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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI G. D. AGRAWAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
The Ld. DR and Ld. AR during the course of hearing submitted that is a penalty appeal filed by the Department which has a tax effect lesser than 10 lacs. In result of this, is dismissed for low tax effect.
Brief facts of the case are as under:-
3.1 During the year, the assessee company sold the property for the cost of Rs.19,53,125/- and the cost of Purchase deducted was for Rs.10,16,105/- including payment of Rs.6,87,500/- paid as compensation for acquiring purchase rights. The assessee company was asked to justify as to why this compensation should be allowed to be deducted against the Sales as cost of purchase. The assessee company submitted before the Assessing Officer that the assessee company had paid Rs.6,87,500/- to M/s M.L. Promoters Pvt. Ltd. for cancelling the Agreement to Sale which was executed for the sale of impugned property. Later the assessee company found a new reputed buyer M/s Omax Ltd for the purchase of property. To earn profit, the assessee company cancelled the agreement against payment of Cancellation Charges.
3.2 However, neither a copy of sale deed nor any agreement entered with M/s M.L. Promoters Pvt. Ltd. was produced before the Assessing Officer. The assessee company claims to have made payment of Rs.6,87,500/- as compensation. But the payment of compensation was on account of a decision of the assessee company only and was not incidental to the business. The Assessing Officer observed that the submission by the assessee company that the agreement was cancelled on account of earning higher profit was not correct. There was no evidence to suggest that the amount received from Omax was higher than what was being received from L. M. Promoters in absence of any agreement produced by the assessee company. Hence, the payment of compensation paid was disallowed and added back to the income of the assessee company.
Being aggrieved by this the Assessee filed appeal before the CIT(A). The CIT(A) observed that the original documents were not filed hence, dismissed the appeal of the assessee.
The Ld. AR submitted that the department has accepted additional evidence and at no point questioned the authenticity of documents which were sealed when the premises were sealed by the Supreme Court’s directions. The remand report also stated the same, but has not verified from the said documents.
The Ld. DR relied on the order of the Assessing Officer and the CIT(A).
We have perused all the records and heard both the parties. The assessee produced the photocopies of the Agreement to sell dated 12.04.2005 and cancellation deed dated 31.08.2005 as additional evidence before the CIT(A). The CIT(A) has accepted additional evidence and at no point the authenticity of documents were questioned by the Revenue which were in the premises which was sealed by the Supreme Court’s directions. The remand report also stated that the original cancellation deed as submitted by the assessee before the CIT(A) was not provided by the assessee to the Assessing Officer. The same was not verified by the Assessing Officer. Since the documents were not properly verified and there was no cognizance to the effect of the additions made by the Assessing Officer, the matter needs to be adjudicated based on the evidence before the Assessing Officer. Thus, the matter is remanded back to the Assessing Officer for fresh adjudication.
In the result, appeal (ITA No. 3692/DEL/2011) is partly allowed for statistical purposes and appeal in respect of penalty ( ) is dismissed.
The order is pronounced in the open court 26th of September, 2016.