Case Law Details
ACIT Vs Precision Realtors P. Ltd. (ITAT Delhi)
A perusal of the sale deed show that the seller was the absolute owner and was in actual possession of the impugned property. Nowhere in the sale deed, there is a mention of encumbrance / encroachment in the impugned property. This fact has been completely ignored by the first appellate authority.
In our considered view if there were no encroachment no encumbrances on the impugned property there should not be any reason why the payments were made by the assessee. Since the basic fact has not been appreciated by the first appellate authority we deem it fit to restore the appeal and the cross objection to the files of the CIT(A). The CIT(A) is directed to examine each and every sale deed and verify whether the impugned property was encroached/ encumbered by the occupants to whom the assessee paid compensation. The CIT(A) is directed to decide the issue afresh after affording a reasonable and sufficient opportunity of being heard to the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
ITA No.3588/Del/2016 and Cross Objection No.288/Del/2016 are appeal by the revenue and cross objection by the assessee directed towards the order of the CIT(A)-29, New Delhi dated 30.03.2016 pertaining to A.Y.2011-12.
2. The grievance of the revenue read as under and the grounds of cross objection are as under :-
Cross Objection grounds :-
3. This appeal and cross objection were first listed for hearing on 16.04.2019 and thereafter the appeal was getting adjourned at the request of the AR/DR. Up to 16.08.2021 the assessee was represented by advocate V. Raj Kumar thereafter on every date of hearing none represented the assessee. On 09.05.2022 the Bench asked the DR to serve the notice. Today the DR submitted a report of the service of notice which is placed on record. Since more than 3 years have elapsed we decided to proceed exparte.
4. The DR was heard at length. Case records carefully perused. We find that the bone of contention is the amount paid towards settlement / resolution of dispute pertaining to release of possession / encroachment of land including demolition of Kachha structure, temporary tube well in order to take possession of vacant land.
5. During the course of the scrutiny assessment proceedings the assessee was asked to produce the parties to whom such compensation was made but the assessee failed to do so. The AO issued notices u/s. 133 (6) of the Act to the beneficiaries but received no response. The AO was left with no choice but to make addition of Rs. 1,90,50,000/-.
6. Assessee carried the matter before the CIT(A) and reiterated its claim of compensation by referring to the documentary evidences / receipts from the beneficiaries of the payments made by the assessee.
7. After considering the facts and the submissions the CIT(A) was convinced that the said payment of compensation is duly covered within the provisions of section 37 of the Act as the said compensation was incurred wholly and exclusively for the business purposes and actually capitalized towards inventory and deleted the disallowance of Rs. 1,90,50,000/-.
8. Before us the DR strongly supported the findings of the AO. We have carefully perused the findings of the CIT(A). We have also gone through the copy of sale deed brought on record in the form of paper book. A perusal of the sale deed show that the seller was the absolute owner and was in actual possession of the impugned property. Nowhere in the sale deed, there is a mention of encumbrance / encroachment in the impugned property. This fact has been completely ignored by the first appellate authority.
9. In our considered view if there were no encroachment no encumbrances on the impugned property there should not be any reason why the payments were made by the assessee. Since the basic fact has not been appreciated by the first appellate authority we deem it fit to restore the appeal and the cross objection to the files of the CIT(A). The CIT(A) is directed to examine each and every sale deed and verify whether the impugned property was encroached/ encumbered by the occupants to whom the assessee paid compensation. The CIT(A) is directed to decide the issue afresh after affording a reasonable and sufficient opportunity of being heard to the assessee.
10. In the result, the appeal and the cross objection are allowed for statistical purpose.
11. Decision announced in the open court on 22.08.2022.
