2019 (2) TMI 728 - HC - Income Tax

Undisclosed investment u/s 69 - loose papers were found which related to the sale transactions of flats - Tribunal deleted the addition - Held that - Loose papers does not have any signature of any person nor did it contain name of the respondent. We note that the loose document is a dumb document as it does not give any particulars of the persons involved in the alleged transaction. Thus, it is not open to the Assessing Officer to draw inferences from the document by interpreting the words Sh to mean cash payment and Q to mean cheque payment without any evidence on record. The CIT(A) as well as the Tribunal have concurrently rendered a finding of fact, which is not shown to be perverse in any manner. No substantial question of law.

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act for Assessment Year 2007-08 - Addition of undisclosed investment under Section 69 of the Act.

Analysis:
The case involved an appeal challenging the order passed by the Income Tax Appellate Tribunal regarding the addition of undisclosed investment under Section 69 of the Income Tax Act for the Assessment Year 2007-08. The Assessing Officer reopened the assessment based on information obtained during a search operation in the case of a real estate group. It was alleged that the assessee had made a cash payment of ?6.84 crores to purchase flats, which was treated as undisclosed income. The Commissioner of Income Tax (Appeals) examined the evidence and found that the loose papers relied upon did not have relevant details like signatures or names of the parties involved in the transaction. Both the builder and the assessee denied making or receiving any cash payments for the flat purchase. Consequently, the CIT(A) allowed the appeal of the respondent.

Upon further appeal by the Revenue, the Tribunal upheld the decision of the CIT(A) after examining the records. The Tribunal found that the loose papers did not provide substantial evidence to support the claim of cash payments made by the assessee. The High Court concurred with the findings of the lower authorities, emphasizing that the loose document lacked essential details and could not be used to infer cash transactions without concrete evidence. The Court noted that interpreting vague references on the document as cash payments without any supporting proof was unjustified. As both the CIT(A) and the Tribunal had arrived at a factual conclusion based on the lack of evidence, the Court held that the issue did not raise any substantial question of law and dismissed the appeal.

In conclusion, the High Court upheld the decision of the lower authorities, dismissing the appeal and emphasizing that the loose papers did not provide sufficient evidence to support the addition of undisclosed investment under Section 69 of the Income Tax Act. The Court highlighted the importance of concrete evidence in making such determinations and stressed that drawing inferences from vague documents without proper substantiation was not permissible under the law.