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2017 (10) TMI 422 - AT - Income TaxAddition u/s 69B - unexplained investment - purchase of land unexplained - additions based on agreement - Held that - Section 69B cannot be invoked on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account. No action is called for in a case of transaction consequential to the transaction mentioned in the agreement seized. There is no evidence of unaccounted investment by the assessee. See Sh. Kulwinder Singh and M/s Harman Builders Pvt. Ltd. 2016 (8) TMI 1282 - ITAT AMRITSAR
Issues Involved:
1. Deletion of additions made by the Assessing Officer under Section 69B of the Income Tax Act. 2. Reopening of cases under Section 148 of the Income Tax Act. 3. Admissibility and reliability of evidence seized from third parties. Detailed Analysis: 1. Deletion of Additions under Section 69B: The primary issue in these appeals was the deletion of additions made by the Assessing Officer (AO) under Section 69B of the Income Tax Act. The AO had made additions based on a photocopy of an agreement seized during a search of M/s Punjab Iron & Steel Co. Ltd. (PISCO), which indicated a higher land purchase price than what was recorded by the assessees. The Tribunal found that the assessments were reopened because the assessees had purchased land from PISCO, and the seized agreement suggested a higher purchase price. However, the Tribunal noted several critical points: - The seized agreement was a photocopy, not the original. - It was seized from a third party, not the assessees. - Both the seller and the buyer, as well as the witnesses, refused to identify the agreement. - The assessees were not parties or witnesses to the agreement and had no relation to it. - The assessees purchased the land at the prevalent circular rate and paid due stamp duty, with the purchase deeds registered with the Registrar at Jalandhar. The Tribunal emphasized that the burden of proving the understatement of sale consideration lies with the department, which was not discharged in this case. The AO's presumption based on the seized agreement did not materialize into conclusive evidence against the assessees. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the additions, finding no positive evidence of unaccounted investment by the assessees. 2. Reopening of Cases under Section 148: The assessees had filed cross-objections challenging the reopening of their cases under Section 148 of the Income Tax Act. However, the assessees' representative withdrew these cross-objections, and the Tribunal dismissed them as withdrawn. 3. Admissibility and Reliability of Evidence: The Tribunal extensively discussed the admissibility and reliability of evidence, particularly documents seized from third parties. It referred to several judicial pronouncements, including: - DCIT Vs. D.N. Kamani (HUF): Highlighted that documents seized from third parties must be specific and descriptive enough to establish the fact of unaccounted sale consideration. - CIT Vs. Ram Narain: Emphasized that suspicion cannot replace evidence. - Amarjit Singh Bakshi (HUF) vs. ACIT: Stressed that documents not recovered from the assessee and not confronted to the assessee cannot justify additions. - CIT Vs. Smt. Suraj Devi: Reinforced that the primary burden of proof lies with the Revenue to show understatement or concealment of income. The Tribunal concluded that the AO's reliance on the photocopy of the agreement seized from a third party was insufficient to justify the additions under Section 69B. The evidence did not meet the required standard to prove that the assessees had made unaccounted investments. Conclusion: The Tribunal upheld the CIT(A)'s orders, dismissing the revenue's appeals and the assessees' cross-objections. The Tribunal found that the additions made by the AO under Section 69B were not supported by conclusive evidence, and the burden of proof was not discharged by the department. The assessees' transactions were conducted at the prevalent circular rates, with due stamp duty paid and purchase deeds duly registered, negating the presumption of unaccounted investment.
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