2024 (3) TMI 540 - AT - Income Tax

Assessee cannot be taxed for property transaction they didn't execute under sections 69 and 115BBE

ACIT, Central Circle-15, New Delhi Versus Yash Pal Mendiratta And (Vice-Versa) And ACIT, Central Circle-15, New Delhi Versus Alka Mendiratta And (Vice-Versa)

The ITAT Delhi dismissed the revenue's appeal in an assessment u/s 153C involving undisclosed investment u/s 69 r.w.s 115BBE. The AO had treated property ... Assessment u/s 153C - Undisclosed investment u/s 69 r.w.s 115BBE - AO concluded that the sale consideration of the impugned property cannot be less than Rs. 40.06 crores and treated the consideration of the impugned property at Rs. 40.06 crores - Whether incriminating material belonging to Assessee found during the course of search on the basis of which addition is made? - HELD THAT:- As the agreement found and seized and the payments made thereon are no way connected to the assessee. AO clearly accepted that the agreement was cancelled and not executed. Assessment u/s 153C concluded in the assessment of one of the buyer in the agreement mentioned being taxed as per the cash transactions mentioned in the agreement. Assessee cannot be held responsible to contents of the agreement for which he is neither signatory nor executor. The property was registered by the assessee and no evidence of payment by the assessee is mentioned neither in the agreement nor on any material gathered during the search or post search enquiries. Even the cheque payments made by the alleged buyer in the agreement have been returned back to the buyer. Hence, the assessee cannot be tied up with the agreement which is executed between four unrelated parties to the assessee. CIT(A) has duly examined the evidences on record and the confirmative evidence of the seller and came to a conclusion that assessee cannot be taxed for the money which has not paid. CIT(A) has also examined the comparable instances of the sale of property in the same area which is at parity with the value adopted and purchased by the assessee. Hence, in view of the tangible material on record duly examined by the CIT(A), we hereby affirm the decision of the ld. CIT(A). Decided against revenue. Issues Involved:1. Deletion of Addition under Section 69 read with Section 115BBE of the Income Tax Act, 1961.2. Legality of Notice issued under Section 153A.3. Admissibility of Photocopy of Document as Evidence.4. Applicability of Section 69 and Section 292C.5. Validity of Approval under Section 153D.6. Application of Section 115BBE and Higher Rate of Tax.Summary:1. Deletion of Addition under Section 69 read with Section 115BBE of the Income Tax Act, 1961:The Assessing Officer (AO) added Rs. 24 crores based on a seized photocopy of an Agreement to Sale (ATS) indicating a higher property value of Rs. 40.06 crores, compared to the registered sale deed value of Rs. 16 crores. The AO presumed the actual transaction value was Rs. 40.06 crores. The CIT(A) deleted the addition, noting the ATS was a photocopy, not signed by the assessee, and not corroborated by other evidence. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of concrete evidence linking the assessee to the ATS and the necessity of corroborative evidence to substantiate the AO's claims.2. Legality of Notice issued under Section 153A:The assessee contested the legality of the notice issued under Section 153A, claiming it was illegal, bad in law, and without jurisdiction. The CIT(A) and Tribunal found that despite the notice referring to Section 69C instead of Section 69, the assessee was given sufficient opportunity to present their case, and the procedural error did not invalidate the assessment.3. Admissibility of Photocopy of Document as Evidence:The assessee argued that the photocopy of the ATS could not be considered valid evidence. The Tribunal acknowledged that while photocopies could constitute 'material,' their use against an assessee required corroboration with other evidence, which was lacking in this case. The Tribunal cited various judicial precedents emphasizing the need for corroborative evidence to substantiate claims based on photocopies.4. Applicability of Section 69 and Section 292C:The Tribunal reiterated that the presumption under Section 292C is rebuttable and emphasized the necessity of concrete evidence to invoke Section 69. The Tribunal found that the AO failed to establish that the assessee made investments over and above the recorded amount. The Tribunal cited multiple judicial decisions, highlighting that mere possession of documents does not warrant additions without corroborative evidence.5. Validity of Approval under Section 153D:The assessee contended that the approval under Section 153D was invalid and without application of mind. The Tribunal noted that the procedural aspects were duly followed, and the approval was obtained as required, dismissing the assessee's claims.6. Application of Section 115BBE and Higher Rate of Tax:The assessee argued against the application of Section 115BBE and the higher tax rate. The Tribunal found that the AO's application of Section 115BBE was incorrect, as the primary conditions for invoking Section 69 were not met due to the lack of evidence of unrecorded investments.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 12.03 crores made under Section 69, citing the lack of concrete evidence linking the assessee to the ATS and the necessity of corroborative evidence. The Tribunal also dismissed the cross-objections filed by the assessees as infructuous. The appeals of the Revenue were dismissed, affirming the CIT(A)'s decision.