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70,00,000/-. During the appeal proceedings, it is submitted that payment of Rs. 3.5 crore was made through pay orders/drafts and not through cash as assumed by the Assessing Officer. It has been further submitted that the payment was made towards the cost of land which was purchased through an open auction by the High Court of Bombay; that the amounts were paid by M/s. Zoom Developers Pvt. Ltd" on their behalf; that AO did not bother to go through the confirmation of Zoom Developers Pvt. Ltd filed before him; that relevant bank statement of Zoom Developers Pvt. Ltd" were also filed during the course of their assessment proceedings, The assessee had also filed copy of conveyance deed, The AO, however, observed in the assessment order that details of payments were not available in the said conveyance deed; and that the assessee neither furnished the details of payments nor the copies of relevant bank accounts. The AO took cognizance of the
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statement of Shri S.K. Tanwar, Asst. Vice President of Zoom Developers Pvt. Ltd., which was recorded during the search, wherein he had categorically accepted that the group had made huge cash payments for purchase of land and concluded that the said payment of Rs.3.5 crore was also made in cash only. 'In this context, in order to ascertain the mode of payment, I have perused the copy of account of the assessee company in the books of accounts of Zoom Developers Pvt. Ltd" which reflects the entire payment of Rs.3.5 crores through their accounts maintained in Allahabad Bank, United Bank of India and Punjab National Bank. The bank account of Zoom Developers Pvt. Ltd. maintained in Allahabad Bank reflects payment of Rs. 10,00,000/- on 03.11.2003, that of United Bank of India reflects payment of Rs.77,50,OOO/- on 11.02.2004 and the bank account in Punjab National Bank reflects payment of Rs. 2,62,50,000/- for getting pay
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final settlement of the dispute. The auction sale was confirmed by the Hon'ble Mr. Justice Khanvilkar on 05.02.2004 wherein Zoom Developers Pvt. Ltd. was declared as the successful auction purchaser on sale consideration amounting to Rs.3.5 crores which was deposited with the Commissioner for taking accounts, High Court, Bombay and on an application made by Zoom Developers Pvt. Ltd. to the Hon'ble High Court for an order that the conveyance should be executed in favour of the assessee company, Magnificent Constructions Pvt. Ltd., the Hon'ble High Court by its order dated 24.03.2004 granted the said prayer. In view of these facts, it is very clear that the entire payment of Rs. 3.5 crore was made to the Commissioner for taking accounts through pay orders and drafts prepared from the bank accounts of Zoom Developers Pvt. Ltd., on behalf of the assessee. Even otherwise also in such auction, which is executed by the High
inventory in the balance sheet. For invoking Section 40A(3), a show cause notice was given to the assessee. Contention of the assessee was that, firstly, these payments were made by cheques by its sister concern M/s. Zoom Developers and secondly the assessee has not debited these expenditure in the profit and loss account, therefore, no disallowance u/s 40A(3) can be made. During the course of appellate proceedings, the ld. CIT(A) after calling the Assessing Officer perused the copy of account of assessee company in the books of account of Zoom Developers, which reflects the entire payment of Rs. 3.5 crores through their accounts maintained in the Allahabad Bank, United Bank of India and Punjab National Bank. At para 4.3, the ld. CIT(A) has categorically recorded a finding with respect to the various payments made through different bank accounts. We also found that payment was made towards the cost of land, which was purchased through an open auction by the High Court of Bombay and that amounts were paid by M/s. Zoom Developers Private Limited on behalf of the assessee. In the conveyance deed also, there is a reference of payment of Rs. 3.5 crores to the Commissioner for