TaxTMI 
TaxTMI 
2025 (2) TMI 1248
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....T(A) has erred in deleting the addition of Rs. 1,62,35,000/- made on account of unexplained investment u/s 69 of the IT Act, 1961, without appreciating the facts that the payment made by the cheques were duly credited in the respective bank accounts and the Stamp Vendor had confirmed that the stamp paper in which the agreement to sale was executed was also purchased by the assessee himself. 3 Any other grounds and fact to be raised at the time of appeal." 3. The sole issue arose from the aforesaid grounds of appeal is, whether or not the learned CIT(A) was justified in deleting the addition of Rs. 1,62,35,000, made by the Assessing Officer on account of unexplained investment under section 69 of the Income Tax Act, 1961 ("the Act"). 4. Facts in Brief :- The assessee herein is an Individual. A search and seizure action under section 132 of the Income Tax Act 1961 ("the Act") was conducted in case of Shri Parag Suresh Vakharia on 11/07/2019, in connection with the action on Swami Fuels Pvt. Ltd. Group. During the search proceedings, various documents were found and seized at the residence of Shri Parag Vakharia, pertaining to the assessee. Accordingly, in response to a....
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.... cash payment of Rs.1,62,35,000/- by purchaser to the seller. Based on this document assessee's case was centralized and notice u/s 153C of the Act was issued. In response to 153C notice assessee filed return declaring same income that was returned originally u/s 139(1) of the Act. During the course of assessment proceeding, it was submitted that the assessee has never ever executed any agreement to sale with the "Vakharia" or Shri Wardhaman Sahakari Samiti for purchase of the said property. The documents titled as "Agreement to sale" alleged to be found from premises of Parag Suresh Vakharia is not within the knowledge of the assessee. The assessee is neither party to it nor assessee has executed/signed any such document. It seems to be a unilateral act of Shri Suresh Vakharia and Shri Shailesh Vakharia for the reasons best known to them. The assessee reiterated that he has not entered into any agreement to sale with Shri Suresh and Shailesh Vakharia as allegedly mentioned in the said document on pages 4 to 6 and therefore no cognizance of the said document should be taken in assessee's case. 4.1 It was further submitted that the assessee has never ever p....
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.... 5.2 Nature & unreliability of the document: As regards the said "document" on the basis of which the assessee has been saddled with the huge demand is concerned, the assessee most respectfully invites attention of your honour to the following facts which are totally ignored by the Id. AOin making an unjust, illegal and unsustainable addition as above. a) This loose paper treated as a document is actually a photocopy with no original to verify its authenticity. b) This loose paper treated as a document by the Id. AO is neither signed/executed by the Assessee nor it belongs to the Assessee so as to make the Assessee liable for the same. c) The Assessee has categorically denied its authenticity. The said document not being signed by the Assessee and further found from the premises of a third person who is not a party to said alleged agreement, no adverse inference can be drawn against the Assessee based on such dumb document. d) The said 'document' is merely a fabricated photocopy. It is most respectfully submitted that 'n' number of such documents can be created with malicious and malafide intents. Reliance is place....
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....sessee relies on judgment in the case of Addl. CIT. Miss Late Mangeshkar [1974] 97 ITR 696 (Bom.) wherein it was held that, "Revenue has got a tendency to make an addition on the basis of entries appearing in the books of a third party or a statement recorded from a third party or loose papers seized from a third party. In all such cases, it is imperative to afford an opportunity to the assesse a cross-examine the said third party." 4.2 Enquiry conducted behind the back of the assessee: The Id AO on pages 8, 9 & 10 of the impugned order has narrated the enquiries conducted with the stamp vendor to establish that the said stamp paper on which the said agreement is recorded was indeed purchased by the assessee. The appellant assessee vehemently denies this assertion and reiterates that the assessee has got nothing to do with it. The paper was not purchased by the assessee. No such register/paper was ever signed by the assessee. The Id. AO did not inform the assessee of this enquiry conducted behind his back. The Id. AO also erred grievously in not confronting the assessee with the said 'evidence' collected behind his back and which has also been put to use a....
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....hasizing the requirement of application of principles of natural justice, observed thus: "It is surprising that the Tribunal took from the representative of the department statement of gross profit rates of other cotton mills without showing the statement to the assessee and without giving him an opportunity to show that the statement had no relevancy whatsoever to the case of the mill in question." 7.4.1 Following excerpt from Kirtilal Kalidas & Co. v. Deputy Commissioner of Income-tax. [1998] 67 ITD 573 (Mad) merits attention. "35. The principles of natural justice" demand that no man should be condemned without any hearing and that nothing should be done behind the back of any person who is likely to be adversely affected. This is based on the very well accepted maxim Audi AltemmPartem, ie, hear the other side. The fundamental idea of observance of the principles of natural justice is the recognised basic right of a human being to a fair trial or fair play in action or faimess in decision-making process whether it is administrative, judicial or quasi-judicial. The observance of the principles of natural justice was sanctified by the Supreme Court, firs....
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....puted lands which could not be transferred to 'V' due to pending civil suits. Said plots were ultimately transferred by 'S' to assessee. In case of search carried out at premises of "S', certain documents were seized. On basis of seized documents, Assessing Officer opined that assessee had paid certain amount over and above amount specified in agreement to sell which represented unexplained investment. Tribunal found that assessee was not a party to seized agreement of sale which was basis of making entire addition. Moreover, revenue could not bring any material on record to show that assessee actually paid any amount more than amount stated in registered deed of sale. On these facts, Tribunal deleted addition made by Assessing Officer. The Hon. H.C. found that findings recorded by Tribunal did not require any interference. 1.2 It is respectfully submitted that on identical facts wherein an addition was made based on photo copy of unsigned Agreement to Sale found from the premises of the assessee during action under section 132 of the Act the ITAT Hyderabad 'B' bench in the case of DCIT (Central Circle)-6 Vs. B. Vijay Kumar in ITA No.930 & 931 o....
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....er statement further clearly stated that the property was sold at Rs.23.50 lakhs and not at the rate of Rs. 1.68 crores. The Hon'ble Supreme Court in the case of K.P. Verghese reported in 131 ITR 597 has held that onus is on the department to prove that the assessee has understated the value of the property and has paid more than what is mentioned in the registered sale deed. The Hon'ble Supreme in the case of Moosa S. Madha and Azam S. Madha vs. CIT(89 ITR 65) has held that photo copies have little evidentiary value. Therefore, photocopies of any document cannot by itself be considered as evidence for purpose of making addition in assessment proceedings. The AO is required to bring further evidence on record to show that the sale agreement was actually acted upon by the parties. This is because of the fact when the AO is going to make an addition, there should be sufficient evidence brought on record to support such addition. No addition can be made on conjectures and surmises." 6. The learned CIT(A), considering the submissions made by the assessee as aforesaid, deleted the addition of Rs. 1,62,35,000, made by the Assessing Officer under section 69 of the Act by observ....
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.... has not been signed by the appellant, the same is an undated document and it does not bear any imprint of the appellant to infer that the appellant was indeed in know of the document. settled law that the section imposes a rebuttable presumption. Of course, the appellant has to bring out clearly the reasons why reliance cannot be placed on the document. On perusal and careful consideration of the appellant submission I find merit in the arguments advanced in this behalf. The document is actually a photocopy seized from the premises of a third party and contents of this document cannot be verified independently as no original document of this nature has been found. The appellant has pleaded that a number of such photocopies can be prepared with malicious intent by the persons from whose custody the document has been recovered. Since the document has not been seized from the custody of the appellant it cannot beThe appellant has also painstakingly brought out that material facts like the payment by cheques as mentioned in the document are not mentioned in the actual sale deed executed on 29.09.2017 and registered under law. Further, the amounts mentioned in the sai....
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....[1998] 67 ITD 573 (Mad), etc in support. From the assessment order it is clear that the material collected by the AO from the said enquiry with the stamp vendor was never put before the appellant for his rebuttal. The ratios of various decisions cited supra including the one of the Hon. Jurisdictional H.C. can lead to only one conclusion that this indeed is a fatal flaw and the assessment order suffers from the vice of serious violation of natural justice. The AO has not brought on record any evidence in support of his claim that the appellant did pay a sum of Rs. 1,62,35,000/- over and above the value and amount mentioned in the registered sale deed for the purchase of property. of the assessment order I find that there is no confession from any of the sellers that he/they actually received Rs. 1,62,35,000/- in addition to amount mentioned in the registered sale deed. There is no such evidence coming from the person from whose custody and premises the impugned document has been seized. I also find that no corroborative evidence has been mentioned in the assessment order by the assessing officer. It is clear from the assessment order that the only evidence which h....
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....sing Officer. 8. The learned Counsel for the assessee reiterated the submissions made before the learned CIT(A) and prayed that the impugned order passed by the learned CIT(A) be upheld. 9. We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. We find that the Assessing Officer made addition on the basis of photocopy of sale deed where there is no signature of the assessee which was found at the residential premise of Shri Parag Suresh Vakharia. Further we find that the case of the assessee before us is, the assessee purchased a property through a registered sale deed dated 15/04/2017, for a consideration of Rs. 1,41,00,000, from Shri Wardhman Sahakari Griha Nirman Samiti Ltd. The assessee submitted that the no addition can be made on the basis of photocopy of sale agreement in view of the judgment of the Hon'ble Supreme Court in Moosa S. Madha and Azam S. Madha v/s CIT, 89 ITR 65 (SC). It is the argument of the learned counsel for the assessee that once the property is acquired through a registered sale deed, it is a conclusive proof for the sale mentioned in the sale deed which is final unless contr....