Appeal allowed deleting Rs.76 lakh unexplained investment addition, no on-money proved, cancellation agreement accepted u/s 69

ITAT Jaipur allowed the assessee's appeal and deleted the addition of Rs. 76 lakhs made as unexplained investment in the purchase of a plot. The Tribunal held that the Revenue failed to establish payment of any on-money, noting that the seller's sworn statement confirmed receipt of only Rs. 65 lakhs and that there was no construction, water or electricity connection on the plot. The cancellation agreement, seized during the search, was accepted as authentic in absence of contrary evidence. ITAT held that the lower authorities erred in treating the investment as unexplained and reversed the order of the CIT(A).

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Issues Involved:
1. Authenticity of the cancellation agreement found during post-search operations.
2. Addition of Rs. 76,00,000/- as unexplained investment in the purchase of Plot No. 281, 10-B, Gopal Pura Bye Pass, Jaipur.
3. Validity of the assessment order and whether it was time-barred.

Issue-Wise Detailed Analysis:

1. Authenticity of the cancellation agreement found during post-search operations:
The assessee argued that the cancellation agreement was seized by the Income Tax Department and is not a fabricated document. The document was found during the course of search operations which started on 22-09-2010 and continued until 12-10-2010. The assessee contended that the document should be presumed correct as per section 132(4A) of the Income Tax Act. The CIT(A) held that the document was fabricated, noting that it was found on plain paper without witness signatures, unlike the other agreements which were on stamp paper and had witness signatures. The Tribunal, however, found that the cancellation agreement was indeed seized during the search and its authenticity cannot be doubted without concrete evidence to the contrary.

2. Addition of Rs. 76,00,000/- as unexplained investment in the purchase of Plot No. 281, 10-B, Gopal Pura Bye Pass, Jaipur:
The AO added Rs. 76,00,000/- to the assessee’s income as unexplained investment based on an agreement dated 25-06-2008 which indicated a sale consideration of Rs. 1,41,00,000/-. The assessee argued that this agreement included construction costs, which the seller later could not fulfill, leading to the cancellation and the final sale deed being executed for Rs. 65,00,000/-. The seller confirmed receiving only Rs. 65,00,000/- and stated that no significant construction was done on the plot. The Tribunal noted that the seller's statement, corroborated by Google Earth images and photographs showing the plot as vacant, supported the assessee’s claim. The Tribunal found no evidence of the alleged on-money payment and concluded that the addition was based on assumptions and not supported by concrete evidence.

3. Validity of the assessment order and whether it was time-barred:
The assessee initially raised an additional ground under rule 11 of ITAT, Rules 1963, arguing that the assessment order was not served within the time specified in the Act as the annexures were not attached to the assessment order. However, this ground was withdrawn by the assessee’s representative during the hearing and was dismissed as withdrawn by the Tribunal.

Conclusion:
The Tribunal concluded that the lower authorities erred in confirming the addition of Rs. 76,00,000/- as unexplained investment. The Tribunal allowed the grounds raised by the assessee, finding that the cancellation agreement was genuine and that there was no evidence of any on-money payment. Consequently, the appeal of the assessee was partly allowed. The order was pronounced in the open Court on 14-02-2017.

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