Matching Fragments
(v) The contract must conform to the legal
formalities;
In this case what the AO points out that the legal
formalities are not fulfilled. One of such formality as to
immovable properties is of compulsory registration u/s
17A of Indian Registration Act. In respect of other
transactions/documents and contract which involves high
values / denomination, the minimum legal formality is that
it should be on stamp paper either executed before a
notary or a Executive Magistrate who would put his seal
and stamp as well as reference no date, place etc., so
that it gets the approval and seal of legality. Unless such
is done, the contract / document have to be inferred as
invalid or void. In this case, the contract is thus void and
consequently the payments made thereon is also illegal
and, hence, disallowable. While pondering over such high
value plain paper void agreement between SEL & the
appellant enlightenment dawned upon me that, it is not
easy to get backdated stamp papers, that too when
alleged different agreements having different dates viz.,
01.07.2002, 01.04.2005 and at least the authorized
signatory has also to put his signature on the stamp
vendors register in token of having purchased that paper
with date that too in the year of 2009. Since such illegal
task involved insurmountable problem, the invention
(necessity being its mother) was made of plain paper
agreement to substitute the agreement not available
(non-existent) during the time of survey which probably a
prudent businessman will not destroy if actually made
because it involved payments above 28 crores unless it
can be assumed that the appellant knew that the payment
is not for the purpose of business and for some other
purpose not worth remembering even if the sum paid is
very high or the same payment is to ones oneself in the
garb of a dummy of ones own self. Thus, considering
from all possible angles, I conclude that the payment
claimed as expenditure paid to SEL deserve to be
disallowed. (confirmed Rs.18,35,79,000/- and
Rs.10,68,71,384/-)."
