERS. THE ASSESSEE STATED THA T INADVERTENTLY SHOWED TOTAL SALE CONSIDERATION AT RS.5.51 CRORE AS HIS OWN SALES INSTEAD OF SHOWING ITS 50% SHARE AND THE DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION, NAMELY, ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 4 RS.548.72 SQ.FT. IN LIEU OF GUT NO.1259 AND RS.620.76 S Q.FT IN LIEU OF PLOT NO.29 ON ONE HAND AND RS.335/- PER SQ FT. ON THE OTHER HAND, AT WHICH HE SOLD HIS RIGHT TO THE AGARWAL BRO THERS IN RESPECT OF BOTH THE DEVELOPED PLOTS, WAS INADVERTENTLY SHOWN AS COMMISSION, WHICH OUGHT TO HAVE BEEN SHOWN AS SALE CONSIDERATION PERTAINING TO THE AGARWAL BROTHERS. HE RECORDED AN INCORRECT FINDING THAT THE AGARWAL BROTHERS WE RE COVERED UNDER SECTION 40A(2)(B)OF THE ACT. THE AO OBSE RVED THAT THE MOUS BETWEEN THE ASSESSEE AND THE AGARWAL BROTHERS WERE AIMED AT SHIFTING THE ASSESSEES PROFIT TO THEM . HE NOTICED THAT THE ASSESSEE INTRODUCED SH. SURENDRA AGARWA L AS BUYER OF 50% SHARE IN LIEU OF GUT NO.1259 AT A PRICE O F RS.1,11,11,280/- JUST ONE DAY BEFORE (SIC AFTER) THE DA TE ON WHICH THE LAND WAS SOLD TO ULTIMATE PURCHASERS. IN THIS WAY , THE AO HELD THAT THE ASSESSEE MANAGED TO TRANSFER HIS PROF IT OF RS.70.88 LAKH IN RESPECT OF SUCH LAND TO SH. SURENDRA AGAR WAL. SIMILAR POSITION WAS FOUND IN RESPECT OF THE SECOND TRACT OF LAND. NOT ACCEPTING THE ASSESSEES CONTENTION AS OUTGO PERTAINING TO THE AGARWAL BROTHERS AS PART OF THEIR SHARE IN THE SALE CONSIDERATION, THE AO TREATED SUCH AMOUNT AS COMMISSION, AS WAS REFLECTED BY THE ASSESSEE IN HIS AN NUAL ACCOUNTS. CONSIDERING THE FACT THAT THE ENTIRE ARRANGEMENT W AS ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 5 MALA FIDE AND NO SERVICES OF ANY KIND WERE OFFERED BY THE AGARWAL BROTHERS, THE AO MADE DISALLOWANCE OF COMMISSION PAYMENT OF RS.1,05,64,282/-. THE LD. CIT(A) SUSTAINED THE ADDITION, AGAINST WHICH THE ASSESSEE HAS APPROACHED THE TRIBUNAL. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT THE ASSESSEE ACQUIRED 12.5% SHARE IN THE DEVELOPED LANDS OF THE SANE FAMILY AND SH. SUBHASH ANAND AS A RESULT OF MOUS ENTERED INTO WITH THEM AT THE RATE OF RS.201.42 PER SQ. FT. AND RS.237.00 PER SQ. FT. RESPECTIVELY. THIS PART OF THE TRANS ACTION IS UNDISPUTED. THE FACT THAT THE ASSESSEE SOLD HIS 50% SHARE IN BOTH THE PIECES OF THE DEVELOPED LAND TO PATEL BROTHERS AND OTHERS AT THE RATE OF RS.548.72 PER SQ. FT AND RS.620.7 6 PER SQ. FT. RESPECTIVELY IS ALSO NOT DISPUTED. THE CONTROVERSY ROTATES AROUND THE REMAINING 50% SHARE IN BOTH THE DEVELOPED PLOTS. WHEREAS THE CLAIM OF THE ASSESSEE IS THAT HE TRANSFERRED HIS 50% SHARE IN BOTH THE DEVELOPED LANDS EARLIER TO THE AGARWAL BROTHERS AT THE RATE OF RS.335 PER SQ. FT., THE REVENUE H AS MADE OUT A CASE THAT THIS ALLEGED TRANSACTION OF TRANSFER TO THE AGARWAL BROTHERS IS FAKE AND HAS BEEN SHOWN WITH A VIEW TO ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 6 REDUCE THE INCIDENCE OF TAX IN THE HANDS OF THE ASSESSEE. WE WILL ANALYZE BOTH THE SETS OF LAND TRANSACTIONS, ONE BY ONE. 5. FIRSTLY, WE ESPOUSE THE TRANSACTION RELATING TO DEVELOPE D LAND ALLOTTED TO THE SANE FAMILY IN LIEU OF THE ACQUISITION OF THEIR LAND IN GAT NO. 1259. THE LD. AR HAS PLACED ON RECO RD A CHART SHOWING CHRONOLOGY OF EVENTS, WHICH IS REPRODUCED A S UNDER : S. NO. DATE PARTICULARS REMARKS 1 19/11/1976 DATE OF ACQUISITION BY PCNTDA BY NOTIFICATION OF GR BY GOVERNMENT OF MAHARASHTRA 2 25/07/2006 POA BETWEEN ASHOK MANE & SANE ENGLISH TRANSLATION PAPER BOOK NO.3 PAGE NO. 239 TO 252. PG. 234 TO 238 3 02/08/2006 MOU BETWEEN DEVRAM SANE AND ASHOK MANE TO SALE THE LAND ENGLISH TRANSLATION PAPER BOOK NO. 3- PAGE NO. 258 TO 263, PG. 253 TO 257 4 21/08/2007 MOU BETWEEN SURENDRA AGARWAL AND ASHOK MANE TO SALE THE LAND @ 335/- PER SQ.FTS. PAPER BOOK NO. 1 PAGE NO. 25 TO 28 5 28/08/2008 LEASE DEED-PCNTDA TO DEVRAM SANE ( DEED NO. 9069/2008) ANNEXURE -I 6 29/08/2008 DEVELOPMENT AGREEMENT BETWEEN DEVRAM SANE TO ASHOK MANE ( DEED NO. 9070/2008 FOR RS.1.20 CRORE + STAMP DUTY RS.13.31 LAKHS + REGISTRATION CHARGES RS.0.30 LAKHS) ANNEXURE -II ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 7 7 29/08/2008 POWER OF ATTORNEY FROM DEVRAM SANE TO ASHOK MANE ( DEED NO.9071/2008) A PAPER BOOK NO. 1 PAGE NO. 12 TO 24 8 02/09/2008 SALE THROUGH POWER OF ATTORNEY BY ASHOK MANE TO BHONDAVE & PATEL BROTHERS A PAPER BOOK NO. 1- PAGE NO. 31 TO 141 6. THE LD. AR EXPLAINED THE NATURE OF TRANSACTION BY STATING THAT THE ASSESSEE ACTUALLY ENTERED INTO MOU WITH THE SANE FAMILY ON 25-11-2005 (THOUGH IN THE ABOVE CHART SUCH A D ATE HAS BEEN SHOWN AS 2.8.2006) FOR PURCHASE OF THEIR ENTIR E 12.5% RIGHTS IN THE DEVELOPED LAND TO BE TRANSFERRED TO THEM, AT A PRE- DETERMINED PRICE OF RS.201.42 PER SQ.FT. THE SANE FAMI LY WAS GIVEN THE LEASEHOLD RIGHTS IN 12.5% DEVELOPED LAND ADMEASURING 66336 SQ.FT. VIDE LEASE DEED DATED 28-08-200 8. ACTUAL SALE OF 66336 SQ.FT. TO PATEL BROTHERS ETC. TOOK PLACE O N 02-09-2008 @ RS.548.72 PER SQ.FT. FOR A TOTAL CONSIDERATIO N OF RS.3.64 CRORE, WHICH IS AGAIN NOT DISPUTED. WHEREAS, THE ASSESSEE CLAIMED THAT HE ENTERED INTO AN MOU WITH SH. AGARWAL ON 21.8.2007 TRANSFERRING 50% OF 66336 SQ.FT. DEVELOPED AREA, THAT IS, 33,166 SQ.FT. AT A CONSIDERATION OF RS.335/- PER SQ.FT., THE AO HAS OBSERVED THAT THE MOU WITH SH. AGARWAL FOR TRANSFER OF SUCH AN AREA AT THE STATED PR ICE WAS APPARENTLY ENTERED INTO ON 01.9.2008, THAT IS, JUST ONE DAY ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 8 PRIOR TO THE DATE OF ACTUAL SALE, WHICH WAS AN ATTEMPT TO DEFRAUD THE REVENUE BY TRANSFERRING PROFIT TO SH. AGARWAL . THE VITAL POINT TAKEN OUT BY THE AO IS THAT WHEN THE ULTIMATE SALE WAS MADE ON 02-09-2008 FOR RS.3.64 CRORE AGAINST THE A CTUAL ALLOTMENT OF LAND ON 28-08-2008, HOW THE ASSESSEE COULD TRANSFER 50% OF HIS SHARE TO SH. AGARWAL BY MEANS OF AN AGREEMENT DATED 01-09-2008. IN THIS REGARD, IT IS PERTIN ENT TO NOTE THAT REFERENCE TO THE MOU DATED 01.09.2008 IS MISSING IN THE CHART GIVEN BY THE LD. AR, AS REPRODUCED ABOVE. FIRST TH ING TO BE DECIDED IS THAT IF, AT ALL, THE MOU DATED 1.9.2008 EXIS TS OR THE AOS EXERCISE, BASED ON SUCH AN MOU, WAS IN THE AIR. ON A SPECIFIC QUERY, THE LD. AR ADMITTED THAT AN MOU WAS ENTERED INTO ON 01.09.2008. HE HOWEVER CLAIMED THAT ANOTHE R MOU WAS EXECUTED ON 21.8.2007 AS WELL. COPIES OF BOTH THE MOUS ALONG WITH THEIR ENGLISH TRANSLATIONS WERE PLACED ON RECORD. IF WE GO WITH THE SECOND MOU DATED 1.9.2008, AS HAS BEEN REFERRED TO BY THE AO IN HIS ORDER, THEN THE POSITION WHICH CRYSTALIZES IS THAT THE ASSESSEE ACTUALLY TRANSFERRED TH E DEVELOPED LAND TO PATEL BROTHER ETC. ON 2.9.2008 AT THE RATE O F RS.548.72 PER SQ. FT AND JUST ONE DAY PRIOR TO THAT, THAT IS, ON 1.9.2008 HE SOLD 50% OF HIS LAND HOLDING TO SH. AGARWAL AT THE RATE OF RS.335/- PER SQ.FT. IT IS FURTHER INTERESTING TO NOTE THAT ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 9 THE FULL DEVELOPED LAND HOLDING, THAT IS, 66336 SQ. FT. WAS S OLD TO PATEL BROTHERS ETC. AND NOT ONLY THE ASSESSEES 50% SHARE IN IT. FURTHER, SALE OF 66336 SQ.FT. WAS EFFECTED THROUGH POWER OF ATTORNEY EXECUTED BY THE ASSESSEE ALONE TO THE PATEL BROTHERS ETC. THOUGH COPIES OF SUCH POAS IN MARATHI ARE AVAILABLE, BU T THEIR ENGLISH TRANSLATIONS ARE NOT ON RECORD. GOING BY THE NARRATION GIVEN IN THE CHART PREPARED BY THE LD. AR, WHICH HAS BEEN REPRODUCED ABOVE, SALE WAS EXECUTED THROUGH POAS EXECUTED BY THE ASSESSEE ALONE AND NOT BY SH. AGARWAL AS WELL. IT IS FURTHER PERTINENT TO NOTE THAT, THE EXECUTION OF POA S IN FAVOUR OF PATEL BROTHERS ETC. ON 2.9.2018 MUST HAVE PRECEDED BY NEGOTIATIONS TAKING PLACE ON EARLIER DATES. IN S UCH A SITUATION, IT DEFIES ALL LOGICS THAT THE ASSESSEE WOULD TRANSFER 50% OF HIS SHARE IN THE DEVELOPED LAND AT AROUND 60% OF TH E PRICE, AND THAT TOO, JUST ONE DAY PRIOR TO THE DATE OF EXECUTIO N OF POAS. 7. THE HONBLE SUPREME COURT IN SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) CONSIDERED A QUESTION WHETHER THE APPARENT CAN BE CONSIDERED AS REAL. IT WAS OBSERVED THA T APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND TH AT ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 10 THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. IT WAS FURTHER OBSERVED THAT AN INFERENCE SHOULD BE DRAWN ON TH E BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. CONSIDER ING THE CIRCUMSTANCES OF THE TRANSACTION IN THAT CASE, THE HONBLE SUPREME COURT HAS HELD THAT AN INFERENCE COULD REASONABLY B E DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT AND THE AUTHORITIES WERE RIGHT IN DRAWING AN ADVERSE INFERENCE AGAINST THE ASSESSEE. ON TESTING THE FA CTS OF THE EXTANT CASE ON THE TOUCHSTONE OF HUMAN PROBABILITY, THE INEVITABLE CONCLUSION WHICH FOLLOWS IS THAT THE TRANSACTION OF THE ALLEGED SALE OF 33166 SQ. FT. TO SH. AGARWAL WAS JUST A PRETENSE AND NOT A GENUINE ONE. 8. WHEN THE POSITION OF THE ASSESSEE BECAME AWKWARD B EFORE THE AO IN THE FACE OF THE MOU WITH SH. AGARWAL EXECUTED JUST ONE DAY PRIOR TO THE DATE OF SALE, THE ASSESSEE CAME OUT WITH ANOTHER EXPLANATION. THIS TIME CONTENDING THAT MOU WAS ACTUALLY ENTERED INTO ON 21.8.2007 AND THE LATER MOU DATED 1.9.2008 WAS JUST A RENEWAL OF THE EARLIER MOU. WE HAVE GONE THROUGH THE ENGLISH TRANSLATION OF BOTH THE MOUS DATED ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 11 21-08-2007 AND 01-09-2008. THE FIRST MOU GIVES DESCRIP TION OF RIGHT, NAMELY, 12.5% OF THE DEVELOPED LAND TOTALING 66336 SQ.FT., OUT OF WHICH 50% AREA WAS THE SUBJECT MATTER OF THIS MOU. CLAUSE (3) OF THIS MOU PROVIDES THAT THE TRANSFEROR DUE TO HIS FINANCIAL AND FAMILY CONSTRAINTS AND TO SETTLE THE DUES HAS DECIDED TO SELL THE RIGHTS IN THE PROPERTY AT SL.NO.1 AT A PRICE OF RS.335/- PER SQ.FT. THIS CLAUSE FURTHER PRO VIDES THAT THE ASSESSEE AND SH. SURENDRA AGARWAL HAVE EXECUTED THIS MOU AT THE PRICE OF RS.1.11 CRORE AND ACCORDINGLY IT IS DECIDED TO EXECUTE THE SALE/DEVELOPMENT AGREEMENT. THE SECOND MOU DATED 01-09-2008 HAS THE FIRST CLAUSE AGAIN GIVING DESCRIPTION OF PROPERTY AND THE AREA, WHICH IS SIMILAR TO THE FIRST MOU. SECOND CLAUSE STATES THAT THE ASSESSEE WAS WILLING TO TRANSFER 50% OF THE SHARE DUE TO FINANCIAL CRUNCH AND DUE TO REQUIREMENT OF PAYMENT OF LOAN . IT FURTHER PROVIDES THAT AS A TOKEN AMOUNT TOWARDS THE TRANSACTION, THE ASSESSEE WAS PAID A SUM OF RS.1,001/-. 9. WHEN WE CONSIDER THE FIRST MOU IN JUXTAPOSITION TO THE SECOND MOU, IT CLEARLY TRANSPIRES THAT IN BOTH THE MOUS, THERE IS A REFERENCE TO THE FINANCIAL DIFFICULTIES FACED BY THE ASSESSEE FOR WHICH HE ENTERED INTO MOU WITH SH. AGARWAL. ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 12 ON A SPECIFIC QUERY AS TO HOW MUCH AMOUNT WAS GIVEN BY S H. AGARWAL TO THE ASSESSEE PURSUANT TO THE FIRST MOU, THE LD. AR CONCEDED THAT THERE WAS NO SPECIFIC AMOUNT TRANSFERRED TO TH E ASSESSEE IN RELATION TO THIS MOU. AS AGAINST THAT, WE FIND FROM THE LEDGER ACCOUNT OF `LAND AT CHIKHALI IN THE BOOKS O F THE ASSESSEE, WHOSE COPY HAS BEEN PLACED ON RECORD, TH AT THE ASSESSEE PAID A SUM OF RS.1.05 CRORE TO THE PARTIES DURIN G THE FINANCIAL YEAR 2007-08 AND RS.37.36 LAKH IN THE FINANCIAL YE AR 2008-09 IN SEVERAL INSTALLMENTS. WE FAIL TO UNDERSTAND THAT IF THE ASSESSEE WAS IN FINANCIAL CRUNCH AND WAS REQUIRED TO P AY SUBSTANTIAL AMOUNTS TO THE SANE FAMILY, HOW HE EVEN AFTER ENTERING INTO MOU ON 21-08-2007 WITH SH. AGARWAL, DID NO T RECEIVE EVEN A SINGLE RUPEE, MORE SO WHEN THE SO CALLED M OU RECOGNIZED THE FINANCIAL DIFFICULTIES FACED BY THE ASSESSEE. FURTHER, THE SECOND MOU DATED 01-09-2008 SPEAKS ABOUT GIVING A TOKEN AMOUNT OF RS.1,001/- TO THE ASSESSEE. THIS AGAIN DOES NOT STAND TO ANY LOGIC, WHEN SEEN IN THE LIGHT OF THE FAC T THAT THE ACTUAL SALE TOOK PLACE ON THE IMMEDIATELY NEXT DAY. 10. THERE IS ANOTHER SIGNIFICANT FACET OF THE FIRST MOU. IT PROVIDES THROUGH CLAUSE (3) THAT : `IT IS DECIDED TO EXECUTE THE SALE/DEVELOPMENT AGREEMENT WITH THE PRICE OF ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 13 RS.1,11,11,280. THE LD. AR WAS ASKED WHETHER ANY SALE/DEVELOPMENT AGREEMENT WAS EXECUTED PURSUANT TO THIS MOU, THE ANSWER TO WHICH WAS GIVEN IN NEGATIVE. THE LD. AR FAIRLY CONCEDED THAT NONE OF THE TWO MOUS WAS REGISTERED WITH THE COMPETENT AUTHORITY AND THESE WERE EXECUTED ON SIMPLE STAMP PAPER OF RS.500/-. 11. WHEN WE NOTE THE CONTENTS OF BOTH THE MOUS, IT BECOMES VIVID THAT THERE IS NO DIFFERENCE IN ANY OF THE RELEV ANT CLAUSES EXCEPT FOR PROVIDING A TOKEN AMOUNT OF RS.1,001/ - IN THE LATTER MOU, VERACITY OF WHICH WE HAVE DISCUSSED AND REJECTED HEREINABOVE. THESE MOUS WERE ADMITTEDLY NOT REGISTERED AS WELL AND FURTHER NO REASON HAS BEEN ADDUCE D AS TO WHY SECOND MOU WAS EXECUTED WHEN THE FIRST MOU WAS ALREADY IN EXISTENCE. IT IS, THEREFORE, HELD THAT THE FIRST MOU DATED 21-08-2007 HAS NO SANCTITY AND THE SAME WAS EXECUTE D JUST IN FURTHERANCE OF THE MOTIVE OF DIVERTING INCOME TO SH. AGARWAL. 12. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE NO T INCLINED TO ACCEPT THE VERSION GIVEN BY THE ASSESSEE THAT HE GENUINELY TRANSFERRED 33168 SQ. FT. OF THE DEVELOPED LAND TO SH. AG ARWAL AT RS.335/- PER SQ.FT. IT IS, THEREFORE, HELD THAT THE ENTIRE SALE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 14 CONSIDERATION OF RS.3.64 CRORE BELONGS TO THE ASSESSEE A ND THE ALLEGED AMOUNT SHOWN AS `COMMISSION OR PART OF SALE CONSIDERATION TO SH. AGARWAL, PERTAINS TO THE ASSESSEE HIM SELF. 13. NOW WE SWITCH OVER TO THE SECOND TRANSACTION AS PER WHICH THE ASSESSEE ACQUIRED 24325 SQ.FT. OF THE DEVELOPED LAND, BEING 12.5% OF THE LAND HOLDING OF SH. SUBHASH ANAND, OUT OF WHICH 12162.50 SQ. FT WAS CLAIMED TO HAVE BEEN TRANSFERRED TO SH. AGARWAL. THE LD. AR HAS PLACED ON RECO RD A CHART GIVING CHRONOLOGY OF THE EVENTS QUA THIS TRANSACTION, WHICH IS REPRODUCED AS UNDER : S.NO. DATE PARTICULARS REMARKS 1 19-11-1976 DATE OF ACQUISITION BY PCNTDA BY NOTIFICATION OF GR BY GOVERNMENT OF MAHARASHTRA 2 16-09-2008 LEASE DEED PCNTDA TO SUBHASH ANAND (DEED NO.9750/2008) ANNEXURE I 3 16-09-2008 DEVELOPMENT AGREEMENT BETWEEN SUBHASH ANAND AND ASHOK MANE (DEED NO.9751/2008 FOR RS.52.50 LAKHS + STAMP DUTY RS.4.85 LAKHS +REGISTRATION CHARGES RS.0.30 LAKHS ANNEXURE II 4 16-09-2008 POWER OF ATTORNEY FROM SUBHASH ANAND TO ASHOK MANE (DEED NO.9754/2008) ANNEXURE III 5 18-10-2008 MOU BETWEEN NARENDRA AGARWAL AND ASHOK MANE PAPER BOOK NO.1. PAGE NO.27 TO 30 6 10-11-2008 SALE THROUGH POWER OF ATTORNEY BY ASHOK MANE TO PATEL BROTHERS (DEED NO.6839/2008) PAPER BOOK NO.2. PG NOS.217 TO 239 ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 15 14. IT IS APPARENT FROM THE ABOVE CHART THAT A LEASE DEED WAS EXECUTED BETWEEN SH. SUBHASH ANAND AND THE AUTHORITY ON 16-09-2008 GIVING RIGHT IN 24325 SQ. FT. OF DEVELOPED LAND TO HIM AT THE RATE OF 12.5% OF HIS EARLIER ACQUIRED LAND. ON THE SAME DATE, NAMELY, 16-09-2008, THE ASSESSEE ENTERED INTO AN MOU WITH SH. SUBHASH ANAND FOR PURCHASING HIS RIGHT AT RS.237/- PER SQ.FT. ENTIRE LAND WAS ACTUALLY TRANSFERRED ON 10- 11-2008 @ RS.620.76 PER SQ.FT. TO PATEL BROTHERS THROUGH P OA EXECUTED BY THE ASSESSEE FOR THE FULL AREA, THAT IS, 24325 SQ. FT. OF THE DEVELOPED LAND. THESE ASPECTS OF THE TRANSACTION ARE NOT DISPUTED. THE CONTROVERSY IS ON THE ALLEGED TRANSACTION DATED 18.10.2008, THROUGH WHICH THE ASSESSEE APPARENTLY ENTERE D INTO MOU WITH SH. NARENDRA AGARWAL TRANSFERRING 50% OF HIS SHARE IN THE DEVELOPED LAND AT THE RATE OF RS.335/- PER SQ .FT. THE REVENUE HAS NOT ACCEPTED THIS TRANSACTION AS GENUINE B Y HOLDING THAT IT WAS AN ATTEMPT BY THE ASSESSEE TO DIVERT PROFIT TO SH. AGARWAL. 15. IT CAN BE SEEN THAT THE SEQUENCE OF EVENTS FOR THIS TRANSACTION IS MUTATIS MUTANDIS SIMILAR TO THAT OF THE FIRST TRANSACTION DISCUSSED ABOVE. THE ASSESSEE ALLEGEDLY TRANSFERRED 12162.5 SQ. FT OF THE DEVELOPED LAND TO SH. AG ARWAL ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 16 ON 18.10.2008, BEING, 50% SHARE IN THE DEVELOPED LAND, JUST A COUPLE OF DAYS PRIOR TO THE ULTIMATE SALE TO PATEL BROTHERS. FOR THE INSTANT TRANSACTION ALSO, THE ASSESSEE ALONE EXECUTED POA IN FAVOUR OF PATEL BROTHERS FOR FULL 24325 SQ. FT. OF THE DEVELOPED LAND AS `VENDOR/TRANSFEROR. UNLIKE THE FIRST TRANSACTION WHERE THE ASSESSEE TRIED TO MAKE OUT A CASE THAT THE FIRST MOU WAS ACTUALLY ENTERED INTO ON 21.08.2007 AS AGAINS T THE SECOND MOU ON 01.09.2008, FOR THE EXTANT TRANSACTION THERE IS REFERENCE TO ONLY ONE MOU DATED 18-10-2008. HE RE AGAIN, WE ARE AT LOSS TO COMPREHEND AND IT IS AGAINST ALL HUM AN PROBABILITIES THAT A PERSON IN THE BUSINESS OF LAND DEALINGS WOULD SELL HIS RIGHT IN LAND AT 54% OF THE PRICE WHICH HE IS GOING TO GET FROM THE REGULAR SALE JUST AFTER A COUPLE OF DA YS. FURTHER, IT IS RELEVANT TO APPRECIATE THAT THE SAME IS NOT AN ISOLATED TRANSACTION OF THE LAND SALE BY THE ASSESSEE. HE MAD E ACTUAL SALE TRANSACTION IN RESPECT OF THE FIRST DEVELOPED LAND AT THE RATE OF RS.548.72 PER SQ.FT. TO PATEL BROTHERS ETC. ON 02.09.20008. IT IS TOTALLY UNACCEPTABLE AND AGAINST THE NORMA L HUMAN CONDUCT THAT A BETTER LAND, WHICH ACTUALLY FETCHED THE RATE OF RS.620.76 PER SQ.FT., WOULD BE SOLD BY THE ASSES SEE TO SH. AGARWAL AT RS.335 PER SQ.FT. ON 18.10.2008, THAT IS, A FTER THE FIRST ACTUAL SALE TRANSACTION TAKING PLACE AT AN EARLIER DATE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 17 ON 02.09.2008 AT THE RATE OF RS.548.72 PER SQ.FT. FOLLOWING THE REASONING GIVEN FOR THE FIRST TRANSACTION, WE HOLD THAT THE SECOND TRANSACTION OF EXECUTING THE MOU WITH SH. AGARWAL ON 18-10-2008, AS PER WHICH, 50% OF SHARE IN DEVELOPED LAND WAS TRANSFERRED AT RS.335/- PER SHARE, IS ALSO NOT GENUIN E. 16. TO BUTTRESS THE CONTENTION OF THE GENUINENESS OF THE SALE TRANSACTIONS WITH THE AGARWAL BROTHERS, THE LD. AR CONTENDED THAT THE DEPARTMENTAL CONTENTION OF THE ASSESSEE HAVING TRANSFERRED HIS PROFIT OF RS.1.05 CRORE TO THEM, IS NOT COR RECT. IT WAS PUT FORTH THAT THE AGARWAL BROTHERS DECLARED SUCH INC OME IN THEIR RESPECTIVE HANDS, WHICH GOT TAXED AT THE SAME RATE O F TAXATION AS THE ASSESSEE. 17. WE HAVE GONE THROUGH THE COPIES OF THE INCOME-TAX RETURNS FILED BY THE AGARWAL BROTHERS FOR THE YEAR UNDER CONSIDERATION. IT CAN BE SEEN THAT THE TOTAL INCOME OFFERED F OR TAXATION BY THE AGARWAL BROTHERS STANDS AT RS.9,88,043/- AN D RS.41,29,878 RESPECTIVELY. OUT OF TOTAL INCOME OF RS.9.88 LAKH, SH. NARENDRA BHIMSEN AGARWAL HAS SHOWN SALARY INCOME OF RS.3.67 LAKH APART FROM INCOME FROM OTHER SOU RCES AT RS.5.43 LAKHS, THEREBY LEAVING `BUSINESS INCOME ONLY AT RS.3.34 LAKH. SIMILAR IS THE POSITION REGARDING SH. SURENDRA ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 18 AGARWAL, WHO DECLARED TOTAL INCOME OF RS.41.29 LAKH FOR THE YEAR UNDER CONSIDERATION. OUT OF SUCH INCOME, THERE IS SA LARY INCOME OF RS.3.87 LAKH AND `INCOME FROM OTHER SOURCES AT RS.36.04 LAKH AND THE `BUSINESS INCOME IS ONLY RS.3.96 LAKH. THUS, IT IS MANIFEST THAT THE `BUSINESS INCOME SHOWN BY THE AGARWAL BROTHERS AT RS.3.34 LAKH AND RS.3.76 LAKH RESPECTIVELY IS NO MATCH TO THE INCOME OF RS.1.05 CRORE WHIC H SHOULD HAVE BEEN TAXED IN THE HANDS OF THE ASSESSEE BUT WAS SOUGHT TO BE TRANSFERRED TO THEM. THE AMOUNT OF INCOME TRANSFERRED BY THE ASSESSEE THROUGH THESE DUBIOUS TRANSA CTIONS TO THE AGARWAL BROTHERS, WAS ADJUSTED BY THEM, THEREBY DENYING THE RIGHTFUL TAXABILITY OF RS.1.05 CRORE AND ODD IN THE HANDS OF THE ASSESSEE. 18. IT IS FURTHER RELEVANT TO NOTE THAT THE ASSESSEE CLAIMED TO HAVE TRANSFERRED HIS 50% SHARE IN BOTH THE PIECES OF THE DEVELOPED LANDS TO THE AGARWAL BROTHERS AT THE UNIFORM RATE OF RS.335/- PER SQ. FT. HOWEVER, THE INTERESTING POINT IS THAT THE MOU FOR THE FIRST TRANSACTION WAS CLAIMED TO HAVE BEEN ENTERED INTO ON 21.8.2007 AND FOR THE SECOND TRANSACTION ON 18.10.20008. ALBEIT RATE OF CONSIDERATION IS STATIC AT RS.335 /- PER SQ. FT., BUT THERE IS A DIFFERENCE OF MORE THAN ONE Y EAR IN THE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 19 TWO MOUS, MEANING THEREBY, THAT DESPITE A GAP OF MORE THA N ONE YEAR, THE PRICE NEGOTIATED WITH THE AGARWAL BROTHERS REMAINED FIXED AT RS.335/- PER SQ. FT., EVEN THOUGH THE LAND UNDER THE SECOND TRANSACTION WAS MORE COMMERCIAL, AS ULTIMATELY SOLD TO PATEL BROTHERS AT RS.620.76 PER SQ.FT. AGA INST THE LAND UNDER THE FIRST TRANSACTION AT RS.548.72 PER SQ.F T. IN A NORMAL COMMERCIAL PARLANCE, THE PRICE OF THE SECOND TRANSACTION SHOULD HAVE BEEN HIGHER THAN THE FIRST ONE, WHICH IS ACTUALLY NOT THE CASE HERE BECAUSE OF THE SIMPLE FAADE OF THE GENUINE NATURE OF BOTH THE TRANSACTIONS OF SALE OF RIGHT IN TH E DEVELOPED LAND TO THE AGARWAL BROTHERS, WHICH ARE ACTUALLY N OT GENUINE TRANSACTIONS. THIS FACTOR ALSO JEOPARDIZES THE BONA FIDES OF THE MOUS AND THE RESULTANT GENUINE INVOLVEMENT OF AGARWAL BROTHERS IN THE TRANSACTIONS. 19. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE SATISFI ED THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING AND SUSTAINING ADDITION OF RS.1,05,64,282/-, WHICH IS HEREBY UPHELD. THIS GROUND FAILS. 20. THE ONLY OTHER GROUND WHICH SURVIVES IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF COMMISSION ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 20 EXPENSE OF RS.8,80,000/- PAID BY THE ASSESSEE TO HIS WIF E SMT. CHHAYA MANE. 21. THE FACTS CONCERNING THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.9 LAKH TOWARDS COMMISSION PAID TO HIS SON MR. DEEPAK MANE AND RS.8,80,000/- TO HIS WIFE M S. CHHAYA MANE. THE AO GOT CONVINCED WITH THE ASSESSEES CONTENTION AS REGARDS THE COMMISSION PAID TO HIS SON, WHICH WAS ALLOWED AS DEDUCTION. AS REGARDS THE PAYMENT TO ASSESSEES WIFE, MS. CHHAYA MANE, THE ASSESSEE WAS CA LLED UPON TO SUBSTANTIATE THE SERVICES RENDERED FOR WHICH SUCH COMMISSION WAS PAID. THE ASSESSEE MADE GENERAL SUBMISS IONS WHICH DID NOT CONVINCE THE AO WHO MADE THE ADDITION OF RS.8,80,000/-. THE LD. CIT(A) ECHOED THE ADDITION. 22. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE CLAIMED TO HAVE PAID A SUM OF RS.8,80,000/- TO HIS WIFE A S COMMISSION. ON A PERTINENT QUERY FOR ADDUCING SPECIFIC EVIDENCE OF SERVICES RENDERED BY HER, THE LD. AR FAILED T O DRAW OUR ATTENTION TOWARDS ANY SUCH EVIDENCE. HE MADE GENERAL SUBMISSIONS THAT MS. CHHAYA MANE CONVINCED THE LADY MEMBERS OF THE FAMILY OF THE SELLERS AND BROUGHT THEM TO THE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 21 REGISTRATION OFFICE FOR AGREEMENT. IN VIEW OF THE FACT THA T THE ASSESSEE FAILED TO LEAD EVEN A SHRED OF EVIDENCE PROVIN G THE RENDITION OF ACTUAL SERVICES BY MS. CHHAYA MANE, WE HAVE NO OPTION BUT TO UPHOLD THE ADDITION SUSTAINED IN THE FIRST APPEAL. 23. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 15 TH FEBRUARY, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-V, PUNE 4. 5. THE CIT-V, PUNE , , / DR A, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2091/PUN/2012 ASHOK RAGHUNATH MANE 22 DATE 1. DRAFT DICTATED ON 14-02-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15-02-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *