TaxTMI 
TaxTMI 
2023 (8) TMI 917
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.... denied only the cash components of agreement. iii. Whether the Ld. CIT(A) were right in discarding the unsigned agreement to sell (ATS) without appreciating the fact that all other details were exacting matching with the particulars of parties and bank account receipt/payments in this respect. iv. Whether in law and facts of the case, the order of the CIT(A) is erroneous and not tenable in law and on facts. 3. We have heard argument of both the sides and carefully peruse the relevant material placed on record inter alia paper book filed by assessee spread over 88 pages. The ld. CIT(DR), supporting the assessment order submitted that Ld. CIT(A) has erred in law and on facts of the case by deleting the addition of Rs. 1.50 Cr. Made as unexplained money u/s 69A of the IT, 1961 (for short the 'Act')by ignoring the established facts that seized document found during search has permissibility as per the provision of presumption u/s 292C of the IT Act, 1961. He further submitted that the Id. CIT(A) has erred in law and on facts by ignoring facts that the contents of ATS where all other details like past ownership of plot, details of director of these companies, details of cheque of ....
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....as sold to M/s. Luv Luxmi Land Developers ltd. under the registered sale deed executed on 26.06.2014 and capital gain have been shown by the assessee in the written of income for FY 2014-15 pertaining to AY 2015-16. 6. The learned AR further drew our attention towards para 5.6 to 5.8 of first appellate order and submitted that the ld. CIT(A) has rightly relied on the order of ITAT Delhi Bench dated 25.01.2019 in the case of Shri Bhagat Singh vs. ACIT wherein by relying on the judgment of Hon'ble jurisdictional High Court of Delhi in the case of Smt. Vineeta Chaurasia the addition has been deleted based on dumb document by holding that since the document was not found and seized from the assessee during search & seizure operation and the same was seized and found in the soft copy from the computer of a deed writer Shri Naresh Gupta, who was a third party, therefore presumption u/s . 292C(1)(i) of the Act cannot be drawn against the assessee that the same belongs to the assessee. The ld. AR lastly submitted that the ld. CIT(A) was right in deleting the baseless addition therefore the first appellate order may kindly be uphold by dismissing the ground of revenue. 7. On careful consi....
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.... and not 'shall presume', hence the presumption of facts under section 292C is not a mandatory or compulsory presumption, but, discretionary presumption; secondly, such a presumption is not a conclusive presumption but is a rebuttable presumption because it is a presumption of fact not a presumption of law. The presumption u/s 292C and 132 are not presumption of law, but facts and are rebuttable. (iii) In the case of Vijay Kumar Aggarwal vs. ACIT, Central Circle- 12, New Delhi [No.- ITA No. 1182/Del/2011 dated 17/02/2017], the Hon'ble ITAT Delhi had held as under: "12. From the observations made in the aforesaid referred to orders, it is clear that the presumption of facts us 292C of the Act is not a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said Section is " may be" and not "shall". Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. 5.3.1 The ratio-decidendi on section 292C emerging from the above judicial precedents is that: (a) The presumption of facts u/s 292C of the Act is not a mandatory or compulsory p....
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.... for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 15. It is apparent from the plain language of Section 69 of the Act that in order for any addition to be made under Section 69 of the Act, the following conditions must be met: (a) It is established as a fact that the Assessee has made an investment: (b) That the investment made is not recorded in the books of the Accounts, if so maintained; and (c) The Assessee offers no explanation as to the nature and source of investment made or the explanation offered by the Assessee is, in the opinion of the AO, not satisfactory. 16. Thus, first and foremost, A0 must come to a conclusion that an Assessee had, in fact, made an investment. Once an AO finds that an investment has been made, he has to examine the Assessee's explanation as to the source of that investment. It is only in cases where the Assessee is unable to explain the source of the investment made that provisio....
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....rt had held as under: - 4. We have heard the rival submissions and perused the relevant material on record. It is noticed that the extant addition was made by the AO us 69B of the Act. The relevant part of this section stipulates that: 'Where in any financial year the assessee has made investments or and the Assessing Officer finds that the amount expended on making such investments or ... exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.' The pre-requisite conditions for making an addition under this section are that firstly, the assessee should have made investment and then the AO should find that the amount actually expended on making such investment is more than the amount recorded in the books of account. In other words, there should be some positive evidence with the AO to find that the assessee had, in fact, invested more amount than that actually re....
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....observed by the Apex Court in K.P. Varghese v. ITO /19811 131 ITR 597', to throw the burden of showing that there is no understatement of the consideration received, on the appellant would be to cast an almost impossible burden upon him to establish in negative, namely, that he did not receive any consideration more than what has been declared by him. Therefore, if the Revenue seeks to hold that the appellant has received more than what has been declared by him in respect of the assessment in question, the onus would lie on the Revenue to prove this fact by bringing some material on record. (vii) In the case of CIT vs. Kulwant Rai reported in 291 IT 36, Delhi High Court had held as under: "12. Coming to the facts of the present case with regard to the addition of Rs. 17,00,892/- made by the Assessing Officer as undisclosed income of the Assessee for the block period, we may refer to the findings of the Tribunal on this point and the relevant portion reads as under:- "On consideration of the matter we find that the addition has been made by the learned Assessing Officer on the basis of surmises and guess work. He has ignored the fact that the agreement was found in possess....
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.... legal fiction the unabsorbed carried forward losses should be given preference not merely over the unabsorbed carried forward depreciation but also over the current year's depreciation. There is, thus, no modification of nor deviation from the basic and well recognised principle of commercial accountancy by the statute as is contended by the counsel for the (ix). The Hon'ble Supreme Court in the case of CIT vs. Moon Mills Ltd - 59 ITR 574 [larger bench of 3 judges] held that - But the fourth proviso introduces a fiction that in case any insurance, salvage or compensation money received in respect of the said property exceeds the difference between the written down value and the scrap value, so much of the excess as mentioned therein will be deemed to be the profits of the previous year in which such money is received. Though in fact the said compensation represents a capital asset, to the extent mentioned in the proviso, the compensation is deemed to be the profits of the previous year in which such money is received. The proviso, therefore, introduces a fiction. What is not a profit in the previous year is... deemed to be a profit in that year. The previous year is th....
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....parties to the agreement. There is no evidence on record of any cash exchanged between the parties as mentioned in ATS, to which appellänt is the receiving party as seller of property. (v) The deed writer had not given any adverse statement to the contents of this ATS, as nothing had been reproduced in the assessment order. (vi) This ATS never culminated into the sale deed. Infact, the appellant had sold this property later on at value of Rs3,61,00,000/- to another party M/s Luv Laxmi Land Developers (P) Ltd. as per the sale deed dated 26.6.2014 submitted by the appellant and capital gains have been shown in the return of income filed by the appellant for AY 2014-15. 5.6 In the situation where the ATS is unsigned, not on any stamp paper and had been denied by all the parties to it and had been found from the computer of a deed writer ( a third party on which the appellant had no control), the contents & purpose of this allegedly partly executed ATS is not fully established. In these circumstances, the presumption u/s 292C, for the cash amounts exchanged between the parties, as mentioned in the ATS cannot be taken on the face value and had to be corroborated with other in....
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....riginal scope for which legal fiction was introduced, in such case, such (technical) meaning should not be considered. * If the terms used in the deeming provision are defined somewhere else in the Act and if adopting such meaning would facilitate working of the Act in accordance with the object of such deeming provision, then such meaning should be adopted. However, the intent and purpose of bringing deeming provision cannot be allowed to be whittled down by bringing into play the meaning of terms used somewhere else in the Act by the legislature. There cannot be deeming within deeming while interpreting deeming provision. 5.7 In the similar circumstances, on the basis of same search and same hard disc seized from residence of Sh. Naresh Gupta (same as in the case of the appellant), in the case of Shri Bharat. Singh, New Delhi vs ACIT, New Delhi ITA Nos 2001 & 3256/De1/2017, in the order dated 25 January, 2019, the ITAT Delhi had held as under: "5.8 As regard to the argument that no presumption can be made under section 292C of the Act against the assessee, we find that presumption made us 292C of the Act that contents of documents are true, can be invoked when the documen....
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.... those should not be treated as true? Ans. The printouts of the documents shown to me taken from the hard disk from my office is pertaining to my various clients, it does not pertain to me in many manner whatsoever. These documents are drafted under the instruction of my various clients in discharge of my professional duty/obligation. Any other information/actual details of money transaction is not my knowledge. Any other details pertaining to the same is protected under the privileged communication under the Indian evidence Act. " 5.11 Subsequently, the assessee filed a letter from Sh. Naresh Gupta, wherein he has submitted that said draft deed was as a result of preparation of document by way of cut-and-paste of IT No.2001 & 3256/Del/2017 paragraphs from other documents. A copy of the said letter is available on page 3 of the paper book. Content of the said letter are reproduced as under: Dated: 19.03.2016 "The ACIT, Circle 26, New Delhi, Sub: In the case of Bharat Kumar, for the assessment year 2008-2009, (Reference property No. J-31, N.D.S.E.-I, New Delhi), Sir, I state that I am in to profession of providing consultancy services to my various Clients j regarding Real Est....
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....not signed by any of the party mentioned in the said draft. Such an unsigned document cannot be made basis of presumption that the assessee received cash on sale of the property. The assessee has been subjected to search but no other documentary evidence of receipt of cash by the assessee has been found in the course of the search. We also note that no attempt has been made by the Assessing Officer to make an enquiry from the buyer or to ascertain the prevalent market value of the property sold by the assessee. 5.14 In view of the aforesaid discussion, we are of the opinion that no addition can be sustained only on the basis of the unsigned draft agreement to sell found from the premises of the third party and that too without any corroborative evidences. Accordingly, we set aside the order of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and direct the Assessing Officer to delete the addition of Rs. 83,50,000/- for alleged cash received on sale of 1st floor of the property under reference. The grounds No. 2 and 3 of the appeal are, accordingly, allowed. ......... 7. In the result, appeal of the assessee is allowed partly. 5.8 It is observed that the fact....
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.... or CIT(A) that the said ATS was acted upon by the assessee and second party to the ATS by execution of sale deed and thus we have to agree with the contention of the ld. AR that the ATS was never acted upon and never culminated into transfer of property by way of execution of registered sale deed in favour of second party i.e. M/s. J P Holding & Leasing Pvt. Ltd. and in fact the assessee sold the property to a third party later against the consideration of Rs. 3.61 crores to M/s. Luv Luxmi Land Developers Pvt. Ltd. on 20.06.2014 during FY 2014-15 and also shown capital gain in its return of income for AY 2015-16 as these facts have not been controverted by the ld. Senior DR by way of any other adverse positive material or evidence which may lead us to take a different view in favour of the revenue. 10. In our considered view, Hon'ble jurisdictional High Court in the case of PCIT vs. Smt. Vinita Chaurasia judgment dated 18.05.2017 in ITA Nos. 1004 of 2015 & 1005 of 2015, which was followed by the co-ordinate bench of ITAT Delhi in the case of Shri Bhagat Singh vs. ACIT (supra), held that the presumption under section 292C (1)(i) of the Act cannot be drawn against the assessee on t....
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.... immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. 14. From the plain language of Section 69 of the Act that in order for any addition to be made under Section 69 of the Act, the following conditions must be satisfied:- (a) It is established as a fact that the Assessee has made an investment; b) That the investment made is not recorded in the books of the Accounts, if so maintained; and as (c) The Assessee offers no explanation as to the nature and source of investment made or the explanation offered by the Assessee is, in the opinion of the AO, not satisfactory. Thus, first and foremost condition for invoking sec. 69 of the Act is that the Assessing Officer must come to a conclusion that an Assessee had, in fact, made an investment. Once an AO finds that an investment has....