Unsigned seized sale agreement used to raise capital gains sale price rejected without proof of banking receipt; remanded for verification.

Whether an unsigned agreement seized during search could be relied upon to substitute declared sale consideration for computing capital gains turned on its evidentiary value. The ITAT held that, absent corroborative evidence of actual receipt of the stated amount through identifiable banking channels by the taxpayer or another identified person, the unsigned document was a "dumb document" and could not form a reliable basis to determine sale consideration. However, it directed verification of whether the amount mentioned was received by cheque or other banking mode; if such receipt is established, the document may support the AO's inference. The appeal was allowed for statistical purposes by way of remand for verification.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether an unsigned (draft) agreement of sale found in search proceedings, coupled with a statement under section 132(4), can by itself constitute reliable evidence of higher sale consideration for computing capital gains.

1.2 Whether the unsigned agreement of sale in question is a mere "dumb document" or a document having evidentiary value, contingent on corroborative proof of payment of the advance of Rs. 13,00,000/- mentioned therein.

1.3 Whether the addition towards alleged unaccounted sale consideration on one plot should be sustained or remanded for further factual verification regarding actual receipt of the advance through banking channels.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Evidentiary value of unsigned agreement of sale and need for corroboration

Legal framework (as discussed)

2.1 The assessment was framed under section 143(3) based on a document found in search under section 132 and the statement of the assessee's son recorded under section 132(4). The addition was made under the head "Capital Gains" by treating the difference between the registered sale consideration and the consideration in the unsigned agreement of sale as undisclosed sale consideration.

Interpretation and reasoning

2.2 The Tribunal examined the unsigned agreement of sale and the registered sale deed and found significant similarities: (i) the vendee's name is identical in both documents; (ii) the property described is the same; (iii) the vendor named in the unsigned agreement is the assessee's son, who also signed the final registered deed as General Power of Attorney holder of the assessee; and (iv) in his statement under section 132(4), the son admitted a sale consideration of Rs. 37,26,500/- and receipt of part consideration in cash.

2.3 Despite these similarities and the admission under section 132(4), the Tribunal held that the unsigned agreement of sale cannot automatically be treated as conclusive evidence of higher sale consideration for capital gains without corroborative material. The document specifically records that a part sale consideration of Rs. 13,00,000/- was paid "by way of Cheque's" and acknowledged by the vendor.

2.4 The Tribunal emphasized that, in the absence of corroborative evidence demonstrating that this sum of Rs. 13,00,000/- was actually received through identifiable banking channels either by the assessee or by her son, the unsigned document by itself cannot be treated as a reliable basis for determining the sale consideration. The evidentiary status of the document thus turns on whether the recorded cheque payment is verifiable in the banking records.

2.5 The Tribunal effectively held that the document cannot be dismissed outright as a dumb document merely because it is unsigned and in draft form, given its close nexus with the final registered transaction and the supporting admission; however, without evidentiary corroboration of the recorded cheque payment, it also cannot be treated as sufficient to sustain an addition.

Conclusions

2.6 The unsigned agreement of sale, even when linked to the registered sale deed and supported by a statement under section 132(4), does not by itself conclusively establish a higher sale consideration for purposes of capital gains.

2.7 The document will cease to be a "dumb document" and can be used as reliable evidence only if the payment of Rs. 13,00,000/- mentioned therein is corroborated by banking records in the hands of the assessee or her son.

Issue 3: Sustainability of addition and direction for verification/remand

Interpretation and reasoning

2.8 The addition of Rs. 30,82,500/- was made solely on the basis of the unsigned agreement of sale and the accompanying statement, without any verification of the alleged cheque payment of Rs. 13,00,000/- referred to in the document.

2.9 The Tribunal held that there is a need for factual verification specifically as to whether the amount of Rs. 13,00,000/- recorded in the unsigned agreement has been actually received through banking channels either by the assessee or by her son, who acted as vendor/General Power of Attorney holder.

2.10 The Tribunal determined that the fate of the addition must depend on the result of such verification: if banking records show receipt of the amount of Rs. 13,00,000/-, then the unsigned agreement would gain evidentiary credibility, and the inference drawn by the Assessing Officer regarding higher sale consideration may warrant confirmation; conversely, if no such receipt is traceable in banking channels, the addition made solely on the basis of the unsigned agreement cannot be sustained.

Conclusions

2.11 The matter was remanded to the Assessing Officer with a specific direction to verify, through banking channels, whether the amount of Rs. 13,00,000/- mentioned in the unsigned agreement was received by the assessee or her son.

2.12 The Assessing Officer is to pass a fresh order in accordance with law after such verification and after affording due opportunity of hearing to the assessee, and the addition towards alleged unaccounted sale consideration will be governed by the outcome of this verification.

2.13 The appeal was allowed for statistical purposes, with no final adjudication on the merits of the addition pending the directed verification.

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