TMI Blog2023 (8) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. As 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 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 provisions of Section 69 of the Act can be applied to tax the value of the investment made. CIT(A) was right in holding that no addition can be made and sustained only on the basis of unsigned unexecuted draft agreement to sale found from the premises of third party i.e. deed writer without any other collaborative evidence supporting the factum of receipt of cash by the assessee under the alleged document. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings recorded by the ld. CIT(A) and thus we uphold the same. Accordingly, grounds of revenue being devoid of merits are dismissed. - Shri Chandra Mohan Garg, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Revenue : Shri Subhra Jyoti Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the fact that all other details were exacting matching with the particulars of parties and bank account receipt/payments in this respect. 4. The ld. CIT(DR) has placed reliance on the following judgments and orders to support the addition made by the Assessing Officer u/s . 69 of the Act:- 1. [2021] 128 taxmann.com 414 (Delhi) Jatinder Pal Singh vs. DCIT, Central Circule-9. 2. [2021]f 126 taxmann.com 82 (Gujarat)- Heval Navinbhai Patel vs. ITO, Ward 3(2)(2). 3. [2019] 107 taxmann.com 464 (SC)- Krishan Kumar vs. ITO, Patiala 4. [2014] 49 taxmann.com 101 (Gujarat) CIT-1 vs. Sarwankumar Sharma. 5. [2014] 45 taxmann.com 276 (Allahadbad)- Swami Sharan Garg vs. CIT, Meerut. 6. [2005] 148 Taxman 569 (Madhya Pradesh)- Kantilal Prabhudas Patel vs. DCIT Investigation, Circle-2. 7. R. Malika vs CIT [2017] 79 taxmann.com 117(SC). 8. Ashokbhai H Jariwala vs ACIT [2017] 84 taxmann.com 196 (SC)/[2017] 250 taxman 14 (SC) 5. Replying to the above, the learned authorised representative of assessee (AR) submitted that the provision of section 69A of the Act cannot be invoked in a vacuum only on the standalone basis of a unsigned document found fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the residence of Sh. Naresh Gupta who is a deed writer and advocate by profession. (ii) In the hard disc seized from the residence of Sh. Naresh Gupta, an unsigned Agreement to Sell (ATS) between the appellant and M/s JPHLPL for the property belonging to the appellant, as per the details in the above table, was found. (iii) The appellant and M/s JPHLPL, both have denied the existence of this ATS as well as any amount of cash exchanged as mentioned in this ATS. There is no evidence on record that the amount of Rs. 1.5 cr. had actually exchanged hand between these two parties. (iv) The AO had invoked presumption us 292C against the appellant on the basis of the unsigned ATS seized from the third party. (v) The AO had not mentioned the section under which addition had been made by it, however from the wording of addition made, it appears that the addition had been made u/s 69A of IT Act, 1961. 5.3. Let us examine the legal position vis-a- vis the facts of the present case w.r.t presumption of section 292C. (i) Hon'ble Jurisdictional Delhi High Court vide its order dated 10.02.2016 in the case of Pr. CIT VS M/s Delco India Pvt. Ltd. reported at (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of fact, not a presumption of law. 5.3.2 The above judgments of various courts had held that the presumption available in section 292C of the Act is a rebuttable presumption, Mere possession of documents perse does not warrant any addition on the basis of values in non executed documents. The AO cannot make any addition simply on the basis of this presumption but need to bring other corroborative evidences on record. 5.4 There are other judicial pronouncements on the issue of burden of proof, corroborative evidences of actual payments, applicability of deeming provisions etc. in such circumstances. Some of these are as under: (i) The Hon'ble Madras High Court in the case of CIT vs. P.V. Kalyanasundaram (2006) 282 IT 259 (Madras) has held as under : The burden of proving actual consideration in such transaction is that of the revenue. The Tribunal had given factual finding and, inter alia, held that the Apex Court in K.P. Varghese v. ITO (19911 131 ITR 597 | 7 Taxman 13 held that the burden of proving actual consideration in such transaction is that of the revenue. The Assessing Officer did not conduct any independent enquiry relating to the value of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment had been made or not is a matter of fact and the same cannot be presumed. The ratio of the aforesaid decision is squarely applicable to the facts of the present case of the appellant. The AO has not been able to establish through any evidence that the appellant had, in fact, received any amount for which the addition had been made in the assessment order. Once this primary and basic condition of section 69/69A has not been fulfilled, as held by the Hon'ble High court in the above case, provisions of Section 69/69A of the Act cannot be applied. (iii) In the case of Pr. Commissioner of Income Tax-III, Ahmedabad Versus Vivek Prahladbhai Patel 2015 (12) TMI 1287 - GUJARAT HIGH COURT the hon'ble high court had held as under: - 8. For the reasons stated hereinabove, this court is in complete agreement with the findings recorded by the Tribunal upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. This section cannot be triggered on a mere presumption of the AO. When the legislature has unambiguously provided so, it is impermissible to substitute such a finding with a presumption about actual investment having been made by the assessee at a level higher than that depicted in the books of account. Only some positive and irrefutable evidence converts a presumption into a finding. Absent affirmative evidence, what remains is a mere supposition of unexplained investment etc., which cannot take the place of a finding of the AO towards unexplained investment. (v) In the case of CIT vs Dinesh Jain HUF, IT no. 610/2012, Dated 19.10.2012 (Del), the Court had held as under:- This Court in its order dated 28.9.2012 held that (a) Section 69B in ) terms requires the assessing officer to first prove that the assessee has actually expended an amount which he has not fully recorded in his books of account; (b) there has to be a finding that such amount was actually paid by the assessee over and above the declared consideration and the extra amount was not recorded in the assessees books of account; (c) the provisions of the Wealth Tax Act and Schedule III thereto ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of income tax assessment proceedings that although strict rules of Evidence Act do not apply to Income-tax proceedings, assessments cannot be made on the basis of imagination and guess work. Reference in this respect may be made to the judgment of Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 IT 775 (SC) and a host of Supreme Court and High Court's judgments thereafter on the subject. We, therefore, direct deletion of the sum of Rs. 17,00,892/- assessed by the Assessing Officer by way of half share of the Assessee in the alleged earnest money. 13. It is an admitted fact that the present Assessee had not signed the agreement in question and since the Assessee had not signed the agreement, no liability can be attributed qua that agreement towards the Assessee since he is not party to the agreement till he had signed the same. The mere fact that this agreement was found in the possession of the Assessee does not lead us anywhere. We find no hesitation in holding that this addition of Rs. 17,00,892/- made by Assessing Officer is based on surmises and guess work and on this point case of Dhakeswari Cotton Mills Ltd v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, namely, that if an amount was receivable during the previous year it must be deemed to have been received during that year. So too, in the instant case, the fiction serves the purpose, if the said compensation was deemed to be the profits of the previous year or of the year in which it was received. This fiction cannot be enlarged by giving the expression received a technical meaning which it may bear in the mercantile system of accountancy. (x) In the case of ACIT vs. M/s Vatika Greenfield (P) Ltd. IT 113 (AT) (Del), the court had held as under:- 21. A conjoint reading of the above decisions suggests that taxing statutes have to be interpreted strictly. In the deeming provision what is prescribed is to be deemed and deeming provision cannot be extended beyond the legislative scope. The presumption as envisaged in s. 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. If it is so, then unless some evidence/material is brought on record by the Revenue to say that what is stated in the seized document is not correct, st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e presumption of section 292C cannot be raised and the deeming provisions of sections 68/69/69/69B/69C cannot be applied, without evidences of actual payments/investments or any adverse statements on record. Thus, the presumption u/s 292C the presumption is rebuttable and cannot be raised in the case of the appellant, in case the document have been found from the premises of the third party, unless there are corroborative evidences. Further, the deeming provision of section 69/69A cannot be invoked against the sellers/buyers only on presumption, in the absence of any evidence of money actually paid/received had been brought on record. (i) The above judgments of various courts had held that the presumption available in section 292C of the Act is a rebuttable presumption, mere possession of documents perse does not warrant any ran addition and the AO cannot make any addition simply on the basis of this presumption. In the case laws cited above, the courts have mentioned that presumption cannot be made for the value mentioned in ATS even if it belongs to the same parties. (ii) In order to invoke the provisions of Section 69/69A of the Act, the AO ought to have established th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of search or survey proceedings. But, in the instant case, the said document in the form of draft agreement to sell has been found from the possession of third party i.e. Sh. Naresh Gupta. Hon'ble Delhi High Court in the case of Vinita Chaurasia (supra) in the identical circumstances held that presumption can be drawn only against the search person. The relevant part of the judgment is reproduced as under: 24. In the present case, however, it is nobody s case other than the Revenue that the document found in the premises of Mr. Lalit Modi belongs to the Assessee. Mr. Shivpuri referred to Section 292 C of the Act for the purposes of drawing two presumptions (i) the one contained in Section 292 C (1) (i) to the effect that the document found in possession of a person should be presumed to belong to such person.As far as this is concerned, clearly, since the document was found in possession of Mr. Modi, the presumption, if at all, is attracted only qua Mr. Lahti Modi and not the Assessee herein. 5.9 The finding of the Assessing Officer the document has been requisitioned under section 132A of the Act and, thus, provisions of section 292C(2) would apply in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy, I do draft various documents under the instruction of Clients. Sometimes under the instructions of seller, sometimes under the instructions of Purchaser and sometimes under the instructions of Real Estate Agents. I do not remember as to under whom instruction I drafted the document picked-up from my hard disk, regarding property No. J-31, situated N.D.S. E.-I, New Delhi. That during the course of drafting of various instruments, data from the Master Document is copied and sometimes during such cutting/ pasting, data of some other file is also copied by mistake, which shows various discrepancies/variance as per the actual figures/ amounts/ terms. Therefore simply picking Up file from the hard disk of the Computer will not reflect true nature of the contract. True nature of the contract can only be gathered from the contracting parties only. Regards Sd/- NARESH GUPTA (ADVOCATE) 5.12 On perusal of the statement and letter of Sh. Naresh Gupta, we find that though he initially admitted that draft document was prepared on the direction of the assessee, however, he has denied of any knowledge of information/actual details of money transaction between the buyer and asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of ATS seized (without any signatures from the third party) and the deed writer from whom it had been seized, are same as in the case of the appellant. In fact in the case of the appellant, the ATS did not culminate into any sale deed, whereas in the above case, it culminated into sale deed at a lower value than mentioned in the ATS, with same parties as in ATS. After the detailed discussion and various case laws, the ITAT Delhi had concluded 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. This decision of the ITAT Delhi is squarely applicable to the facts of the present case. Therefore, respectfully following the decision of ITAT Delhi in the case of Shri Bharat Singh Vs ACIT, New Delhi, it is held that no addition can be sustained only on the basis of the unsigned unexecuted draft agreement to sell found from the premises of the third party and that too without any corroborative evidences. Accordingly, the addition made by the AO of Rs 1,50,00,000/- is hereby deleted and this ground of appeal is allowed. 8. At the very outset, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument found in the possession of third party i.e. Shri Naresh Gupta who was a deed writer in the present case. Therefore the case laws relied by the ld. CIT(DR) having distinct and dissimilar facts and circumstances are not applicable to the present case in favour of the assessee. 11. In our humble view, the burden of proving receipt of cash by the assessee under ATS is that of the revenue. The Hon ble Supreme Court in the case of K.P. Varghese v. ITO [1991] 131 IT 597 / 7 Taxman 13 held that the burden of proving actual consideration in such transaction is that of the revenue. The Assessing Officer did not conduct any independent enquiry relating to the value of the property purchased. He merely relied upon the ATS copy of unsigned ATS found and seized from the third party i.e. deed writer without any examination of the second party i.e. J.P Holding. If he would have taken independent enquiry by referring the matter to the Valuation Officer, the controversy could have been avoided. Failing to refer the matter was a fatal one. 12. In the present case the Assessing Officer had made addition of Rs. 1.50 crore by observing that the credit of said amount not disclosed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 provisions of Section 69 of the Act can be applied to tax the value of the investment made. 15. In the case of Shri Bhagat Singh vs. ACIT (supra), under identical facts and circumstances the co-ordinate bench held that no addition can be sustained only on the basis of the unsigned draft agreement to sale found from the premises of the third party and that too without any other collaborative evidence showing the cash payment as mentioned therein. However, we also note that the details of cheque mentioned in the ATS has been accepted and confirmed by the assessee which has not been disputed by the Assessing Officer but the assessee as well as the buyer has confirmed that no amount of in cash has been received by the assessee from the buyer. This fact has not been controverted by the Assessing Officer that the advance of Rs. 50 lac received through cheque from M/s. J P Holding Leasing Pvt. Ltd. was returned through banking channel on 18.12.2010 vide cheque no. 118 drawn on syndicate bank an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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