DAMODAR PRASAD MAJESHWARI,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 395/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke Sh. Damodar Prasad Maheshwari, The ITO, Vs. Flat No. 103, Bhargu Marg, Ward 3(2), Banipark, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AKQPM7971E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.) jktLo dh vksj ls@ Revenue by : Shri Roshanta Meena (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 10/10/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 31/10/2017 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order of dated 21.03.2017 of CIT (A)-I, Jaipur for A.Y. 2012-13. The assessee has raised the following grounds as under:- “1. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in upholding the action of AO in computing the short term capital gain on sale of plot of land at Rs. 93,44,430/- as against short term capital loss of Rs. 25,92,000/- computed by the assessee by:-

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

(a) taking the value of property adopted by Stamp Valuation Authority at Rs. 1,45,36,430/- as against the sales consideration of Rs. 1,40,00,000/- declared by the assessee, (b) not allowing the deduction of Rs. 74 lacs paid to Alka Bengamin, Narendra Khoraniya & Surendra Lamba and Rs. 40 lacs paidto Amber Bengamin, Ahish Bengamin & Shrawan Benjamin, aggregating to Rs. 1.14 crores for vacating the plot. (c) holding that assessee has not explained the source for making payment of Rs. 1.14 crores for vacating the plot.”

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

the assessee filed the details of payment made to six persons as well as an agreement for vacation of the property by the occupants against the payment. The assessing Officer did not accept explanation of the assessee due to reason that the information called u/s 133(6) from all six persons except Shri Sharwan Bengamin as well as in the statement recorded u/s 131 of these persons denied having received any compensation from the assesee. As regards Shri Sharwan Bengamin the notice issued u/s 133(6) was not served as he was not found at the address provided by the assessee. Further, the AO also held that the compensation claimed to have paid in cash is unusual and this difficult to accept that the assessee who is a property dealer would purchase a property which is under unauthorized possession and thereby incurred a loss of Rs. 25,92,000/- in a short period of just two months. Accordingly, the AO completed the assessment whereby short term capital gain of Rs. 93,44,430/- was brought to tax. Aggrieved by the order of the Assessing Officer the assessee filed an appeal before the ld. CIT(A) but could not succeed as ld. CIT(A) has concurred with the view of the AO that when these persons have denied having received any compensation. Further during the appellate proceedings vide order sheet dated 29.09.2016 the assessee was required to file confirmation from these persons from whom money has been received for making payments for getting the property vacated including their PAN, TTR source thereof. However, the assessee did not file confirmation and stated that he wants to go for Dispute Resolution Scheme-2016.

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

of this property in question for more than 40 years of which Smt. Alka BenJamin, her husband Shri Narendra Khorania and Shri Surendra Lamba were the office bearers. The first floor and the basement of this property were under the occupation of Shri Sharwan Benjamin, Amber Benjamin and Ashish Benjamin who are brothers of Smt. Alka Benjamin. The ld. AR has further submitted that in order to get this property vacated, after the purchase of the property vide sale deed dated 17.03.2011, the assessee entered into an agreement dated 30.03.2011 with Smt. Alka Benjamin, Shri Narendra Khorania and Shri Surendra Lamba for vacation of the property in which they were running the school. As per this agreement the assessee was to pay Rs. 74,00,000/- as compensation, out of which Rs. 40,00,000/- was paid on the date of agreement i.e. 30.03.2011 and balance amount of Rs. 34,00,000/- was to be paid on or before 15.05.2011 for which a cheque no. 317242 dated 15.05.2011 of SBBJ, Prathviraj Raod, Jaipur was issued in the name of Alka Benjamin. The said cheque was got dishonored when it was presented as the payment was stopped by the assessee. Thereafter, assessee made the payment of Rs. 34,00,000/- in cash on 19.05.2011 which was acknowledged by Smt. Alka Benjamin and Shri Narendra Khurania on the back side of this cheque. The assessee also made cash payment of Rs. 40,00,000/- to Sharwan Benjamin, Amber Benjamn and Ashish Benjamin on 18.05.2011 to get vacated the at first floor and the basement of the property. This payment was duly acknowledged by issuing the receipt by three persons. Thus, the ld. AR has contended that when the assessee produced all relevant evidence in support of its claim of payment of compensation to these six persons for getting the property vacated then the mere denial of these persons 4

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

of compensation will not rendered the documentary evidence filed by the assessee as false or fabricated. The ld. AR has further contended that it is not in dispute that the recipients were in the possession of the property and school was being run thereof. Therefore, to get the property vacated the assessee paid this amount to these persons whichis proved by the assessee by filing various evidences and also corroborated by the affidavit filed by the assessee before the Hon’ble jurisdictional High Court in connection with the criminal miscellaneous petition filed by these persons who were in possession of the property in question. The ld. AR of the assessee has submitted that the AO denied the claim of the assessee on the basis of the reply in response to the notice u/s 133(6) without examination of these persons and confronting the documentary evidence filed by the assessee duly signed by these persons and also without giving an opportunity to cross examine. Thus the Assessing Officer has denied the claim of the assessee on the presumption without conducting a proper enquiry and giving opportunity to cross examine these persons. 4. As regards the source of the amount paid to these persons the ld. AR of the assessee has submitted that the assessee has borrowed fund which were repaid through bank transactions. He has referred to the details of payment of the borrowed fund at page 8 of the paper book and submitted that the assessee subsequently refunded the amount to the creditors through banking channel. Hence, the ld. AR of the assessee has submitted that when the assessee has produced all relevant documentary evidence to substantiate its claim and there is no in consist any in the facts as explained by the assessee and the documentary evidence produced by the assessee then disallowance of 5

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

the claim by the AO and ld. CIT(A) on the basis of the reply and denial of these persons is not justified. 5. On the other hand, the ld. DR has submitted that the assessee purchased this property on 17.03.2011 and there is nothing in the sale deed dated 17.03.2011 that the property in question was in the occupation and possession of these six persons to whom the assessee subsequently claim to have paid the compensation. Further the documents produced by the assessee are all subsequent to the sale deed dated 17.03.2011 which shows that in order to avoid the tax liability the assessee has created the self serving documents. The entire payment has been claimed to be paid in cash which shows that it is an afterthought claim put forth by the assessee to avoid the tax liability. The ld. AR has relied upon the order of the authorities below and submitted that the AO as well as the ld. CIT(A) hav analyzed all the facts as well as the documents produced by the assessee. It was found that the assessee even failed to filed the complete address to prove the creditworthiness of the creditors from whom the assessee has allegedly borrowed funds for paying the compensation of Rs. 1,40,00,000/-. The recipients of the compensation also denied the claim of the assessee and further they have registered an FIR against the assessee in which the assessee has already filed a criminal miscellaneous petition before the Hon’ble High Court. Thus, the ld. DR has contended that the assessee has failed to substantiate its claim of payment of compensation to these six persons.

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

vide sale deed dated 17.03.2011. As per the contents and averments of the sale deed dated 17.03.2011. it is stated that this property plot no. 71A and B measuring 964.70 sq. yard was owned by seller/ vender Smt. Alka widow of Shriselsteen Robut D/o late Shri Kramat Masih. It is further stated in the sale deed that the seller is a legal owner and having all rights of the said property without any encumbrance or any other interest or right of the third party. It is also the said that two property is free from any dispute or claim of any third persons. The sale deed clearly states that the seller has handed over the vacant physical possession of the property to the assessee. Thus, as per the sale deed dated 17.03.2011 the property was free from any their party right or other adverse interest against the title right over the property. The assessee is not a layman but is dealing in the real estate and therefore, if the property was under occupation of these six persons then it was not possible for the assessee to purchase the said property without having the said fact mentioned in the sale deed. Even otherwise if the property was actually in the possession of these six persons then, there is no conclusive evidence to show when the property was got vacated and only after against by the assessee and not prior to the said date of purchase. Since the assessee has accepted the fact stated in the sale deed that the physical vacant possession of the property was handed over by the seller to the assesee then this claim of payment of compensation for getting the property vacated is contradictory to the facts recorded in the sale deed. The assessee further claimed that the entire payment was much in cash even a cheque for payment of Rs. 34,00,000/- was got dishonored and the assessee subsequently made the alleged payment in cash. Therefore, except the receipts from these 7

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur

persons the assessee has not produced any other record of actual payment or movement of money from the assessee to these persons. Since these six persons denied having received any compensation from the assessee then the claim of the assessee cannot be accepted without proper investigation and enquiry. The AO though issued notice u/s 133(6) and received the reply from these persons however, all other connected and relevant facts and aspects of the matter like whether these six persons were in possession of the property in question and when the property was got vacated. All these facts can be verified only in the enquiry conducted through examination of these six persons by recording their statements and giving opportunity to the assessee for cross examination. Since the AO has not conducted the requisite enquiry to reach conclusive finding of fact. We are of the considered view that these matters require a proper verification and enquiry of the relevant facts. Accordingly, we set aside this issue to the record of the Assessing Officer for conduct of proper enquiry by examination of these six persons and also giving an opportunity to the assessee to cross examine and then decide the issue as per outcome of the such fact finding enquiry. As regards the source of the money claimed for compensation the assessee has contended that the barrowed funds was used and repaid through banking channel subsequently. However, except the details of the borrowed funds the assessee has not produced any other material or documentary evidence to show the transaction of borrowed funds. Accordingly, the assessee is required to produce the documentary evidence as well as the creditors for examination by the AO.

ITA No. 395/JP/2017 Sh. Damodar Prasad Maheshwari v. ITO, Jaipur In the result, the assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on 31/10/2017 Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 31/10/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Sh. Damodar Prasad Maheshwari, Flat No. 103, Bhargu Marg, Banipark, Jaipur. 2. izR;FkhZ@ The Respondent- ITO Ward 3(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 395/JP/2017} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत