Musaddilal Projects Limited, Hyderabad V. Dy.CIT, Central Circle-3, Hyderabad

ITA 741/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98559 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Assessee Lawyers: SANJAY KUMAR SHARDA
• Keywords: Unexplained investment; Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 741/HYD/2014 ASSESSMENT YEAR: 2008-09 MUSADDILAL PROJECTS LTD., HYDERABAD PAN AAECM 8691 A VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 3, HYDERABAD (APPELLANT) (RESPONDENT) ITA NO. 754/HYD/2014 ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 3, HYDERABAD VS. MUSADDILAL PROJECTS LTD., HYDERABAD PAN AAECM 8691 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL KUMAR & SANJAY KUMAR SHARDA REVENUE BY : SHRI KONDA RAMESH DATE OF HEARING : 01-09-2015 DATE OF PRONOUNCEMENT : 04-09-2015 O R D E R PER SAKTIJIT DEY, J.M.: THESE CROSS APPEALS BY ASSESSEE AND THE DEPARTMENT ARE AGAINST THE ORDER DATED 24/02/14 OF LD. CIT(A) VIII, HYDE RABAD FOR AY 200809. 2. WHILE ASSESSEE IS AGGRIEVED WITH THE ADDITION OF RS. 33,50,000 SUSTAINED BY LD. CIT(A) OUT OF TOTAL ADDITION OF RS . 80 LAKHS MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT, DEPARTMENT IS CO NTESTING PARTIAL RELIEF GRANTED BY CIT(A). 2 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD 3. BRIEFLY THE FACTS ARE, ASSESSEE A COMPANY IS EN GAGED IN THE BUSINESS OF CONSTRUCTION AND LETTING OUT OF COMMERC IAL SPACE (WAREHOUSE) INCLUDING EQUIPMENTS AND PROVIDING LOGISTICS AND IN FRASTRUCTURE FACILITY. PURSUANT TO SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT CARRIED OUT IN CASE OF M/S MBS JEWELLERS PVT. LTD. AND ITS GROUP C ONCERNS, A SEARCH OPERATION WAS ALSO CONDUCTED IN THE OFFICE PREMISES OF M/S EGGWOOD BOARDS AND PANELS PVT. LTD. IN COURSE OF SUCH SEARC H ACTION, CERTAIN DOCUMENTS RELATING TO ASSESSEE WAS FOUND AND SEIZED . SUCH SEIZED MATERIAL CONTAINED AGREEMENT OF SALE FOR PURCHASE O F LAND BY ASSESSEE AT SURVEY NO. 74/2, GAVALAKANAHALLI VILLAGE, CHIKBALLA PUR, 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 SA ID NOTICE, ASSESSEE FILED ITS RETURN OF INCOME ON 25/11/11 DECLARING NIL I NCOME. DURING THE ASSESSMENT PROCEEDING, AO REFERRING TO THE AGREEMEN T OF SALE FOUND AND SEIZED IN COURSE OF SEARCH OPERATION, OBSERVED THAT AS PER THE SAID AGREEMENT OF SALE, ASSESSEE AGREED TO PURCHASE 14.3 6 ACRES OF LAND FROM SMT. YASHODA AND 17 OTHERS FOR TOTAL CONSIDERATION OF RS. 5,17,50,000. HOWEVER, AS PER THE REGISTERED SALE DEED DATED 29/0 5/08, THE SAID PROPERTY WAS REGISTERED FOR CONSIDERATION OF RS. 4 CRORES ON LY. WHEN ASSESSEE WAS CALLED UPON TO EXPLAIN THE DIFFERENCE, IT WAS SUBMI TTED THAT THE ACTUAL AMOUNT RECORDED IN THE BOOKS OF ACCOUNT IS MUCH HIG HER THAN THE CONSIDERATION OF RS. 5,17,50,000. WHILE EXAMINING T HE DETAILS SUBMITTED, IT WAS NOTICED BY AO THAT THE AMOUNT RECORDED IN THE B OOKS OF ACCOUNT INCLUDED THE EXPENDITURE INCURRED TOWARDS LAND DEVE LOPMENT, REGISTRATION AND PAYMENT MADE TO MEDIATORS, WHICH ACCORDING TO A O CANNOT BE TREATED AS AMOUNT PAID TOWARDS PURCHASE OF LAND. IN FURTHER REPLY DATED 03/08/12, ASSESSEE FURNISHING MORE DETAILS STATED THAT AN AMO UNT OF RS. 34,05,000 WAS PAID TO SHRI G. RANGANATH, ONE OF THE LAND OWNE R, THROUGH CHEQUE DRAWN ON BANK OF INDIA, KHAIRATABAD BRANCH, WHICH H AS BEEN SHOWN UNDER THE LAND DEVELOPMENT CHARGES. IT WAS FURTHER STATED THAT THE LAND OWNERS BEING AGRICULTURISTS AND MANY IN NUMBER HAD APPOINT ED ONE SHRI SYED ASIF AS THEIR REPRESENTATIVE FOR DEALING ON THEIR BEHALF . ACCORDINGLY, ALL AMOUNTS HAVE BEEN PAID BY ASSESSEE THROUGH CHEQUE TO SHRI S YED ASIF, WHO, INTURN WAS SUPPOSED TO DISTRIBUTE THE MONEY TO THE LAND OW NERS. IT WAS SUBMITTED, THE AMOUNT PAID TO SHRI SYED ASIF IN THIS REGARD IS RS. 50 LAKHS, WHICH HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT UNDER TH E HEAD LAND 3 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD DEVELOPMENT CHARGES. IT WAS SUBMITTED, OVER AND ABO VE RS. 50 LAKHS, AN ADDITIONAL AMOUNT OF RS. 33,50,000 WAS ALSO PAID TO SHRI SYED ASIF THROUGH ACCOUNT PAYEE CHEQUE FOR DISTRIBUTION TO LAND OWNER S. IT WAS SUBMITTED BY ASSESSEE THAT THE AMOUNT SHOWN TOWARDS ACQUISITION OF LAND IN THE AUDITED BALANCE SHEET FOR AY 200910 IS RS. 5,89,83,112. REC ONCILING THE DIFFERENCE BETWEEN THE AMOUNT MENTIONED IN THE AGREEMENT OF SA LE AND THE REGISTERED SALE DEED, IT WAS SUBMITTED BY ASSESSEE THAT APART FROM THE PRICE MENTIONED IN THE REGISTERED SALE DEED AT RS. 4 CROR ES, AN AMOUNT OF RS. 34,05,000 WAS PAID TO SHRI G. RANGANATH AND THE AM OUNT OF RS. 83,50,000 WAS PAID TO SHRI SYED ASIF FOR DISTRIBUTING TO OTHE R LAND OWNERS. AO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, HOWEVER, O BSERVED THAT THE GENERAL POWER OF ATTORNEY GIVEN TO SHRI SYED ASIF, IS ONLY IN RESPECT OF 10 GUNTAS OF LAND FOR TOTAL CONSIDERATION OF RS. 3,75, 000, HENCE, IT CANNOT BE STATED THAT RS. 50 LAKHS PAID TO SYED ASIF IS ON AC COUNT OF PURCHASE OF LAND. THOUGH, ASSESSEE SUBMITTED A MEMORANDUM OF UN DERSTANDING EXECUTED WITH SYED ASIF TOWARDS PURCHASE OF LAND, B UT, AO WAS NOT CONVINCED WITH THE SAME. HE OBSERVED THAT AS PER TH E REVERSE SIDE OF AGREEMENT OF SALE EXECUTED ON 20/11/2007, AN AMOUNT OF RS. 28,51,250 WAS PAID TO FOUR FAMILIES TOTALING TO RS. 1,14,05,0 00 APART FROM CHEQUE ISSUED OF RS. 34,05,000 TO SHRI G. RANGANATH. HE, T HEREFORE, 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 FINALLY CONCLUDED THAT OVER AND ABOVE SALE CONSIDER ATION RECORDED IN THE REGISTERED SALE DEED, ASSESSEE HAS PAID AN AMOUNT O F RS. 28,51,250 EACH TO FOUR FAMILIES. HE FURTHER NOTED THAT EXPLANATION SUBMITTED BY ASSESSEE IS ONLY AN ATTEMPT TO CAMOUFLAGE THE SUBSEQUENT EXPEND ITURE INCURRED TO EXPLAIN THE GAP BETWEEN THE AMOUNT MENTIONED IN AGR EEMENT OF SALE AND REGISTERED SALE DEED. ACCORDINGLY, ACCEPTING THE PA YMENT OF RS. 34,05,000 MADE THROUGH CHEQUE TO SHRI G. RANGANATH OUT OF EXC ESS 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 RETU RNED. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). 4 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD 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) THE ASSESSING OFFICER ACCEPTED THAT THE PAYMEN T TO G.RANGANATH (RS 34.05 LAKHS) IS RELATED TO LAND PURCHASE BUT D ID NOT ACCEPT THE PAYMENT TO SYED ASIF AS RELATED TO LAND. THE ASSES SING OFFICER ACKNOWLEDGES AND EVEN GAVE A FINDING THAT THERE WA S AN MOU DATED 17.09.2007 FOR ACQUIRING LAND ON BEHALF OF THE APP ELLANT BY SRI SYED ASIF YET DOES NOT ACKNOWLEDGE THAT THE PAYMENT MAD E TO SRI ASIF IS RELATED TO LAND ACQUISITION. (C) THE MOU ON PAGE 2 CLEARLY STATES THAT THE APPE LLANT APPROACHED SRI SYED ASIF FOR ACQUIRING THE LAND FROM ORIGINAL OWNERS/AGREEMENT HOLDERS. PAGE 2 ALSO SPEAKS OF THE SCHEDULE PROPER TY WHICH IS THE SAME PROPERTY UNDER DISCUSSION. PAGE 2 OF THE MOU ALSO STATES THAT THE APPELLANT AFTER INSPECTION OF THE LOCATION OF THE SCHEDULE PROPERTY, GAVE CONSENT TO NEGOTIATE WITH ORIGINAL OWNERS/AGREEMENT HOLDERS TO GET THE SALE DEED EXECUTED BY THE ORIGI NAL OWNERS IN FAVOUR OF THE APPELLANT. PAGE 3 CLEARLY STATES THA T SRI SYED ASIF WILL ACQUIRE THE PROPERTIES AND GET THE SAME REGISTERED AFTER CONVERSION FROM AGRICULTURAL TO INDUSTRIAL IN THE NAME OF THE APPELLANT. PAGE 3 ALSO STATES THAT SRI SYED ASIF WILL VERIFY THE TIT LE DEED AND IT IS HIS RESPONSIBILITY TO CLEAR OFF ANY DISPUTES OR LITIGA TION BEFORE EXECUTING THE SALE DEED. FINALLY PAGE 6 OF THE MOU ALSO STAT ES THAT SRI SYED ASIF WILL PAY ALL THE VENDORS THROUGH DEMAND DRAFT S AS APPLICABLE AND THE BALANCE AMOUNT OF AGREED SALE CONSIDERATION BY WAY OF CASH ON THE DATE OF EXECUTION OF SALE DEED. (D) THE AO IS ERRONEOUS TO HOLD THAT PAYMENT TO SR I SYED ASIF IS FOR SOME OTHER SERVICES AND NOT RELATED TO LAND ACQUIS ITION. (E) ALL THE PAYMENTS WERE ACCOUNTED IN THE BOOKS A ND WERE MOSTLY THROUGH BANK 'EXCEPT RS.5,50,000/- BY WAY OF CASH' . (F) THE SEQUENCE OF EVENTS WERE ACTUALLY AS UNDER: S.NO. DATE PARTICULARS 1 17/09/07 MEMORANDUM OF UNDERSTANDING ENTERED MR.SYED ASIF AND MR.PRAMOD KUMAR GUPTA FOR ACQUIRING OF LAND AT CHIKBALLAPUR DISTRICT, KARNATAKA 2 20/11/07 AGREEMENT OF SALE ENTERED BETWEEN CO- OWNERS OF LAND AND MR.PRAMOD KUMAR GUPTA FOR PURCHASE OF LAND ADMEASURING 15 ACRES 06 QUNTAS 3 01/03/08 GPA ENTERED BETWEEN CO-OWNERS AND MR.PRAMOD KUMAR GUPTA 5 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD 4 29/05/08 ABSOLUTE SALE DEED ENTERED BETWEEN CO- OWNERS OF LAND AND MR.PRAMOD KUMAR GUPTA FOR PURCHASE OF 14 ACRES 36 GUNTAS OF LAND AT CHIKBALLAPUR DISTRICT KARNATAKA (G) AS THE LAND OWNERS WERE TOO MANY (19), IT WAS DIFFICULT TO THE COMPANY TO INTERACT WITH THEM AND FOLLOW UP LEGAL FORMALITIES. SRI SYED ASIF, (AN ADVOCATE IN KARNATAKA) WAS APPOINTE D AS MEDIATOR TO INTERACT WITH THE COMPANY AND THE CO-OWNER AS AGRI CULTURAL LAND CANNOT BE PURCHASED BY COMPANY FOR PURPOSE OTHER T HAN AGRICULTURAL IN KARNATAKA, SRI SYED ASIF WAS APPOINTED TO GET T HE PROPERTY REGISTERED IN THE NAME OF THE COMPANY AFTER CONVER SION FROM AGRICULTURAL TO INDUSTRIAL. THE LAND WAS THEREFORE PURCHASED ONLY AFTER CONVERSION TO INDUSTRIAL LAND. AN MOU WAS ALSO SIG NED WITH HIM. THE PAYMENT TO THE LAND OWNERS WERE ALSO ROUTED THROUG H SYED ASIF. SRI SYED ASIF WAS PAID BY CHEQUE AND HE IN TURN DISTRI BUTED 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 F OR 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 APPELL ANT HAS NOTHING TO DO WITH THIS TRANSACTION OF SALE OF 10 GUNTAS O F LAND. (I) NO MEDIATOR WOULD BE PAID SUCH A HIGH AMOUNT O F 'ABOUT RS.80 LAKHS' FOR PROVIDING MEDIATOR SERVICES. (J) A NOTORIZED AFFIDAVIT GIVEN BY SRI SYED ASIF C LARIFYING THE TRANSACTION WAS ALSO FILED IN COURSE OF THE APPELL ATE PROCEEDINGS, WHICH READS AS UNDER: I, THE ABOVE NAMED DEPONENT SOLEMNLY AFFIRM AND DE C/ARE:- 1. THAT I HAVE ENTERED INTO MEMORANDUM OF UNDERSTA NDING (MOU) WITH M/S MUSADDILAL PROJECTS LTD., ON I R' SEPTEMB ER, 2007 AND AS PER MOU OF THE AMOUNT RECEIVED RS.80,00,000/IN THE FY 2007-08 AND 2008-09 WAS FOR THE PURPOSE OF MAKING PAYMENTS TO ALL THE OWNERS OF LAND AND THE SAME WAS PAID TO THEM. 2. THAT THE LAND OWNERS ARE PERTAINING TO THE PROP ERTY BEARING SURVEY NO. 74/2, GUVALAKANAHALLI VILLAGE, CHIKBALLAPUR UN DER SALE DEED NO. 500/08-09, DATED 29.05.2008 BETWEEN MUSADDILAL PRO JECTS LIMITED AND LAND OWNERS. 3. THAT I HAVE BEEN REGULAR IN FILING MY INCOME TA X RETURNS. IN SUPPORT OF SUCH CONTENTION, ASSESSEE ALSO SUBMIT TED FOLLOWING DOCUMENTS: (I) GENERAL POWER OF ATTORNEY DATED 29.07.2009 B ETWEEN SRI SYED ASIF AND THE OTHER LAND OWNERS FOR 10 GUNTAS OF AG RICULTURAL LAND AND 3 ACRES OF KHARAB LAND' WHICH REMAINED WITH THE OR IGINAL LAND OWNER 6 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD AFTER THE SALE OF 14 ACRES 36 GUNTAS OF CONVERTED LAND TO THE APPELLANT.( SCHUDULE A AND B TO THE GPA-PAGES 21 A ND 22) (II) AGREEMENT OF SALE BETWEEN THE ORIGINAL LAND O WNERS AND THE APPELLANT COMPANY. (III) THE ABSOLUTE SALE DEED BETWEEN THE ORIGINAL LAND OWNERS AND THE COMPANY. (IV) MOU DATED 17.09.2007 BETWEEN SYED ASIF AND TH E APPELLANT. (V) ACCOUNT COPY OF SYED ASIF IN THE BOOKS OF APPE LLANT COMPANY. (VI) ACCOUNT COPY OF LAND DEVELOPMENT CHARGES TOTA LING 1,37,85,000/- IN THE BOOKS OF APPELLANT COMPANY. (VII) ACCOUNT COPY OF LAND IN THE BOOKS OF APPELLA NT COMPANY INDICATING VALUE OF 5.89 CRORES BY 31.03.2009. (VIII) DETAILED LAND ACCOUNT COPY INDICATING VALUE OF 4.20 CRORE AND WHICH IS PART OF 5.89 CRORES MENTIONED SUPRA 5. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE IN THE LIGHT OF THE MATERIALS PLACED ON RECORD, LD. CIT(A) OBSERVED THA T AFTER THE REGISTRATION OF SALE DEED ON 29/05/08, ASSESSEE HAS MADE PAYMENT S OF RS. 33,50,000 ON DIFFERENT DATES TO SHRI SYED ASIF. HE OBSERVED T HAT IF THE LAND WAS REGISTERED ON 29/05/08, HOW CAN IT BE BELIEVED THAT AGRICULTURIST LAND OWNERS WOULD WAIT FOR ANOTHER SIX MONTHS TO RECEIVE SALE AMOUNTS IN INSTALMENTS. HE OPINED THAT WHILE IT IS ACCEPTABLE THAT CERTAIN PAYMENTS MIGHT HAVE BEEN MADE THROUGH SHRI SYED ASIF, HOWEVE R, IT CANNOT BE RELATED AND ACCEPTED AS PAYMENT TOWARDS LAND PURCHA SE AFTER THE DATE OF REGISTRATION OF SALE DEED. LD. CIT(A) OBSERVED THAT ASSESSEES CLAIM THAT AN AMOUNT OF RS. 83,50,000 PAID TO SHRI SYED ASIF TOWA RDS 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 LA KHS. THE SUBSEQUENT PAYMENT OF RS. 33,50,000 AFTER 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. 7 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD 6. LD. AR SUBMITTED BEFORE US, THOUGH, AO TREATED T HE AMOUNT OF RS. 1,14,05,000 TO BE THE PAYMENTS OUT OF THE BOOKS OF ACCOUNT, HOWEVER, HE SELECTIVELY ALLOWED RS. 34,50,000 WHEREAS LD. CIT(A ) ALLOWED FURTHER SUM OF RS. 46,50,000 AS ACCOUNTED IN THE BOOKS OF ACCOU NT. HE SUBMITTED, THE AFORESAID FACT PROVES THAT AO AND LD. CIT(A) ACCEPT S THAT PAYMENTS OF RS. 1,14,05,000 ARE ACCOUNTED FOR IN THE BOOKS OF ACCO UNT, 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 AFTER THE SALE DEED. HE SUBMITTE D, THIS WAS NEVER THE GROUND OF ADDITION BY AO. HE SUBMITTED, WHEN LD. CI T(A) DOES NOT DISPUTE THE MEMORANDUM OF UNDERSTANDING BETWEEN ASSESSEE AN D SHRI SYED ASIF AND PAYMENTS TO BE MADE BY HIM TO THE LAND OWNERS O N BEHALF OF ASSESSEE, THERE IS NO REASON TO SUSTAIN A PART OF ADDITION. L D. AR SUBMITTED, INITIALLY THE AGREEMENT OF SALE WAS MADE FOR THE TOTAL AREA O F 15.60 ACRES AND THREE ACRES OF KHARAB LAND FOR A TOTAL CONSIDERATION OF R S. 5,17,50,000. HOWEVER, THE REGISTERED SALE DEED WAS FOR AN AREA OF 14.36 A CRES ONLY AND AN AREA 10 GUNTAS AND THREE ACRES OF KHARAB LAND WAS RETAIN ED BY THE LAND OWNER. THEREFORE, ASSESSEE WITHHELD THE PAYMENT OF AN AMOU NT OF RS. 33,50,000. LATER ON WHEN SHRI SYED ASIF WAS APPOINTED AS GPA B Y THE FOUR FAMILIES OF LAND OWNERS FOR THE BALANCE PORTION OF LAND, ASSESS EE RELEASED THE BALANCE AMOUNT OF RS. 33,50,000 WITHHELD AT THE TIME OF REG ISTRATION OF SALE DEED. THUS, IT WAS SUBMITTED BY LD. AR, WHEN THE ENTIRE P AYMENTS HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNT AND ASSESSEE HAS MADE PAYMENT IN CHEQUE TO SHRI SYED ASIF, THERE IS NO REASON TO DIS ALLOW A PART OF SUCH PAYMENT AND TREAT IT AS UNEXPLAINED INVESTMENT. 7. LD. DR, ON THE OTHER HAND, RELIED UPON THE REASO NING OF THE AO. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATE RIALS ON RECORD. AS COULD BE SEEN FROM THE ASSESSMENT ORDER, THE ADDITION MAD E BY AO WAS ON ACCOUNT OF THE FACT THAT WHILE THE AGREEMENT OF SAL E RECORDED THE CONSIDERATION TO BE PAID AT RS. 5,17,50,000, THE AC TUAL REGISTERED SALE DEED WAS FOR THE CONSIDERATION OF RS. 4 CRORES. HE, THER EFORE, TREATED THE DIFFERENTIAL AMOUNT AS PAYMENTS MADE BY ASSESSEE OU TSIDE THE BOOKS. HOWEVER, IT IS A FACT ON RECORD THAT ASSESSEE IN IT S BOOKS OF ACCOUNT AS WELL AS AUDITED FINANCIAL STATEMENTS HAS SHOWN AN AMOUNT OF RS. 5.89 CRORES 8 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD TOWARDS EXPENDITURE INCURRED FOR ACQUIRING LAND. IN FACT, AO AS WOULD BE EVIDENT, OUT OF THE AMOUNT OF RS. 1,14,05,000 TREAT ED TO HAVE BEEN PAID OUTSIDE THE BOOKS OF ACCOUNT HAS ACCEPTED PAYMENT O F RS. 34,05,000 TO SHRI G. RANGANATH THROUGH CHEQUE. HE ONLY DISPUTED THE PAYMENTS MADE TO FOUR FAMILIES FOR AN AMOUNT OF RS. 80 LAKHS, WHICH ACCORDING TO HIM, HAS BEEN PAID THROUGH CASH. ON A PERUSAL OF RECEIPTS PU RPORTEDLY SEIZED DURING THE SEARCH AND SEIZURE OPERATION, IT IS NOTICED THA T THEY ARE FOR TWO AMOUNTS OF RS. 28,51,250 AND WITHOUT MENTIONING ANY DATE. THOUGH, AO HAS OBSERVED, THEY ARE IN THE REVERSE SIDE OF THE A GREEMENT 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 T HE MATTER, SINCE SEIZED MATERIALS WERE NOT PRODUCED BEFORE US, WE ARE NOT I N A POSITION TO RENDER ANY FINDING ON THIS FACTUAL ASPECT. BE THAT AS IT M AY, BEFORE LD. CIT(A), ASSESSEE HAS CLAIMED THAT OUT OF THE DIFFERENTIAL A MOUNT OF RS. 1,14,50,000 BETWEEN THE AGREEMENT OF SALE AND REGISTERED SALE D EED, ASSESSEE HAS PAID AMOUNT OF RS. 34,05,000 TO SHRI G. RANGANATH A ND 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 RESPE CTIVE LAND OWNERS. IT IS CLEARLY EVIDENT THAT THE AFORESAID EXPLANATION OF A SSESSEE WAS FOUND BELIEVABLE/ACCEPTABLE BY LD. CIT(A). THE ONLY REASO N FOR WHICH LD. CIT(A) HAS SUSTAINED THE ADDITION OF AN AMOUNT OF RS. 33,5 0,000 IS, SUCH PAYMENTS WERE MADE TO SHRI SYED ASIF AFTER REGISTRA TION OF THE SALE DEED. IN OUR VIEW, WHEN LD. CIT(A) ACCEPTS THE PAYMENT OF RS. 50 LAKH TO SHRI SYED ASIF BY ACCEPTING THE FACT THAT HE IS ACTING A S GPA HOLDER OF THE LAND OWNERS AND AS WELL AS CONSIDERING THE MEMORANDUM OF UNDERSTANDING BETWEEN ASSESSEE AND SHRI SYED ASIF, THERE IS NO RE ASON TO DISBELIEVE THE PAYMENT OF RS. 33,50,000 TO SHRI SYED ASIF ONLY BEC AUSE SUCH PAYMENTS ARE AFTER REGISTRATION OF SALE DEED. IN THIS REGARD , ASSESSEES EXPLANATION THAT THE REGISTERED SALE DEED WAS NOT FOR THE ENTIR E EXTENT OF LAND AS MENTIONED IN THE AGREEMENT OF SALE, HENCE, THE AMOU NT OF RS. 33,50,000 WAS WITHHELD AND SUBSEQUENTLY PAID AFTER THE TRANSF ER OF LAND, IN OUR VIEW, IS BELIEVABLE. MOREOVER, IT HAS BEEN CONTENDED BEFO RE US BY LD. AR, WHEN THE PAYMENTS OF RS. 33,50,000 WERE ADMITTEDLY MADE AFTER THE END OF RELEVANT FY, THEY CANNOT BE CONSIDERED AS UNEXPLAIN ED INVESTMENT OF 9 ITA NOS. 741 & 754 /HYD/2014 MUSADDILAL PROJECTS LTD., HYD ASSESSEE FOR THE IMPUGNED AY. WE FIND MERIT IN THE AFORESAID SUBMISSIONS OF LD. AR. AS CAN BE SEEN FROM THE DETAILS, AS EXTR ACTED IN PARA 5.3 OF LD. CIT(A)S ORDER, THE AMOUNT OF RS. 33,50,000 WAS PAI D TO SHRI SYED ASIF BETWEEN 31/05/08 TO 12/01/09. THEREFORE, AS THE PAY MENTS WERE MADE AFTER THE END OF THE RELEVANT FY I.E. FY 2007-08, SUCH PA YMENTS, IF AT ALL, ARE TO BE TREATED AS UNEXPLAINED INVESTMENT OF ASSESSEE, T HEY CANNOT BE CONSIDERED FOR ADDITION IN THE IMPUGNED AY. ACCORDI NGLY, WE DELETE THE ADDITION OF RS. 33,50,000 SUSTAINED BY LD. CIT(A). IN VIEW OF OUR ABOVE DECISION, DEPARTMENTS GROUNDS ARE CONSIDERED AS DI SMISSED. 9. IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO. 741 /HYD/2014 IS ALLOWED AND APPEAL OF DEPARTMENT IN ITA NO. 754/HYD/14 IS D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 4 TH SEPTEMBER, 2015 KV COPY TO:- 1) MUSADDILAL PROJECTS LTD., 6-3-679, ELITE PLAZA, PANJAGUTTA, HYDERABAD. 2) DCITO, CENTRAL CIRCLE 3, HYD. 3) CIT(A) - VII, HYDERABAD 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.