Sh Sanjay Mohan Uniyal, Dehradun V. ACIT, Dehradun

ITA 3641/DEL/2012

• Counselvise Citation: 364120114 RSA 2012
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 10-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Salary income
• Section: 142(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 3641/DEL/2012 ASSTT. YR: 2007-08 SHRI SANJAY MOHAN UNIYAL VS. ACIT, CIRCLE-1, 132, JHANDA MOHALLA, DEHRADUN. DEHRADUN. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI ASHWANI TANEJA CA RESPONDENT BY : SMT. Y.S. KAKKAR SR. DR O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER D ATED 30-03-2012 RELATING TO A.Y. 2007-08. VARIOUS GROUNDS ARE RAISE D, OUT OF WHICH ASSESSEE HAS PRESSED ONLY GROUND NO. 2, WHICH IS AS UNDER: 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS. 43,67,000/- CLAIMED BY ASSESSEE ON ACCOUNT OF REMOVAL OF ENCROA CHMENT EXPENSES. REST OF THE GROUNDS STAND DISMISSED BEING NOT PRESS ED. 2. BRIEF FACTS ABOUT THE CONTROVERSY ARE THAT THE A SSESSEE SOLD A PIECE OF LAND ADMEASURING 2.480 HECTARES SITUATED AT MAUZA DANDA LAKHAUND, PARGANA PARWADOON, DEHRADUN TO PRATEEK RESORTS & BU ILDERS (P) LTD., DEHRADUN (COMPANY IN SHORT) FOR RS. ONE CRORE WIT H CONDITIONS THAT THE ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 2 LAND WILL BE DELIVERED WITH CLEAN TITLE AND POSSESS ION. THE LAND WAS ACQUIRED BY THE ASSESSEE IN FINANCIAL YEAR 2003-04 AND 2004- 05 FOR AN AMOUNT OF RS. 18,98,610/-. THE ASSESSEE CLAIMED THAT IT HAD TO IN CUR LIABILITY TO PAY AN AMOUNT OF RS. 43,67,000/- FOR REMOVAL OF ENCROACHME NT AS A DISPUTE AROSE ON AREA OF .955 HECTARE WHICH WAS CLAIMED TO BE IN POSSESSION OF SOME FARMERS WHO RAISED OBJECTIONS FOR MUTATION OF THE L AND IN COMPANYS NAME. DUE TO THIS DISPUTE OUT OF 2.480 HECTARES, ONLY 1.4 85 HECTARE OF LAND COULD BE MUTATED IN COMPANYS NAME. TO AVOID PROTRACTED LITI GATION ABOUT THE DISPUTE ON POSSESSION OF .955 HECTARE AND TO ENSURE THAT A CLEAR TITLE AND PEACEFUL POSSESSION FREE FROM ALL ENCUMBRANCES AS AGREED, IS DELIVERED TOP THE VENDEE COMPANY, THE FOLLOWING AMOUNTS WERE AGREED TO BE PA ID BY THE ASSESSEE TO REMOVE THE ENCROACHMENTS: SHRI PRADEEP BAHUGUNA 1085000 S/O SHRI HAR DEV BAHUQUNA, VILLAQE & P.O. THANO, DEHRADUN SHRI JAI KISHAN BHATT 1097000 S/O SHRI I.M.BHATT, WINQ NO.712/2, PREM NAQAR DEHRADUN SHRI UPENDER SINGH NEGI 1095000 SLO SHRI VIJAY SINCH NEQL, VLLLAOE TUNWALA, DEHRADUN SHRI RAJAT KUMAR 1090000 S/O SHRI AJIT KUMAR, 12/3, BHANDARI BAQH, DEHRADUN. TOTAL 4367000 2.1. SOME AMOUNTS WERE PAID AND SOME OF THE AMOUNTS REMAINED PENDING TILL THE DATE OF ASSESSMENT PART THEREOF WAS PAID I N SUBSEQUENT YEAR. THE ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 3 ASSESSEE CLAIMS THAT IT COULD NOT GET THE ENTIRE A MOUNT OF RS. 1 CRORE IN THIS YEAR AS WHEN THE COMPANY FAILED TO GET .995 HECTARE OF LAND (SOLD BY THE ASSESSEE TO IT) MUTATED IN ITS NAME, IT APPROACHED THE ASSESSEE. ON 31.10.2009, THEY ENTERED INTO A MEMORANDUM OF UNDER STANDING (MOU) AS PER WHICH THE ASSESSEE AGREED TO COMPENSATE THE COM PANY. UNDER THE TERMS OF THE MOU, HIS WIFE MRS. BEENA UNIYAL WOULD SELL H ER LAND MEASURING .4620 HECTARE TO THE COMPANY. THE PRICE OF THIS LAN D WAS FIXED AT RS. 60,00,000/- . AN AMOUNT OF RS. 4,00,000/- WAS PAID BY THE COMPAN Y BEFORE SIGNING OF THE MOU. PAYMENT OF RS. 1,00,000/- WAS CONTINGENT UPON REMOVAL OF SOME MINOR ERROR IN THE TITLE DEED OF TH E LAND. BALANCE AMOUNT OF RS.55,00,000/- WOULD BE PAID IF THE ASSESSEE WAS AB LE TO CLEAR THE DISPUTE IN RESPECT OF THE LAND SOLD BY HIM TO THE COMPANY. IF HE FAILED TO DO SO, THE COMPANY WOULD NOT PAY THE SAID SUM OF RS.55,00,000/ -. 2.2. ASSESSING OFFICER, IN ORDER TO VERIFY THE CLAI M OF THE ASSESSEE ISSUED NOTICES U/S 131 TO THE ABOVE PERSONS WHO APPEARED, GIST OF THEIR APPEARANCE IS AS UNDER: (I) SHRI PRADEEP BAHUGUNA APPEARED AND DEPOSED BEFORE A SSESSING OFFICER CONFIRMING THE DEAL BUT NON-RECEIPT OF THE PART OF PAYMENT. HOWEVER, IN FURTHER QUESTIONS HE STATED THAT OUT OF THE AMOUNT RECEIVED FROM THE ASSESSEE A MAJOR PORTION WAS PAID TO THE PERSON TO FREE THE ENCROACHMENT OF LAND AND HE DID NOT KNO W MUCH ABOUT ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 4 THE PARTICULARS OF THE LAND DUE TO LAPSE OF TIME AN D HE NEVER VISITED THE LAND. HE DID NOT NOW KNOW THE NAMES AND ADDRESS ES OF THE PERSONS TO WHOM THE AMOUNT WAS PAID. (II) SHRI JAI KISHAN BHATT ALSO DEPOSED ON THE SAME LINE S. (III) SHRI UPENDER SINGH NEGI ALSO CONFIRMED THE DEAL AND REPLIED THAT THERE WAS NO DOCUMENT WITH THE ENCROACHERS REGARDIN G THE POSSESSION OF THE LAND. BESIDES, THERE WAS NO PENDI NG COURT CASE IN RELATION TO THIS DISPUTE. HE HAD NOT TAKEN ANY HELP OF POLICE OR ADVOCATE FOR REMOVAL OF ENCROACHMENT. (IV) SHRI AJIT KUMAR APPEARED WHO ALSO DEPOSED ON THE SA ME LINES, COULD NOT TELL THE NAMES OF THE ENCROACHERS. IT WAS ALSO DEPOSED THAT THERE WAS NO CONSTRUCTION ON LAND, WHICH WAS V ACANT. 2.3. THE ASSESSING OFFICER CARRIED OUT THE INQUIRIE S THROUGH INSPECTOR SHRI INDER JEET WHO SUBMITTED FOLLOWING REPORT: 'IN THIS REGARD, AS PER YOUR DIRECTIONS, I ALONG WI TH SHRI. SANJEEV SACHDEVA, SR. T.A OF THIS OFFICE, VISITED THE VII/AGE DANDA LAKHOND, PARAGANA DOON, DEHRA DUN, ON SUNDAY I.E. ON OCTOBER 24, 2010 REGARDING ENQUIRIES IN THE CASE OF SHRI. SANJAY MOHAN UNIYAL FOR NEARLY 32 BIGAS OF LAND SIT UATED AT VII/AGE DANDA LAKHOND. THE VII/AGE IS ON THE ROAD GOING TO SAHASHTRA AND THE LAND IS 11 SITUATED NEARLY ~ TO 1 KM. FROM THE MAIN SAHASHTRA ROAD. THERE IS NO PACCA ROAD TO THE LAND. ON LOCAL ENQUIRIES AND SPOT INSPECTION, IT WAS GATHERE D THAT THERE WAS NO BOUNDARIES ON THE LAND AND NO CROPS OF STRUC TURE ETC WERE THERE ON THE LAND. EXACTLY NEAR THE LAND OR A TTACHED TO THE LAND, THERE WAS NO HOUSE OR PAKKA STRUCTURE ETC. AS IT WAS STATED THAT THERE IS ENCROACHMENT ON THE LAND, I FO UND NO SUCH TYPE OF ENCROACHMENT ON THE LAND. THERE WAS GRASS A ND OTHER WILD BUSHES ON THE LAND. I REMAINED ABOUT M AN HOUR ON THE ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 5 LAND, AND DURING THIS PERIOD ONLY TWO THREE PERSONS WITH SOME COWS ETC CAME, WHEN I ASKED THEM THAT IS SOMEO NE DOES ANY TYPE OF FARMING ON THE LAND, THEY STATED THAT N O ONE DOES ANY TYPE OF FARMING ON THE LAND, AND THERE IS NO ENCROACHMENT ON THE LAND. I WAS ALSO DIRECTED TO ENQUIRE ABOUT SOMEONE SHRI. ANIL SHARMA, IN THE AREA. I ASKED FROM TWO THREE SHOPKEE PERS, AND IN MANY HOUSES AND NO ONE WAS ABLE TO TELL ANY WHER E ABOUT OF SHRI. ANIL SHARMA, THUS THE NOTICE OF SHRI. ANIL SHARMA IS BEING REMAINED UNSERVED, WHICH IS BEING RETURNED ' 2.4. ASSESSING OFFICER THEREAFTER ISSUED A NOTICE T O THE ASSESSEE U/S 142(1) DATED 8-12-2010 CONFRONTING THE ABOVE STATEMENTS. T HE ASSESSEE ON 16-12- 2010 SUBMITTED FOLLOWING REPLY: 6(IV) THE ASSESSEE REPLIED TO THE SHOW CAUSE NOTICE ON 16.12.2010 AS UNDER: 'YOUR GOODSE/F HAS RECORDED THE STATEMENTS OF ALL T HE FOUR PERSON WITH WHOM THE ASSESSEE HAS ENTERED INTO THE AGREEMENT FOR THE PURPOSE OF REMOVAL OF ENCROACHMEN T. WE HAVE GONE THROUGH THE STATEMENTS RECORDED BY YOU AN D PROVIDED TO US ALONG WITH YOUR ABOVE SAID NOTICES. ALL THE FOUR PERSON HAVE CONFIRMED THE FOLLOWING THAT THEY A/L KNOW SHRI SANJAY MOHAN UNIYAL, THEY HAVE AL/ ENTERED INT O AN AGREEMENT FOR THE PURPOSE OF REMOVAL OF ENCROACHMEN T FROM THE LAND SITUATED AT DANDA LAKHOND DEHRADUN, THE AM OUNT OF AGREEMENT, THE PAYMENTS RECEIVED BY THEM SO FAR, HO W THE PAYMENTS WERE MADE TO THEM, CONFIRMED THAT THEY HAV E ISSUED RECEIPTS ALSO FOR THE PAYMENTS RECEIVED BY THEM. TH EY ALSO CONFIRMED THAT THEY HAVE PAID THE AMOUNT TO PERSON WHO HAVE ENCROACHED THE ABOVE SAID LAND. NOW THE QUESTION ARISES THAT THE ASSESSEE SUBMITTED FOUR AGREEMENTS WITH YOUR GOODSELF CARRYING NECESSARY DE TAILS. YOUR GOODSELF HAS CROSS EXAMINED THE PARTIES TO THE AGREEMENTS. IT IS ALSO BEYOND DOUBT THAT ALL THE FO UR PERSONS ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 6 APPEARED BEFORE YOUR GOODSELF AND CONFIRMED ALL THO SE DETAILS WHICH THE ASSESSEE HAS SUBMITTED WITH YOUR GOODSELF. THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH THESE FOUR PERSONS TO AVOID ANY SORT OF DISPUTE BE IT LEGAL, O R OTHERWISE WITH THE ENCROACHERS AND AS A RESULT OF THE AGREEME NTS ALL THESE FOUR PERSONS HAVE TAKEN THE LIABILITY FOR REM OVAL OF ENCROACHMENT. NOW YOUR GOODSE/F HAS POINTED OUT THAT THERE IS NO PROOF OF ANY EXPENDITURE MADE FOR REMOVAL OF ENCROACHMENT. T HE ASSESSEE HAS PROVIDED THE AGREEMENT WHICH WERE CONF IRMED BY ALL THE OTHER FOUR PARTIES AND THEY STAND BY THE AGREEMENT EVEN TODAY AND CONFIRMED THAT THEY HAVE RECEIVED MO NEY FROM THE ASSESSEE AND ALSO CONFIRM THAT THEY ARE RE GULARLY IN TOUCH WITH THE ASSESSEE FOR THE BALANCE PAYMENTS OF MONEY. AS PER ALL THE MATERIALS AVAILABLE IT IS PROVED BEY OND DOUBT THAT THE ASSESSEE HAS GENUINELY ENTERED INTO AGREEM ENTS WITH THESE FOUR PERSON WHO CONFIRMED IT TO AND ALL THE D ETAILS AS PER AGREEMENT AND AS SUBMITTED BY THE ASSESSEE WERE ALSO CONFIRMED BY THEM. NOW IF THESE PERSONS HAVE FAILED TO PROVIDE DETAILS SUCH AS NAMES & ADDRESSES OF THE PERSON WHO ENCROACHED THE LAND, NATURE OF DISPUTES, EVIDENCES OF PAYMENTS MADE BY THEM, AGREEMENTS WITH THE PERSONS WHO ENCROACHED THE LAND, AND AGREEMENT OF VACATION OF S UCH LAND ETC. THEY FAILED TO SHOW THESE AMOUNTS IN THERE RET URN OF INCOMES. ALL THIS FAILURE ON THE PART OF OTHER PART IES CANNOT LEAD TO THE FACT THAT THE CLAIM OF THE ASSESSEE IS NOT GENUINE. THE ONUS WHICH LIES ON THE ASSESSEE HAS BEEN DULY D ISCHARGED AND THE NAME, ADDRESSES, IDENTITY DETAILS AND CONTE NTS OF AGREEMENTS WERE CONFIRMED AND PROVIDE BEYOND DOUBT. THE ASSESSEE HAS DULY DISCHARGED THE ONUS LIES ON HIM A ND PROVED THAT HIS CLAIM IS BONAFIDE AND SHOULD BE ALLOWED TO HIM. YOUR GOODSE/F FILL APPRECIATE THAT THE FAILURE ON T HE PART OF OTHER PARTIES COULD NOT HELD THE ASSESSEE RESPONSIB LE AND DEPRIVED HIM OF HIS BONAFIDE CLAIM. ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 7 FURTHER YOUR GOODSE/F SOME LOCAL ENQUIRIES AND FOUN D THAT THE LAND IS FREE FROM ANY ENCROACHMENT. IT IS RESPE CTFULLY SUBMITTED THAT KINDLY PROVIDE THE DETAILS SUCH AS N AMES. ADDRESSES, OF THE PERSONS FROM WHOM THESE INFORMATI ON WERE GATHERED WHICH LEADS TO THE CONCLUSION THAT THE LAN D WAS FREE FROM ANY ENCROACHMENTS. IN VIEW OF THE ABOVE SAID SUBMISSIONS IT IS RESPECT FULLY SUBMITTED THAT THE EXPENDITURE CLAIMED BY THE ASSES SEE IS A GENUINE CLAIM AND NOT A BOGUS EXPENDITURE. YOUR GOODSELF IS REQUESTED TO ALLOW THE EXPENDITURE. 2.5. ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLA IM OF THE ASSESSEE BY FOLLOWING OBSERVATIONS: 6(V) FROM THE REPLY OF THE ASSESSEE AND STATEMENT R ECORDED UNDER SECTION 131 OF THE ABOVE FOUR PERSONS IT IS H ELD THAT THE EXPENDITURE IS BOGUS, IT IS NOT MADE FOR THE REMOVA L OF ENCROACHMENT FROM THE SAID LAND AS THERE IS NO DISP UTE AT ALL SHRI PRADEEP BAHUGUNA NEVER VISITED THE LAND AND NO T KNOWING ABOUT THE LAND THEN IT IS UNDERSTOOD THAT HE HAS NO T DONE ANY EFFORTS FOR REMOVAL OF ENCROACHMENT AS THERE IS NO ENCROACHMENT AT ALL. AS PER THE STATEMENT THESE PERSONS COULD NOT CLEARL Y DISCLOSE THE IDENTITY AND ADDRESS OF THE ENCROACHERS. BASED ON THE FACTS AND STATEMENT IT IS HELD THAT EXPENDITURE IS BOGUS AND ACCORDINGLY EXPENDITURE RS.43,67,0001- IS DISALLOWE D WHICH IS CLAIMED BY THE ASSESSEE AS EXPENDITURE MADE FOR REM OVAL OF ENCROACHMENT FROM THE SAID LAND. PENALTY PROCEEDING ARE ALSO BEING INITIATED UNDER SECTION 271(1)(C) FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 8 2.6. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE CIT(A) CONFIRMED THE ADDITION. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE A SSESSEE HAS FILED RETURN OF INCOME ON THE BASIS OF INCOME FROM SALE AND PURC HASE OF LAND, SHORT TERM CAPITAL GAINS, INTEREST INCOME AND SALARY INCOME. T HE ASSESSEE MAINTAINS BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM AND DISCLOSE D THE AMOUNT OF SALE VALUE OF LAND AT RS. 1 CRORE, QUA WHICH THE LIABILI TY OF RS. 43,67,000/- WAS CLAIMED FOR REMOVAL OF THE ENCROACHMENT IN RESPECT OF THIS LAND. THE LIABILITY INCURRED FOR DETERMENT OF TITLE AND POSSESSION IS A LLOWABLE DEDUCTION THE MUTUAL AGREEMENT BETWEEN THE ASSESSEE AND THE SAID COMPANY ABOUT CLEAN TITLE AND POSSESSION COULD NOT BE IMPLEMENTED IN RE SPECT OF .995 HECTARE OF LAND AS FOR THE MUTATION THEREOF SOME OF THE LOCAL FARMERS HAD LODGED THEIR PROTESTS AS BEING IN POSSESSION OF THE RESPECTIVE P IECE OF LAND AND THE ASSESSEE IN ORDER TO AVOID ANY UNPLEASANT SITUATION AND PROTRACTED LITIGATION IN DECLARATION OF POSSESSION, SOLICITED SERVICES O F ABOVE FOUR PERSONS TO RESOLVE THIS ISSUE AMICABLY. THESE PERSONS ARE LOCA L LEADERS/SOCIAL WORKERS WHO HAVE INFLUENCE OVER THE FARMERS/ RESIDENTS OF T HAT AREA. ALL THE PERSONS APPEARED AND CONFIRMED THE TRANSACTIONS AND HAVING RECEIVED THE PART PAYMENTS FROM ASSESSEE AND GIVEN TO THE ENCROACHERS TO FREE THE LAND. THUS, THE RECIPIENTS HAVE ADMITTED HAVING ENTERED INTO AG REEMENTS WITH THE ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 9 ASSESSEE FOR REMOVAL OF ENCROACHMENT. ALL OF THESE PERSONS HAVE CONFIRMED THE DEALS AND STATED BEFORE ASSESSING OFFICER THAT THEY WERE YET TO RECEIVE SOME BALANCE PAYMENT FROM THE ASSESSEE FOR WHICH RE PEATED DEMANDS WERE MADE. THE WRITTEN AGREEMENTS WERE FILED BY THE ASSE SSEE APART FROM THEIR CONFIRMATION LETTERS. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCO UNTING; LIABILITY IS ALLOWABLE AS THE SAME WAS DULY ACCRUED BY WAY OF W RITTEN AGREEMENTS AND ENTERED IN BOOKS. ALL THE FOUR PERSONS APPEARED AN D ACCEPTED HAVING RENDERED THE SERVICES AND DISTRIBUTED THE AMOUNT, T HUS ASSESSEE HAS DISCHARGED ITS BURDEN TO ESTABLISH THE ACCRUAL OF L IABILITY. BESIDES, SUBSEQUENTLY ACTUAL PAYMENTS HAVE BEEN MADE WHICH H AVE NOT BEEN DISPUTED. THE ENTIRE PREMISE OF THE DISALLOWANCE BY ASSESSING OFFICER AND CIT(A) IS BASED ON SUSPICION AND NOTHING MORE. IT I S A SETTLED PROPOSITION OF LAW THAT SUSPICION HOW SO EVER STRONG CANNOT TAKE T HE PLACE OF POSITIVE EVIDENCE. 3.1. THE INSPECTOR WAS DEPUTED AFTER TWO YEARS OF T HE LAND DEAL AND HE HAS STATED THAT THERE IS NO CONSTRUCTION OR ENCROACHMEN T ON THE LAND. ASSESSING OFFICER FAILED TO APPRECIATE THAT FOR CLAIMING POS SESSION WHAT WAS REQUIRED FOR FARMERS TO LODGE FORMAL OBJECTIONS BEFORE THE M UTATION AUTHORITY. IN OPEN FIELDS THERE CANNOT BE A PERMANENT STRUCTURE OR A V ISIBLE PROOF OF PHYSICAL ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 10 POSSESSION OR PRESENCE OF HUMAN BEING. BESIDES, WHE N THE AMOUNTS WERE ALREADY INCURRED, THERE WAS NO PURPOSE OF ANY FARM ER REMAINING PRESENT ON THE SITE AND CLAIMING THAT HE WAS EARLIER IN POSSE SSION, AS THE ISSUE OF POSSESSION WAS ALREADY SETTLED. THUS, THE INSPECTOR S REPORT DOES NOT REVEAL ANYTHING MATERIAL AT ALL TO DISLODGE ASSESSEES VER SION. 3.2. ASSESSING OFFICER HAS ONLY DRAWN ADVERSE INFER ENCE FURTHER CLAIMED THAT THE FOUR PERSONS COULD NOT CLEARLY DISCLOSE TH E IDENTITY AND ADDRESSES OF ENCROACHERS, THE SAME CANNOT DENY THE CLAIM INASM UCH AS THE ASSESSEE HAS DISCHARGED ITS BURDEN BY PRODUCING THE PARTIES TO W HOM ASSESSEE OWED THE MONEY. THEY CONFIRMED THE DEAL ALONG WITH WRITTEN A GREEMENTSTHE ASSESSEE DID NOT OWE ANY MONEY TO THE ENCROACHERS DIRECTLY B UT TO THE ABOVE 4 PERSONS WITH WHOM THE DEALS WERE MADE. BESIDES, THE MATTER RELATES TO F.Y. 2006-07 WHEREAS STATEMENTS OF 4 PERSONS WERE RECOR DED IN 2010. IN THESE CIRCUMSTANCES, THE ASSESSEE CANNOT BE PUT TO JEOPAR DY FOR THE FAILURE OF THE PERSONS WHO ENTERED INTO TRANSACTIONS WITH ASSESSE E IN EXPLAINING TO ASSESSING OFFICER FURTHER FACTS AFTER A GAP OF FOUR YEARS. EXCEPT RAISING SUSPICION, SURMISES AND CONJECTURES, ASSESSING OFFI CER HAS NOT BROUGHT ON RECORD ANY COGENT EVIDENCE THAT THE DISPUTE DID NOT EXIST OR DEALS FOR REMOVAL OF ENCROACHMENTS WERE NOT MADE WITH THESE 4 PERSONS . ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 11 3.3. BESIDES, NO INQUIRIES HAVE BEEN CARRIED OUT FR OM THE SAID COMPANY M/S PRATEEK RESORTS & BUILDERS (P) LTD., WHETHER TH EY HAVE BEEN GIVEN FREE POSSESSION OF THE LAND IN ONE VOW OR THERE WAS ANY DISPUTE ABOUT .995 HECTARE OF LAND, WHICH WAS SETTLED LETTER. 3.4. LD. COUNSEL FOR THE ASSESSEE THUS SUMS UP HIS ARGUMENTS: (I) THAT THE AGREEMENT BETWEEN ASSESSEE AND M/S PRATEEK RESORTS & BUILDERS (P) LTD. HAS NOT BEEN DISPUTED. (II) THE FACT ABOUT PROBLEM AND MUTATION OF .995 HECTARE OF LAND BETWEEN ASSESSEE AND M/S PRATEEK RESORTS & BUILDERS (P) LTD.HAS NOT BEEN DISPUTED. (III) THE FACT THAT ASSESSEE HAD TO DELIVER CLEAR TITLE A ND FREE POSSESSION TO M/S PRATEEK RESORTS & BUILDERS (P) LTD. HAS NOT BEEN DISPUTED. (IV) THE ASSESSEE HAS PRODUCED ALL THE FOUR PARTIES TO W HOM THE AMOUNT WAS OWED AND SUBSEQUENTLY PAID FOR REMOVAL OF ENCRO ACHMENT. THEIR STATEMENTS WERE RECORDED BEFORE THE ASSESSING OFFICER AFTER FOUR YEARS. THEY CONFIRMED THE TRANSACTIONS AND COM PLAINED ALSO THAT THEY WERE YET TO RECEIVE SOME OF THEIR PAYMENT S. IN VIEW OF THESE FACTS, THE INCURRING OF THE LIABILITY ON MERC ANTILE SYSTEM BY THE ASSESSEE CANNOT BE DOUBTED. (V) THE INSPECTORS REPORT CARRIES NO VALUE AS IT DOES NOT SPECIFICALLY DEAL WITH THE ISSUE OF THE EARLIER ENCROACHMENT DI SPUTE AND ITS SETTLEMENT. IT ONLY VAGUELY HINTS AT NO PRESENCE OF ANY ENCROACHERS, NO PHYSICAL STRUCTURES AND POSSESSION OF ANY FARMER . THE FACT OF THE MATTER IS THAT ENCROACHMENT WAS ALREADY REMOVED AT THE TIME OF HIS ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 12 VISIT AND IN OPEN FIELD NO ENCROACHER WOULD BE FOUN D AFTER SETTLEMENT OF DISPUTIE. (VI) NO CORROBORATIVE EVIDENCE HAVE BEEN COLLECTED BY AS SESSING OFFICER FROM M/S PRATEEK RESORTS & BUILDERS (P) LTD. (VII) THE STATEMENTS, CONFIRMATIONS AND AGREEMENTS FILED BY THE ABOVE 4 PERSONS HAVE BEEN IGNORED BY THE LOWER AUTHORITIES WITHOUT ANY JUSTIFIABLE REASONS AND DISREGARDED ONLY ON GUESS WORK, SURMISE AND CONJECTURES. IT IS PLEADED THAT THE ACCRUED LIA BILITY BEING IN RESPECT OF THE LAND DEAL WHICH IS ACCEPTED BY ASSES SING OFFICER, EVIDENCED BY BOOKS OF ACCOUNTS, WRITTEN AGREEMENTS, PERSONAL ATTENDANCE OF THE RECIPIENTS AND THEIR CONFIRMATION S, THE DEDUCTION SHOULD BE ALLOWED. 5. LD. DR ON THE OTHER HAND CONTENDS THAT THE ASSES SEE COULD NOT GIVE ANY DETAILS ABOUT THE NAMES OF THE ENCROACHERS, THE NATURE OF THE ENCROACHMENT, THE PIECES OF THE LAND ENCROACHED. T HE INSPECTORS REPORT CLEARLY INDICATES THAT HER WAS NEITHER PHYSICAL ENC ROACHMENT FOUND NOR THE EXISTENCE OF ANY ENCROACHER. SINCE THE ASSESSEE FAI LED TO DISCHARGE ITS BURDEN, THE AMOUNT HAS BEEN RIGHTLY DISALLOWED. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE BURDEN OF THE ASSESSEE TO PROVE A FA CT IS TO BE ASCERTAINED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. FROM THE FOREGOINGS, IT EMERGES THAT ALL THE FOUR PERSONS WHO ARE CLAIMED BY THE AS SESSEE TO HAVE BEEN ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 13 ENTRUSTED WITH THE WORK OF FREEING THE LAND FROM EN CROACHMENT APPEARED BEFORE THE ASSESSING OFFICER IN RESPONSE TO SUMMONS U/S 131 AFTER 4 YEARS. THEY CONFIRMED HAVING HELPED THE ASSESSEE IN FREEIN G THE ENCROACHMENT AT THE SAME TIME ALSO COMPLAINED THAT SOME OF THE AMOU NT WAS YET TO BE RECEIVED. COPIES OF AGREEMENT BETWEEN ASSESSEE AND THESE PERSONS WERE ALSO FILED. THESE ENTRIES ARE INCORPORATED IN ASSESSEES BOOKS OF ACCOUNTS AND IT APPEARS THAT ASSESSEE EXPLAINED BEFORE ASSESSING OF FICER THAT IN SUBSEQUENT YEARS SOME AMOUNTS ARE FURTHER PAID TO THESE PERSON S. 6.1. APROPOS THIS DIRECT EVIDENCE, THE OBJECTIONS O F ASSESSING OFFICER ARE BASED ON THE OBSERVATIONS THAT THESE FOUR PERSONS W ERE NOT VERY ELABORATIVE IN THEIR STATEMENTS AND THEY DID NOT GIVE SPECIFIC DETAILS OF THE LAND ENCROACHED. FURTHER RELIANCE HAS BEEN PLACED ON THE INSPECTORS REPORT, IN OUR CONSIDERED VIEW, INSPECTORS REPORT DOES NOT DE MONSTRATE ANY EVIDENTIARY VALUE INASMUCH AS WHEN THE INSPECTOR VI SITED THE FIELDS, THE ENCROACHMENT WAS ALREADY REMOVED I.E. THAT THE SALE TOOK PLACE. IN LAND ENCROACHMENT THERE CANNOT BE ANY PERMANENT STRUCTUR E AND WHEN SUCH ENCROACHMENT WAS ALREADY REMOVED, THERE IS NO QUEST ION OF FINDING ANY ENCROACHER PHYSICALLY PRESENT THERE. IN THESE CIRCU MSTANCES, WE ARE UNABLE TO ATTACH ANY IMPORTANCE TO INSPECTORS REPORT. ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 14 6.2. COMING BACK TO ASSESSING OFFICERS ADVERSE INF ERENCE THAT THE FOUR PERSONS COULD NOT SPELL OUT THE FURTHER DETAILS ABO UT ENCROACHMENT, RAISES SOME ISSUE BUT AT THE SAME TIME THE FACT IS TO BE ASCERTAINED BY WEIGHING THE EVIDENCE PRODUCED BY THE ASSESSEE AND OBSERVATION O F THE ASSESSING OFFICER. THE ASSESSEE CLAIMS THAT THE INABILITY OF THESE FOU R PERSONS TO GIVE REPLY FURTHER QUESTION BY ASSESSING OFFICER CANNOT PUT IT S CLAIM IN JEOPARDY INASMUCH AS FROM ASSESSEES SIDE SUFFICIENT DIRECT EVIDENCE HAS BEEN ADDUCED, WHICH IS DETAILED ABOVE. THEREFORE, IT BE COMES NOW A QUESTION ABOUT THE WEIGHTAGE OF DIRECT EVIDENCE PRODUCED BY THE ASSESSEE AND THE INFERENCE BEING DRAWN BY THE ASSESSING OFFICER AND CIT(A). IN OUR CONSIDERED OPINION, THE ASSESSEE MAINTAINS BOOKS OF ACCOUNTS AND DEALS IN LAND. THE FACT ABOUT MUTATION OF .995 HECTARE OF LA ND BETWEEN ASSESSEE AND M/S PRATEEK RESORTS & BUILDERS (P) LTD. HAS NOT BEE N DISPUTED BY THE ASSESSING OFFICER. ON THE SCALES OF WEIGHING OF EVI DENCE AND IN THESE FACTS AND CIRCUMSTANCES OF THE CASE THE WEIGHTAGE OF EVID ENCE TILTS IN FAVOUR OF THE ASSESSEE IN CONSIDERABLE TERMS AS AGAINST THE ADVER SE INFERENCE OF ASSESSING OFFICER. DIRECT EVIDENCE IS TO BE CONSIDERED AND TH E ADVERSE INFERENCES WHICH IS DRAWN ON QUESTIONS AFTER A LAPSE OF TIME. IN THI S SITUATION, SOME ISSUE ABOUT FURTHER CORROBORATION ARE BOUND TO ARISE BUT THEY DO NOT WASH AWAY THE EVIDENTIARY VALUE OF DIRECT EVIDENCE PRODUCED B Y THE ASSESSEE. ITA 3641/DEL/2012 SANJAY MOHAN UNIYAL 15 6.3. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES ME NTIONED ABOVE, WE ARE INCLINED TO HOLD THAT THE ASSESSEE HAS DISCHARGED I TS PRIMARY BURDEN TO ESTABLISH THAT THIS AMOUNT HAS BEEN INCURRED FOR TH E ABOVE LIABILITY OF FREE POSSESSION OF SALE OF THE LAND FOR RS. 1 CRORE TO M /S PRATEEK RESORTS & BUILDERS (P) LTD. THUS IT IS TO BE ALLOWED AS A DED UCTION. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 08-08-2013. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08 TH AUGUST 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR