TaxTMI 
TaxTMI 
2023 (8) TMI 917
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.... the issuing bank branch etc. were all matching and parties 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 owner....
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....cution of the registered sale deed and the appellant never sold property to M/s. J P Holding & Leasing Pvt. Ltd. but in fact the same was 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....
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....hich supposes the presumption to be taken is qualified with the words 'may be, hence, it, may or may not be presumed that such documents belong to the person searched. Firstly, the section uses the word 'may presume 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 ....
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....gh Court has held as under: - "14. At this stage it is necessary to refer to Section 69 of the Act, which reads as under:- "69. Where in the financial year 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." 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. T....
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.... mentioned in books nor there is any confession/admission by the proposed sellers/purchasers of having received any amount over and above the amount recorded in the books. Applying the ratio of the aforesaid decision on the present case of the appellant, the AO could not have drawn any adverse inference. (iv) In the case of ACIT V. Rakesh Narang, 64 taxmann.com 332 (Del), the Court 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 condition....
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.... of India as held by the Supreme Court in the case of K P Verghese Vs. ITO (1981) 131 ITR 597" (vi) In the case of CIT vs. Naresh Khattar (HUF) 261 IT 664 (Del), the Court had held as under:- "8. There is no gainsaying that to invoke the provisions of section 69B of the Act, the burden is on the Revenue to prove that the real investment exceeds the investments shown in the books of accounts of the appellant. As 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 wi....
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....r (1955] 2 SCR 603 at p. 606, that legal fictions are created only for some definite purpose and these must be limited to that purpose and should not be extended beyond that legitimate field. 11. Such being the purpose for which the legal fiction is created, it is difficult to extend the same beyond its legitimate field and will have to be confined to that purpose. It is, therefore, not possible to accept the contention of the counsel for the assesses that because of the 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....
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....ved at by the CIT(A) vide which impugned addition has been deleted. " 5.5 It is observed that in the present case: (i) There is no original ATS, but a soft copy, which is not on any stamp paper, not signed by any party to the ATS, including any witness. (ii) The ATS had been seized in the soft copy from the computer of a deed writer, which is a third party. (iii) The existence of this ATS had been denied by both the parties to it. (iv) Only cheque amounts & their details are verifiable from the 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 in....
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.... added by the AO. No material has been brought on record by the AQ, except for presuming that the appellant must have received the amounts mentioned in the unsigned ATS. (iv) From the above decisions at (viii) to (x) in para above, following noteworthy principles follow - * Every fiction created under law has a purpose and the meaning of expressions used in said deeming provision should be considered in ordinary sense, in which purpose, deeming provision is created serves the purpose. * If the technical meaning ascribed to the expressions used in legal fiction enlarges the original 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 dee....
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....payment of Rs. 83,50,000/-, is based on the presumption that said draft agreement to sell was prepared on the direction of the assessee. The Assessing Officer has recorded the statement of Sh. Naresh Gupta, a copy of which is available on page 85 to 88 of the paper book. The relevant part of his statement is reproduced as under: "Q.12 I am showing you printouts taken from the hard disk seized from your office premises R- 36 GK Part -1, New Delhi, in which contain various agreements to sell and sale deeds. In view of the fact and circumstances (a) Why these document should not be treated as belong to you us 132(4A) of the I T Act, 1961. (b) Why 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 th....
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....e draft has denied any knowledge of alleged payment recorded in the draft. No other evidence, like a statement of the buyer or any valuation report regarding the sale value of the property are available on record. In our opinion, unless there are enough corroborative evidence to show that the payments as noted in the draft agreement to sell was actually received by the assessee, no addition can be made in the hands of the assessee merely on the basis of unsigned draft agreement to sale. The finding of the Ld. CIT(A) that part of the document is found to be true and thus the balance should also be treated as true is not correct and instant case the entire document found is a draft prepared by the deed writer, which is 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 ....
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....mption is not a conclusive presumption but is a rebuttable presumption because it is a presumption of fact not a presumption of law. 9. Now, we proceed to adjudicate the grounds of revenue. So far as presumption u/s. 292C of the Act, is concerned this issue has been dealt by the ld. CIT(A) in para 5.7 of the first appellate order wherein he has referred to the order of co-ordinate bench of ITAT Delhi in the case of Bhagat Singh vs. ACIT (supra) and thereafter observed that the nature of agreement to sale seized clearly reveals from the documents its which has not been signed by the parties and hence the same was found without signature in the soft copy of deed writer that is third party Shri Naresh Gupta. It is not a case of the Assessing Officer 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 ....
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....evenue in Form no. 36 we note that the revenue has alleged that the CIT(A) has erred in deleting the addition made by the Assessing Officer as unexplained money u/s . 69A of the Act, which applies to a situation when assessee is found to be the owner any money bullion etc. not recorded in the books of accounts of assessee. As per facts gathered and alleged by the Assessing Officer we note that the main contention of the Assessing Officer based on unsigned ATS is that the credit of cash payment of Rs. 1.50 crore was not found to be recorded in the books of accounts of assessee which attracts the provision of section 69 of the Act. 13. At this stage it is necessary to refer to Section 69 of the Act, which reads as under:- "69. Where in the financial year 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....