2019 (3) TMI 1122 - AT - Income Tax

Assessment u/s 153A - Unexplained investment - property purchased with joint owners - presumption under section 132(4A) read with section 292C - property transaction was executed with portion paid in cheque and rest in cash - Seized document was found at a place other than the place where the search on the assessee has been carried out - HELD THAT - The assessee, along with Mrs. Aroma Jain, has purchased a property from M/s Chawla Buildwell Pvt. Ltd. Thus, there can indeed be an inference as to that what is recorded in the seized document may be relatable to property purchased. However, to reach such a conclusion, one needs to undertake verification, which, unfortunately, has not been done in this case. We also note from this document that it is not clear as to how the AO worked out the figure of ₹ 2,60,00,000/- as being the value of total consideration. It is equally surprising that the AO did not make any enquiry from the seller. Nor any action apparently has been taken against the seller. We are also in agreement with alternative contention of the AR that this property has been purchased in joint-names and, therefore,e the entire addition cannot be made in the hands of the assessee unless the AO is able to bring on record any material to substatntiate that the entire money was paid by the assessee. All these issues were required to be examined by the lower authorities which both the AO and the Ld. CIT (A) has failed to consider. At the same time, we also note that the contention of the Ld. AR that the presumption under section 132(4A) read with section 292C is available only against the person from whose possession or control such document is found is also correct. From the facts stated hereinabove, apparently, it appears that the seized document was found at a place other than the place where the search on the assessee has been carried out. Thus, in these circumstances, it cannot be said that this document was found in possession or control of the assessee. If that be so, then the presumption under section 132(4A) will not be available In case such document was not found in the course of the search on the assessee then the same cannot be the subject matter for addition in assessment proceeding under section 153A of the Act. Since, the facts on record are not clear and all the issues as stated hereinabove have not been taken into due consideration by the lower authorities, we deem it fit to set aside the order passed by the authorities below to the file of the AO with a direction to examine each of the above issues - Appeal of the Revenue stands allowed for statistical purposes.

Summary

Issues Involved:
1. Deletion of addition of ?2,09,50,000/- as unexplained investment by the CIT (A).
2. Jurisdiction of the AO to make additions based on documents not found in the assessee's premises.
3. Applicability of the presumption under section 132(4A) read with section 292C of the Income Tax Act, 1961.

Detailed Analysis:

1. Deletion of Addition of ?2,09,50,000/- as Unexplained Investment:
The primary issue in the appeal is the deletion of an addition of ?2,09,50,000/- made by the Assessing Officer (AO) on account of unexplained investment. The AO based this addition on a document seized from premises 697, Udyog Vihar, Phase-V, Gurgaon, which he believed related to the purchase of a property by the assessee. The AO inferred that the property transaction was executed for ?2,60,00,000/-, with ?49,50,000/- paid by cheque and the balance ?2,09,50,000/- in cash, which was treated as unexplained investment. The CIT (A) deleted this addition, holding that the AO had not brought any corroborative evidence to substantiate the allegation and had made assumptions without proper investigation or verification from the alleged seller.

2. Jurisdiction of the AO to Make Additions Based on Documents Not Found in the Assessee's Premises:
The assessee contended that the addition was unsustainable as the document was not found during the search in the assessee's premises. The search on the assessee was conducted at B-1/118, IInd Floor, Paschim Vihar, New Delhi, and the seized document was from a different location. The CIT (A) initially rejected the legal contention but deleted the addition on factual grounds. The ITAT noted that the AO had drawn adverse inferences without proper verification and that the document was not found in the possession or control of the assessee. Hence, the addition based on such a document was beyond the jurisdiction of the AO.

3. Applicability of the Presumption under Section 132(4A) Read with Section 292C:
The Revenue argued that the presumption under section 132(4A) read with section 292C was applicable, which assumes that the document belongs to the person from whose possession it was found and that its contents are correct. However, the assessee countered that this presumption was not applicable since the document was not found in the possession or control of the assessee. The ITAT agreed with the assessee, stating that the presumption under section 132(4A) could not be applied as the document was found at a different location and not during the search on the assessee. Therefore, the addition based on this document was not justified.

Conclusion:
The ITAT concluded that the AO had not conducted necessary verification and had made additions based on assumptions. The document was not found in the possession of the assessee, and the presumption under section 132(4A) was not applicable. The ITAT set aside the orders of the lower authorities and directed the AO to re-examine the issues, providing the assessee with adequate opportunity before passing a fresh assessment order. The appeal of the Revenue was allowed for statistical purposes.