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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A)-9, Ahmedabad (‘CIT(A)’ in short), dated 30.08.2016 arising in the assessment order dated 26.12.2011 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2009- 10.
The grounds of appeal raised by the assessee reads as under:-
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 2 - “1. The C.I.T. (Appeals) erred in going far beyond the direction of the Tribunal while restoring the matter back to him, and therefore, his order is bad. 2. Without prejudice to the above, the C.I.T. (Appeals) erred in disallowing the amount of Rs.88,72,276/- paid to Ketan Shah, Alpa Shah, Jenal Patel and Dipika Patel in computation of taxable capital gain from sale of land to M/s. Writers and Publications Ltd. as per the Sale Deed of 30.06.2008. 2. The C.I.T. (Appeals) ought to have allowed the deduction of the said amount of Rs.88,72,276/- in the computation of capital gain.” 3. Briefly stated, the assessee, a domestic company, is engaged in the business of manufacturing of fabrics for the AY 2009-10 in question. The assessee filed its return of income which was subjected to scrutiny assessment. In the course of the scrutiny assessment, the AO inter alia noticed that the assessee sold a piece of land at Sanand for sale consideration of Rs.3,80,26,500/- on which long term capital gains (LTCG) of Rs.1,84,02,354/- was declared for taxation. On the said LTCG, the assessee inter alia claimed Rs.88,72,276/- as cost of transfer. It was observed that the assessee has purportedly incurred the aforesaid cost of transfer of Rs.88.72 Lakhs being compensation paid for cancellation of agreement to sale (Banakhat) entered with group of four persons namely (i) Mr. Ketan V. Shah, (ii) Mr. Jenal Patel, (iii) Ms. Dipika Patel and (iv) Ms. Alpa K. Shah. On inquiry in this regard, it was submitted by the assessee to the AO that the compensation of Rs.88.72 Lakhs was paid for cancellation of agreement to sale entered with Ketan V. Shah and others for a consideration of Rs.2,02,82,000/- on 17.04.2008. By virtue of sale agreement to sale, Mr. Ketan V. Shah and others paid advance of Rs.24,13,537/- for purchase of land from the assessee. However, subsequently, the assessee received more attractive offer from M/s. Writers & Publishers Ltd. for purchase of land from assessee. The offer for purchase was made at Rs.3,80,26,500/- for the land for which agreement to sale was earlier entered with Mr. Ketan V. Shah and others. In order to remove encumbrance on the land owing to
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 3 - aforesaid Banakhat, the assessee agreed to pay 50% compensation of the incremental price received from the new purchaser i.e. M/s. Writers & Publishers Ltd. which worked out to Rs.88.72 Lakhs. The assessee thus contended before the AO that the compensation for cancellation of agreement to sale was paid to Mr. Ketan V. Shah and others as it was not possible to sale the land without payment of such compensation. It was thus the case of the assessee that such compensation forms part of the expenditure incurred wholly and exclusively in connection with transfer of capital asset under s.48 of the Act.
However, on a deeper scrutiny into facts, the AO found that the narrative of the assessee of incurring expenditure towards cancellation of ‘agreement to sale’ entered into with Mr. Ketan V. Shah and others was only a sham arrangement to lessen the tax burden. The AO made a detailed inquiry into the factum of advance of Rs.24,13,537/- in aggregate purportedly received from Mr. Ketan V. Shah and others in consideration of ‘agreement to sale’ originally entered into with the assessee on 17.04.2008. The AO made inquiry from the banks of the assessee as well as Shri Ketan V. Shah & Ors. and collected bank statements pertaining to these parties. On a study made on these bank statements, the AO found that Mr. Ketan V. Shah group were men of straw and had no means and capacity to meet the cost of sale consideration of Rs.2.02 Crores eventually to be paid on assigned for purchase of land. As per the Banakhat, the AO further found that the cheques purportedly issued by Mr. Ketan V. Shah and others to the assessee aggregating to Rs.24.13 Lakhs towards advance against proposed sale consideration (Rs.2.02 Crore) was not encashed by the assessee at all before entered into the fresh sale agreement with M/s. Writers group. The AO in fact found that the recipient of the commission (Mr. Ketan V. Shah and others) had no bank balance at the time of issue of cheques towards advance on 17.04.2008. No
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 4 - payment whatsoever was made to the assessee by the recipient of the compensations till the date of sale agreement with the M/s. Writers group. The AO also noted that the aforesaid payment of advance of Rs.24.13 Lakhs was in fact encashed out of the compensation paid by the assessee. The assessee in fact found to have handed over an amount of Rs.75,40,000/- between 16th to 18th July 2008 to Mr. Ketan V. Shah and others Rs.13,32,276/- on 14.08.2008. A perusal of the bank statement of the recipient of compensation revealed that payment of Rs.24,13,000/- was actually sourced out of compensation received from the assessee itself. Thus, in essence, recipients of the compensation never paid any amount whatsoever from their own resources. The AO also made inquiries with Mr. Kethan V. Shah and recorded statement on oath under s.131 of the Act. It was observed that the assessee had shown the receipt of compensation as professional charges against which expenses of doubtful nature were claimed. It was also found that Mr. Jenal Patel was doing electrical work and Ms. Dipika Patel was a Nurse. Mr. Jenal Patel was brother- in-law of Mr. Ketan v. Shah. The AO categorically found that this group of beneficiaries of commission had neither any capacity to invest money for purchase of land nor they actually paid any advance from their resources. It was also observed that Ms. Jenal Patel and Ms. Dipika Patel were no even filing income tax returns and were only name lenders in the entire transactions. The AO accordingly made a detailed findings in the assessment order and held that the whole arrangement towards payment of commission with Mr. Ketan V. Shah and others was sham to avoid incidence of tax. The AO accordingly rejected the expenditure incurred in connection with transfer arising out of purported Banakhat/agreement to sale entered into with Mr. Ketan V. Shah and others. Consequently, the long term capital gain declared by the assessee was enhanced by the amount of compensation of Rs.88.72 Lakhs allegedly paid to Mr. Ketan V. Shah and others.
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 5 - 5. Aggrieved, the assessee preferred appeal before the CIT(A) without any success.
Further aggrieved, the assessee preferred appeal before the Tribunal.
On consideration of facts, the co-ordinate bench of ITAT set aside and remanded the issue back to the file of the CIT(A) in ITA No. 2579/Ahd/2013 order dated 26.08.2014. Pursuant to the restoration of the issue to the file of the CIT(A), the first appellate authority re- examined the whole issue in the light of the direction of the co- ordinate bench and also obtained remand report from the AO. On circumspection of the facts and circumstances re-visited by the CIT(A) in the light of evidences placed before him as well as the remand report, the CIT(A) came to the conclusion that the ‘agreement to sale’ purportedly entered with original purchasers (Mr. Ketan V. Shah and Others) were not legally enforceable at all. The CIT(A) also successfully demonstrated in the second round of proceedings that the compensation paid to the original purchasers can be easily inferred to be a camouflage by the assessee company having regard to the chain of events visible from the documentary evidences.
It will be apt to reproduce the relevant para of the order of CIT(A) dealing with the issue for ready reference:
“3. From the chronology of events it is apparent that the appellant has entered into two sale agreements the first one supposedly was with Ketan Shah and Others signed on 17/4/2008. The said agreement as perused from the records is on an Indian non-judicial stamp paper of Rs. 100/-. The stamp paper was purchased from a stamp vendor. The said banakhat agreement is neither notarised nor registered with the sub Registrar, Sanand. It is also seen from the copy of the agreement that the said agreement is only signed by the parties to the agreement only at the end of the agreement. Rest of the pages are not initilled. The second sale agreement was made by the appellant on 30/6/2008 with M/s. Writers and Publishers Ltd. It is seen from the agreement that stamp duty of more than Rs. 18,63,000/- was paid and the agreement was registered with the sub Registrar, Sanand. In between the two agreements the appellant has
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 6 - entered into another agreement with Shri Ketan Shah and Others on 20/6/2008 i.e. 10 days before the agreement with M/s. Writers and Publishers Ltd. It is observed from the said agreement that it is made on Indian non-judicial stamp paper of Rs. 100/- and is similar to the agreement of sale made on 20/4/2008. The said agreement is not registered with sub-registrar, Sanand. The stamp paper used for the agreement entered on 20/4/2008 was bought on 2/2/2008 whereas the banakhat cancellation agreement entered on 20/6/2008 was made on the stamp paper purchased on 9/5/2007. It means that the stamp paper used for the agreement for the cancellation of the sale agreement were procured/dated prior to the agreement of sale. The agreement/banakhat to sale dated 20/4/2008 signed by the appellant was cancelled on 20/6/2008. As observed by Hon'ble Tribunal one has to see whether the agreements executed by the appellant with the original purchasers (Shri Ketan Shah and Others) are legally enforceable or not?
It is important to refer to sec.53A of the Transfer of Property Act(TPA) in this context. The section is reproduced below :-
53A. Part performance.—Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of 'the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
It can be seen from the above quoted section that it deals with the part performance of contract. There are three main components in order to part perform any transfer of property contract. Firstly there has to be a signed agreement reflecting the consideration of the immovable property to be transferred. Secondly, the transferee has in part performance of the contract have taken possession of the property or any part thereof or is already in possession thereof and finally the transferee has done some act in furtherance of the contract. From the banakhat/agreement to sale dated 20/4/2008 it is apparent and is a matter of fact that the appellant had only entered with Shri Ketan Shah & Others into an agreement for the sale of land. It is a fact that nothing beyond this agreement has been done by the transferees i.e. Ketan Shah and Others in order to fulfill the conditions as per section 53A of TPA. The said piece of land remained in possession of the appellant which was given on lease to its own partnership firm i.e. Gujarat Steel and Pipes. It is also a matter of fact that no steps have been taken by the transferees in furtherance of the contract. It is seen from the
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 7 - contract/banakhat dated 20/4/2008 that at para-6, 7 & 11 it is mentioned as follows:
Para-6 The vendors(the appellant) wishes to sale and the purchasers (Shri Ketan Shah and Others) are ready to purchase the said land have decided to entered into this agreement to sale means the Banakhat on following terms and conditions which are binding to both the parties to this agreement. If any of the party failed in performing and completing, the deal the other party will be entitled to get their rights through Court of Law for specific performance and entitled to claim all the expenses for the same from the other party.
Para-7 It is mentioned that the price has been fixed at Rs.2,02,82,000/- and the purchasers have paid a sum of Rs.24,13,537/-, the details of cheque number and date of cheque and the bank and branch have been mentioned thereafter. Para-11 It is further mentioned that all the payments as mentioned in the banakhat have been made to be considered as receipt of full and final sale consideration.
Although it has been mentioned in the said agreement that Shri Ketan Shah and Others have made payment of Rs. 24,13,537/-. It is a matter of fact and as pointed out by the A.O as well as the CIT(A) that the payment of Rs. 24,13,537/- were received by the appellant after 15th July, 2008 i.e. only after the agreement to sale the same piece of land to M/s. Writers and Publishers was registered with sub registrar, Sanand and the payments in three installments were received from them. The appellant has received Rs. 24,13,537/- which may be considered as an act in furtherance of the contract as per sec.53A of the TPA only after cancellation .of the said agreement on 20/6/2008 and the sale of . land to M/s. Writers and Publishers Ltd. It is seen from the bank account of the appellant that it has received Rs.24,13,537/- on 17/7/2008 whereas as per the agreement dated 20/4/2008 the cheques were dated 17/4/2008 and supposed to have been paid by Shr Ketan Shah & Others. Further; it has been brought out by the A.O that Shri Ketan Shah and Others were able to make the payment of Rs. 24,13,537/- only after the funds were received from the appellant. The perusal of the bank account of all the four persons reflect that they did not have funds to part perform the contract. Therefore, I am of the considered opinion that Shri Ketan Shah & Others cannot be considered to have performed any act except for entering into written agreement on 20/4/2008 as per sec.53A of the TPA. .
In light of the above discussion the question arises whether the said agreement dated 20/4/2008 was enforceable by law especially under the specific Relief Act, 1877 or not? Hon'ble Tribunal Ahmedabad in their judgment in the case of Smt. Sapnaben Dipakbhai Patel vs ITO ITA No.2414/Ahd/2013 dated 13/1/2016 have deliberated on this issue in details. Hon'ble Tribunal has referred to sec.2(47)(v) of the l.T.Act vis-a- vis sec.53A of the TPA and has also referred to the provisions of Specific Relief Act, 1877, and Section 49 of the Indian Registration Act and especially the proviso thereof. It has been held by the Hon'ble Tribunal that in the said case the agreement to sale (similar to the agreement entered by the appellant and Ketan Shah & Others) has assigned rights of capital nature to the buyers of the property. However, in the case under consideration or that of the appellant one has to see whether the buyers
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 8 - i.e. Shri Ketan Shah and Others were in a position to file a suit for specific performance of contract under the Specific Relief Act or not and could have pursued the appellant to register the sale deed in their favour. It is seen from the order of A.O as well as CIT(A) that the said Banakhat dated 20/4/2008 is considered as a sham agreement and deserves to be ignored. Hon'ble Tribunal in the judgment of Smt. Sapnaben Dipakbhai Patel (supra) has quoted various judgments of Tribunals and High Court wherein the buyer of the property had entered into a contract, had possession or part possession, had undertaken certain acts in furtherance of the contract and hence the agreement has assigned rights on the buyer of the property which are of capital nature. It is also seen from various judgments relied upon by the Hon'ble Tribunal that in-these cases when a final deed of sale of land has been registered with the registrar of the revenue department of State Government there has been a confirming party with whom the earlier agreement/banakhat to sale has been entered upon. In these cases, the final buyer of the property has paid compensation to the “confirming parties” directly in order to have a clear title in its favour. Whereas it is seen from the case under consideration that the final sale of land entered with M/s. Wrtiers and Publishers Ltd. has no confirming party to it. M/s. Writers and Publishers have made payments only to the appellant in three installments prior to 30/6/2008 when the final agreement to sale was entered into by them. It is the appellant who has made payments to Shri Ketan Shah and Others and not M/s. Writers and Publishers Ltd. M/s. Ketan Shah & Others have not been the confirming party to final sale deed of the land. The A.O and the CIT(A) have thus challenged the genuineness of the agreement entered into by the appellant with Shri Ketan Shah & Others. Apart from entering into the said 'sham agreement to sale’ neither the appellant nor Shri Ketan Shah and Others have taken any steps in furtherance of the contracts in terms of either possession or in terms of part payments in furtherance of the contract. Therefore, no right can be said to have been assigned which could be of capital nature on Shri Ketan Shah & Others. Secondly, in absence of fulfillment of conditions of sec-53A of the TP Act, it can be said that Shri Ketan Shah & Others could not have ever enforced the agreement dated 20/4/2008 under the Specific Relief Act. Hon'ble Tribunal at para-24 of their order [Smt. Sapnaben Dipakbhai Patel (supra)] has also referred to sec.49 of the Indian Registration Act. At para-25 of their order Hon'ble Tribunal has relied upon the judgment of Division Bench of Punjab and Haryana High Court in regular second appeal No.4946 of 2011 in the case of Ram Kishan vs Bijeder Mann. Para 24 & 25 of the said judgment of the Hon'ble Tribunal is reproduced below:-
"24. On due consideration of the above reasoning, we are of the view that as far as the judgment of the Hon'ble Supreme Court in the case of Suraj Lamp & Industries (supra) is concerned, it is altogether in different context. There is no dispute with regard to the proposition that transfer of an immovable property having value of more than Rs.100/-can only be completed by way of registered sale deed, as contemplated in section 17 of the Registration Act. This judgment deals with the concept of power of attorney, lease, licence etc.. Definition of expression "transfer" provided in section 2(47) is more wider than in the general law. As observed earlier, while dealing with the issue no.(ii), the expression "transfer" employed in section 2(47) includes (a) any transaction which allows possession to be taken/retained in part performance of a
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 9 - contract of the nature referred to in section 53A of the TPA, and (b) any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyment of, any immovable property. In these two eventualities "profits on account of capital gains would be taxable in the year ITA No.2414/Ahd/2013 in which such transactions are entered into, even if a transfer of immovable property is not effective or completed under the general law. In the present case, there is a fine distinction which remained un-noticed at the end of the ld. CIT(A). According to the assessee, the rights which have been alienated by her by virtue of agreement dated 4.4.2008 are the rights of capital nature. These rights have been alienated in favour of SDS, The ld.CIT(A) has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso which reads as under: "49. Effect of non-registration of documents required to be registered.—No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall— (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered :
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of part performance of a contract for the purposes of section 53Aof the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument."
Section 53A of the T.P. Act provide a shield to defend the possession taken by virtue of the agreement. The vendee can claim protection of the possession even against the owner i.e. vendor, during the period sale deed was not registered. The person who has acquired the possession on execution of agreement as referred to in section 53A may not be able to protect his possession on account of non-registration of the agreement, but for all other ITA No.2414/Ahd/2013 collateral purposes, i.e. for tendering the agreement into evidence for suit for specific performance, etc. it is to be treated as valid agreement. A controversy in this aspect had arisen whether such non-registered agreement can be entertained in evidence or not in a suit for specific performance. A reference was made before the Division Bench of Punjab & Haryana High Court in regular Second appeal No.4946 of 2011 in the case of Ram Kishan Vs. Bijeder Mann. The Hon'ble High Court has resolved the controversy and held that such unregistered agreement can be produced as evidence in suit for specific performance. It can be made basis of suit for specific performance. The finding recorded by the Hon'ble Punjab & Haryana High Court in this case reported in (2013) 1 PLR195 as under:
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 10 - "11. A conjoint appraisal of sections 53Aof the Transfer of Property Act, 1882, sections i7(iA) and 49 of the Indian Registration Act, 1908, particularly the proviso to section 49 of the Indian Registration Act, in our considered opinion, leaves no ambiguity that, though, a contract accompanied by delivery of possession or executed in favour of a person in possession, is compulsorily registrable under section 17(1A) of the Registration Act, 1908, but the failure to register such a contract would only deprive the person in possession of any benefit conferred by section 53A of the 1882 Act. The proviso to section 49 of the Indian Registration Act clearly postulates that non-registration of such a contract would not prohibit the filing of a suit for specific performance based upon such an agreement or the leading of such an unregistered agreement into evidence. 12. A suit for specific performance based upon an unregistered agreement to sell accompanied by delivery of possession or executed in favour of a person who is already in possession, cannot, therefore, be said to be barred by section 17(1A) of the Registration Act, 1908.
Section 17(1A) merely declares that such an unregistered contract shall not be pressed into service for the purpose of section 53A of the Transfer of Property Act, 1882. Section 17(1A) of the Registration Act, 1908, does not, whether in specific terms or by necessary intent, prohibit the filing of a suit for specific performance based upon an unregistered agreement to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the ITA No.2414/Ahd/2013proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary. 14. We, therefore, hold that: (a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part per- formance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/ agreement; (b) the proviso to section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract."
Thus, relying on the judgment of Hon'ble ITAT, Ahmedabad in the case of Smt. Sapnaben D. Patel (supra) and it can be seen from the paras above that in absence of fulfillment of conditions u/s.53A of the TPA, in absence of possession or part possession of the land and in absence of payments as per the banakhat dated 20/4/2008 even if the banakhat to sale is not registered it can be safely concluded that the buyers to the property i.e. Shri Ketan Shah & Others could not have gone for a suit for specific performance of the said agreement. Neither sec.17(1)(a) of Registration Act, 1908, nor proviso to sec.49 of the Indian Registration Act would have assigned on Shri Ketan Shah & Others authority for filing suit for specific performance. Thus, I am of the considered opinion that the agreement entered on 20/4/2008 executed by the appellant with Shri Ketan Shah &
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 11 - Others was not legally enforceable and has been correctly held by A.O and the then CIT(A) as a 'sham agreement to sale.'
On 20/6/2008 the appellant has entered into another agreement with Shri Ketan Shah and Others through a Banakhat of Rs. 100/- on non- judicial stamp paper, cancelling the agreement entered into between them and appellant on 20/4/2008. In the said agreement it has been mentioned at para-1 that as per the agreement dated 17/4/2008 the parties were required to get executed registered sale deed within a week on receipt of title clearance certificate. At para-2 of the agreement dated 20/6/2008 it has been mentioned that as per the original banakhat i.e. dated 17/4/2008 the purchasers ought to have obtained title clearance certificate, however, no actions have been started so far. In the same paragraph it has been mentioned that M/s. Ketan Shah & Others have identified another buyer namely M/s. Writers and Publishers Ltd. and after negotiations the sale price for the same piece of land has been fixed at a higher price as mentioned in the first banakhat dated 17/4/2008. However this has been made subject to the condition that M/s. Ketan Shah & Others were ready to lift their encumbrance with the condition that 50% of the additional sale proceeds should be received from the new purchaser is to be passed on to them. As per the terms and conditions reflected in banakhat cancelling the earlier agreement, the appellant would pass on an amount of Rs. 88,72,276/- to M/s. Ketan Shah. and Others. Accordingly, the appellant has issued 8 cheques totalling to Rs.88,72,276/- to M/s. Ketan Shah & Others. Out of these eight cheques, it is seen from the bank account of appellant as well as Ketan Shah & Others that cheques amounting to Rs. 75,40,000/- were credited to the account of Ketan Shah and Others between 16th to 18th July, 2008 whereas cheques amounting to Rs. 13,32,276/- have been credited to the accounts of Ketan Shah & Others on 14/8/2008. The appellant had also agreed to return back Rs. 24,1 3, 537/- to M/s. Ketan Shah and others (it is not known from the records whether the appellant has returned this amount to M/s. Ketan Shah & Others or not as the bank statement of the appellant was not available on the record). It is mentioned at para-5 of this banakhat that both the parties have agreed to release each other from liability whatsoever arisen on account of banakhat dated 17/4/2008. 10. The appellant has received Rs. 50 lacs from M/s. Writers and Publishers Ltd. by 30/5/2008. Further the appellant has also received Rs. 3,30,26,500/-from M/s. Writers and Publishers Ltd., on 2/7/2008. The banakhat to sale dated 17/4/2008 was cancelled on 20/6/2008. It is only during the month of July i.e. from 16th July till 19th July all the transactions between the appellant and M/s. Ketan Shah & Others have taken place. Only on 14/8/2008 as mentioned earlier cheques amounting to Rs. 13,32,276/- were paid by appellant to M/s. Ketan Shah & Others. On 16th July and 18th July 208, the appellant has paid Rs. 75,40,000/- to M/s. Ketan Shah & Others and from the same amount the appellant has also received back Rs. 24,13,537/- which is supposed to have been paid by M/s. Ketan Shah & Others as per the first banakhat dated 17/4/2008. It is difficult to understand as why cheques amounting to Rs. 24,13,537/- were credited to account of the appellant on 17/7/2008 especially when the agreement to cancel the banakhat of sale was already signed on 20/6/2008. And again in banakhat signed to cancel the sale agreement, the appellant has promised to return Rs. 24,15, 537/-. There was no need to refer to the advance payment made by Ketan Shah & Others in cancellation agreement as the funds had never travelled between appellant
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 12 - and Ketan Shah & Others. This further confirms that the sale agreement to sale as well as cancellation agreement were all afterthoughts and sham agreements. Thus, it can be seen that as on date of the entering into banakhat for cancellation of earlier agreement to sale was concerned M/s. Ketan Shah & Others did not have the possession or part possession of the said property as well as had not performed any act in furtherance of the banakhat dated 17/4/2008. As has been already held by me that the said banakhat keeping in mind sec.53A of the TPA and Sec.49 of Indian Registration Act r.w. its proviso could not have assigned any enforceability of that agreement in law under the Specific Relief Act and hence the banakhat cancelling the banakhat to sale also does not have enforceability under the law for filing of suit of specific performers. As the banakhat to sale has not given any authority to M/s. Ketan Shah & Others to file a suit under specific relief act there -is no question that the banakhat cancelling banakhat to sale would have given authority to file suit for specific performance under Chapter-2 of the Specific Relief Act.
It is seen from various bank accounts maintained by M/s. Ketan Shah & Others and as has been rightly pointed out by the A.O that M/s. Ketan Shah and Others did not have the capacity to undertake any act for furtherance of the original banakhat dated 17/4/2008 especially in terms of financial means. It is evident from the bank statements of M/s. Ketan Shah & Others which are made part of the order of assessment. During the original appellate proceedings an affidavit from M/s. Ketan Shah & Others on a stamp paper dated 28/5/2012 is placed on record. It is seen from the said affidavit, at para-3, it is mentioned that "somewhere or otherwise we could not arrange for funds and title clearance certificate within the stipulated time and therefore, cheques remain unpaid with the company - NFDL" Thus in the said affidavit M/s. Ketan Shah & Others have admitted that they could not perform the act for the furtherance of the banakhat dated 17/4/2008. The cheques amounting to Rs. 24,13,537/- have also been referred to at para-2 of this affidavit. It is mentioned at para-2 that M/s. Ketan Shah & Others had handed over cheques to the company (appellant) with the condition to deposit the cheques only after the confirmation from M/s. Ketan Shah & Others. This further proves the failure ont he part of M/s. Ketan Shah & Others to act in furtheraace of the banakhat dated 17/4/2008.
It may be pointed out here that M/s. Ketan Shah & Others have deposited cheques given by the appellant amounting to Rs. 13,32,276/- in their accounts, on 14/8/2008. The careful perusal of the account numbers reflects that all the four accounts in the name of Ketan Shah, Alpesh Shah, Jenal Patel and Dipika Patel are serially numbered i.e. from 006701513828 to 006701513831 and have all been opened on the same date i.e. on 11/7/2008 with ICICI Bank. These account seems to have been opened especially for receiving Rs. 13,32,276/-from the appellant company. Further, from the affidavit dated 28/5/2012 filed by Ketan Shah and others it can be seen that they had not taken any steps for obtaining title clearance certificate. The title clearance certificate is obtained by the buyer of the property which is normally given by an advocate based on the search or scrutiny of public documents available with the sub- registrar of the revenue department as well as by means giving advertisement in the newspaper. No such exercise was undertaken by M/s. Ketan Shah & Others. A 'bonafide buyer' normally takes precautionary measures to obtain the title clearance certificate in order to protect itself from further damages through litigation. Thus, it is apparent that M/s.
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 13 - Ketan Shah & Others were not interested in getting the said property registered in their name and as discussed earlier the banakhat agreement dated 17/4/2008 as well as the cancellation agreement dated 20/6/2008 were only a part of an "arrangement" by the appellant to avoid tax on the sale of land.
Hon'ble Tribunal has also raised an issue with regard to whether there was any concrete evidence proving that the entire compensation paid to M/s. Ketan Shah & Others came back to the assessee company or not? It is observed from the records available at the first appellate proceedings as well as during the current assessment proceedings that no such enquiry has further been made by the A.O and there is no concrete evidence to this effect. However, the case records were called for and were perused for the said purpose. It is seen that Rs. 75,40,000/- which were paid by the appellant to M/s. Ketan Shah & Others on 16th and 18th July 2008, the majority of the quantum has been withdrawn by the account holders as "cash" from their own bank account. In case of Alpa Shah who had received Rs. 29,95,000/- she has paid Rs. 19,13,537/- back to the appellant as a part of original banakhat on 17/7/2008. Remaining Rs. 10 lacs have been withdrawn by her in cash. Ketan Shah who received Rs. 28,25,000/- from the appellant at 18/7/2008 have withdrawn Rs. 27,50,000/-. in -cash on 18/7/2008. Similarly, Jenal Patel and Dipika Patel who received Rs. 8,60,000/- each from the appellant have withdrawn Rs. 9 lacs in cash and also have paid back to the appellant as a part of cheque payment relating to banakhat dated 17/4/2008.
An exercise was undertaken to find out whether Ketan Shah, Alpa Shah, Jenal Patel and Dipika Patel have offered the amount received by them from the appellant in their return of income as well as for taxation or not. It was found that none of them have filed the return of income for A.Y.2009-10. It is seen from the order of assessment that at para-6.8 it is mentioned by the A.O that Shri Ketan Shah and Smt. Alpa Shah were filing income-tax return and Shri Jenal Patel and Smt. Dipika Patel were not filing Income-tax returns. At para 6.9 it is mentioned that Shri Ketan Shah had submitted a copy of return of income filed for A.Y.2009-10 wherein he had shown amount of Rs. 28,25,000/- professional charges received against which he had claimed certain expenses. On going through the case records it is observed that in the note sheet portion the A.O has mentioned that Ketan Shah has submitted the return of income vide note sheet entry dated 20/12/2011. However, the case records reflect that the return of income of Ketan Shah and Alpa Shah were not there in the case records. What was available in the case record was the computation of income of Ketan Shah and Smt. Alpa Shah. Thus, the A.O was asked specifically to inform for the present appellate proceedings whether the four persons have filed their return of income for A.Y. 2009-10 or not, and if yes, the A.O was requested to submit the copies of their returns. The A.O was informed that this was essential to verify whether the four persons have declared the capital gain tax or have reflected the amount received from the appellant in their return of income or not.
The remand report submitted by the A.O and rejoinder filed by the appellant on the remand report are as follows :-
"2. Vide letter referred above,-directions were issued for submission of remand report in respect of undergoing appellate proceedings in the abovementioned case. Vide this letter, it has
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 14 - been pointed out that para 6.9 of the assessment order u/s 143(3) dated 26/12/2011 cites submission of the Income-tax details of Shri Ketan Shah and Ms. Alpa Shah during the assessment proceedings by the assessee before the then A.O. In pursuance of the appellate proceedings copies of these returns of income had been asked for. Also, the copies of returns of Shri Jena/ Patel and Ms. Dipika Patel, taken reference of in para 6.8 of the assessment order, have a/so been asked for.
In this regard, it is submitted that as stipulated report was being contemplated, the case records of the assessee were thoroughly checked. However, Income tax returns of Shri Ketan Shah and Ms. Alpa Shah could not be found in the case records of the assessee. The only available documents were copies of their ledgers and final accounts (copy enclosed). Therefore, requests were sent to jurisdictional A.O.s for obtaining copies of ITRs (filed for A.Y. 2009-10) not only in respect of Shri Jenal Patel and Ms. Dipika Patel but also in respect of Shri Ketan Shah and Ms. Alpa Shah as enumerated hereunder:
Name of the PAN Jurisdiction persons (Shri/Smt) Ketan Shah BBOPS2743G Circle-5 (2) Alpa Shah BEYPS8838H Ward-5 (2)(2). Jenal Patel A01PP0226M Ward-7(1)(4) Dipika Patel AOIPPQ413N Ward-7(1)(4)
In response to the request issued, /TO, Ward-7(1)(4) vide letter dated 13/06/2016 submitted that Shri Jena/ Patel and Ms. Dipika Patel have not filed their income-tax returns for A.Y. 2009- 10. However, no reply was received in respect of other two persons. Therefore, Shri Rishabh Sharma, Inspector of this charge was deputed to personally visit and obtain copies of ITR in respect of Shri Ketan Shah and Ms. Alpa Shah from their respective jurisdiction. As reported by the Shri Sharma, Shri Ketan Shah and Ms. Alpa Shah also have not filed their return of income for A.Y. 2009-10. Axiomatically, they also have not offered their capital gains to tax during the year. Copies of the replies received from ITO, Ward-7(1 )(4) dated 13/06/2016 and ITD queries returning relevant result for Shri Ketan Shah and Ms. Alpa Shah are enclosed herewith for reference. 5. In conclusion, your learned self is requested to decide the case in light of above findings."
The appellant submitted its reply to the remand report vide letter dated 8/7/2016. The same is as under:-
We are in receipt of your letter dated 23.06.2016 enclosing therewith the report received from the Income Tax Officer in our appeal before Your Good self. Before offering comments, we would like to state as follows:
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 15 - 2. Shortly put, the report states that now the returns of Ketan Shah and Alpa Shah, are not in the case records but copies of their ledgers and final accounts were there. The present Income Tax Officer, whose jurisdiction over Jena/ Patel and Dipika Patel.informed that they have not filed returns for Asst. Year 2009- 10. Regarding Ketan Shah and Alpa Shah, the Inspector reported that even they have not filed the return, and therefore, they have not paid tax on capital gain.
As against the above, we draw your kind attention to the following observations in our assessment order by the Joint Commissioner of Income Tax in Para 6.9.
"Shri Ketan Shah, vide his statement recorded on 15.12.2011, stated that he is engaged in software development, information technology services and consultancy in the name of Mangal Tirth, a proprietary concern. He submitted a copy of his return of income filed for A.Y. 2009-10, in which he had shown the amount of Rs. 28,25,000/- as professional charges received. He claimed certain expenditure against this income. He had received the said amount as compensation from assessee but choose to show the same as income from business /profession. If so, the expenses claimed by him might be bogus. In that case, what was offered as income as net profit by Shri Ketan Shah might be the actual commission earned by him for arranging the transfer. He submitted that he had shown a profit of Rs.9.81 lacs and shown the same as income from business and, profession. Similar is the case of Ms. Alpa Shah. ..."(underlining by us for emphasis) ;
Additionally, we must point out that Ketan Shah was examined on oath on 15.12.2011 before the Assessment Order was passed. We draw your attention to the following English translation of under mentioned questions asked and: answered in Gujarati: "Q-2 Give details of your business.
A-2 I am a proprietor of M/s Mangaltirth doing business of Software Development, Information service consultancy since last 6-7 years at my above said residential address.
Q-4 Do you affiliated with any other company except those mentioned in Q-2 above?
A-4 At present, I am director in above said two companies viz. Hallmark Technology Private Limited and Hetwell Enterprise private Limited, where in my wife is director.
"Q-5 Are you and your wife filing Income Tax Returns? Give your PAN Card number as well as give PA numbers of the companies where in you are director and state where return of income are being filed. . '' A-5 Income Tax return of myself and my wife are being filed, copy of which along with its acknowledgement and copy of PAN Card are
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 16 - produced before you. I do not know where the Income Tax returns of above said companies are being filed I will find it out and will produce its copy.
Q-6 Do you know Jena/ H Patel and Dipika Pate! who are residing at 183, Kochrab Gam Pater I/as, Elisbridge, Ahmedabad and also state that what business they are doing?
A-6 Yes, I know above said both persons viz. Jena/ H Pafe/ and Dipika Patel. Jenal H Patel is my brother in law and Dipika Patel is his wife. My brother Jenal
Patel is carrying out Electronic Repairing work and Dipika Pate/ is serving as Nurse in Civil Hospital -UN Mehta Hospital. They are not filing Income Tax Returns, however, they have obtained PA number. Jenal H Patel PAN No. AOIPP0226M Dipika Patel PAN No. AQIPP0413N Their residential address is 183, Patelvas, Near Parbadi, Kochrab Gam, Paldi, AHMEDABAD. Oh their behalf I am replying before you the notices given to them. Their accounting matters also handled by me." And more importantly, "Q-7 Are you informed about the company M/s Nischay Fab Pvt. Ltd., situated at 8, Lavanya Society, Jaltarang Club, Vasna, AHMEDABAD? A-7 I, along with Alpa Shah, Jenal H Patel and Dipika Patel had decided to purchase land situated at Chacharwadi, Vasna, Ta.: Sanand from M/s Nischay Fab Pvt. Ltd. in April 2008 by executing Agreement to sale on stamp paper. Q-8 How did you made payment to Nischay Fab Pvt. Ltd. for purchase of land and execution of Agreement to sale? A-8 For purchase of above said land we made payment to M/s Nischay Fab Pvt. Ltd. as detailed below: Rs. 14,13,537/- Chq. No. 477319 on UCO Bank Near V S Hospital Branch dated 17-04-2008. Rs. 5,00,000/- Chq. No. 434712 on UGO Bank Near V S Hospital Branch dated 17-04-2008. Rs. 5.00.000/- Chq. No. 693313 on Bank of Baroda Elisbridge Branch dated 17-04-2008. Of the above, cheques of Rs.14.13.537/- and Rs. 5,00,000/- were given from bank account of Alpa Shah and whereas cheque of Rs.5,00,000/- on Bank of Baroda, I-do not remember, from whose account it was given.- Q-9 Whether above said deal of land purchase by Agreement to sale (Banakhat), has been completed or not by final sale deed? A-9 No final sale deed was executed in case of above said deal of land purchase and the Agreement to sate (Banakhat) was cancelled in July 2008. Q-10 Please inform that under which circumstances the above said land deal was cancelled. A-10 We have shown land to Divya Bhaskar - News Paper owned by company viz. Writers & Publishers Limited who were planning to purchase said land, we have decided to give said land to Divya Bhaskar and cancel our deal.
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 17 - Q-11 Please inform the amount at which sale price was fixed under new deal with Divya Bhaskar by cancelling your deal and what you got against cancellation of your deal? A-11 New deal with Divya Bhaskar was fixed at Rs.1,77,44,500/- (This is not correct figure, correct amount is s.3,80,26,500/-). Against cancellation of our deal with M/s Nischay Fab Private Limited we got Rs. 88,72,276/- amongst all the four persons as under: Rs.28,25,000/-Union Bank of India, Elisbridge BranchCh.No.842139 Rs. 4,95,766/- --------------------------Do----------------Ch.No.842142 Rs.29,95,000/- -------------------------Do----------------Ch.No.842135 Rs. 5,28,562/- -------------------------Do-----------------Ch.No.842143 Rs. 8,60,000/- -------------------------Do-----------------Ch.No.842138 Rs. 1,53,974/- -------------------------Do-----------------Ch.No.842144 Rs. 860,000/- -------------------------Do------------------Ch.No.842137 Rs. 1,53,974/- -------------------------Do-----------------Ch.No.842145 Over and above we got refund of Rs. 24,13,537/- which was given as an advance."
In the premises aforesaid, we request you to be kind enough to allow the above payment of Rs. 88,72,276/- made to Ketan Shah, A/pa Shah, Jena/ Pate/ and Dipika Patel bearing in mind Banakhat dated 17.04.2008, Cancellation Deed dated 20.06.2008, Sale Deed dated 30.06.2008 and the contents of Tribunal's order."
Thus, it can be seen that the A.O has submitted the remand report wherein the A.O has submitted that the case records were thoroughly checked but the tax returns of Shri Ketan Shah and Alpa Shah could not be found in the case records. The A.O had sent request to jurisdictional A.Os for obtaining the copies of returns of four persons for A.Y.2009-10. The AOs of these four persons have reported that none of them have filed their return of income for A.Y.2009-10. The concerned A.O had also made a verification from the ITD system and found out that for A.Y.2009-10 all the four persons have not filed their return of income whereas the appellant has only relied upon the observations of the A.O in the assessment order as well as the replies given by Shri Ketan Shah in the statement recorded by the A.O. Therefore, the fact remains that during the course of assessment proceedings as well as remand proceedings although the computation of income and certain ledger accounts . were made available to the A.O by Ketan Shah and Alpa Shah, it is clear that all the four persons have not filed their return of income for A.Y.2009-10. Therefore, it is apparent that the A.O. was right in concluding that the appellant had entered into sham agreements, circular entries and thereby creating an arrangement to avoid tax on the sale of land.
From the foregoing it can be seen that the reasons for which Tribunal have set aside the matter back to the file of CIT(A) stands answered. I am of the considered opinion that the decision of the GIT(A) vide order No.ClT(A)-Xl/234/JCIT.Cir-5/11-12 dated 2/9/2013 is correct in confirming the addition of Rs. 88,72,276/.- made by the A.O by disallowing the claim of compensation paid on cancellation of agreement to sale. Thus, the contention of the appellant stands dismissed.”
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 18 - 9. Against the dismissal of the appeal of the assessee in the second round of proceedings before the first appellate authority, the assessee has once again knocked the door of Tribunal.
Learned counsel for the assessee reiterated the various submission made on behalf of the assessee before the lower authorities and submitted that the facts existing in the appeal does not call for adverse inference. The learned counsel strenuously submitted that the assessee had received three cheques from Mr. Ketan V. Shah group in part consideration/advance against Banakhat entered into with them. The realization or otherwise of the cheque is of no consequence once the cheques were handed over to the assessee. The cheques provide remedy under the Negotiable Instrument Act. The cheques so issued were ultimately realized at a later stage. Therefore, the Banakhat so executed had provided an enforceable remedy to Mr. Ketan V. Shah and others against the assessee. Thus, the assessee was under compulsion to remove the encumbrance tagged with the sale of land to M/s. Writers group. The learned counsel thereafter observed that the CIT(A) has misdirected himself in law and on facts in taking guidance from the provisions of Section 53A of the Transfer of Property Act which has no applicability in the facts of the case. The learned counsel further asserted that the assessee gained substantially on cancellation and had shared only a part of it to Mr. Ketan V. shah and others for alienation of their rights accrued by virtue of the Banakhat. The learned AR therefore submitted that there was no warrant for the Revenue authorities to frown upon the cost incurred by the assessee by cost of compensation paid for cancellation of agreement to sale and ought to have allowed the aforesaid expenditure which has direct nexus with the transfer /sale of land in question. The learned counsel accordingly sought reversal of the order of the AO and restoration of claim was made by the assessee.
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 19 - 11. Learned DR on the other hand relied upon the order of the CIT(A). The learned DR in furtherance submitted that the facts and the chronology of events narrated by the CIT(A) clearly endorses the stand of the AO that the compensation purportedly paid to Mr. Ketan V. Shah and others were bogus and a device to avoid lawful taxes payable on gains arising on sale of land.
We have carefully considered the rival submissions and perused the orders of the authorities below as well as the material referred to and relied upon in the course of hearing. The essential controversy for adjudication before us is towards maintainability of expenditure purportedly incurred in connection with sale of land by the assessee situated at Sanand, Gujarat. While the assessee has sought relief on account of compensation paid to the original purchasers namely Mr. Ketan V. Shah and other in lieu of cancellation of agreement to sale, the Revenue on the other hand challenged the very authenticity of such claim. A perusal of the chronological events narrated by the CIT(A) in second round of proceedings (as reproduced above) indicates that the claim of expenditure incurred on account of compensation as deductible from the LTCG apparently lacks in bonafide. The CIT(A) has made threadbare analysis of the facts and circumstances of the case to come to the conclusion that the agreement to sale entered into with original purchasers was devoid of legitimacy and the contract for sale of land with original purchasers could not have been acted upon and was not legally enforceable. The CIT(A) also found on facts that no payment was made by the original purchasers to the assessee as sought to be portrayed in consideration of Banakhat till the date of execution of sale deed with M/s. Writers group. The advance consideration was actually given later out of sale proceeds/ transfer to the original purchasers by the assessee towards compensation. The CIT(A) observed that neither any payment was received nor possession was given and therefore, the contract for transfer of land to
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 20 - the original purchasers could not have enforced at all. The original purchasers were also found to have not done any act in pursuance of the purported agreement to sale. No efforts were made to obtain title clearance certificate. The CIT(A) clearly demonstrated from the pattern of banking transactions that apart from the total lack of capacity of the original owners to perform the contract of purchase of land, purchase consideration has been given by the original purchasers to the assessee out of the assessee’s money received by way of compensation. The CIT(A) has also found that either the owners were not filing the return or compensation received was shown as professional services against which expenses have been claimed. The CIT(A) also frowned upon the claim and observed that the date of execution on purported agreement to sale at wide variance with the date of stamp paper. It was noticed that the original purchasers have withdrawn the compensation so received in their bank accounts in cash immediately on deposits. In the totality of the facts, it was concluded by the CIT(A) that the assessee entered into sham agreement with the original purchasers and arrangement to claim wrongful expenditure towards transfer of land by way of cancellation of purported agreement to sale which was not enforceable at all. We find that sufficient evidences exist to expose the falsity of the version of the assessee with respect to the claim of expenditure purportedly arising from cancellation of a nonest Banakhat. Substantial evidence in the form of conduct of the assessee in not depositing the purported cheques statedly received from the assessee in response to the Banakhat agreement, encashment of cheques from the original purchasers after the sale deed with the real purchasers out of the very consideration received from the assessee on account of cancellation clearly demonstrates the bare disguise. The original purchasers were also not found to be man of substance to cope up with the purported land deal of such magnitude. This apart, the CIT(A) has also referred to the many surrounding circumstances such as non-existence of return
ITA No. 2571/Ahd/16 [M/s. Nischay Fab Pvt. Ltd. vs. Jt.CIT(OSD)] A.Y. 2009-10 - 21 - of income, the background of the purported original purchasers, variations in the dates of the deeds qua the stamp paper and circular entries involved to establish pre-ordained arrangement of colorable nature. Without elaborating further, we are in complete agreement with the conclusion drawn by the CIT(A) in upholding the action of the AO on this score. The arguments raised on behalf of the assessee for non-presentation of cheque allegedly received towards advance is audacious and does not confirm with the normal human conduct. In the absence of any right accrued from so called agreement to sale (which was demonstrated to be without payment, without possession and unenforceable in law), the Revenue was fully justified in not entertaining the contrived losses towards transfer of land. In view of the unrelenting inference against the assessee, we decline to interfere with the order of the CIT(A).
In the result, the appeal of the assessee is dismissed. 12.
This Order pronounced in Open Court on 25/09/2018
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 25/09/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।