2022 (11) TMI 314 - AT - Income Tax

Addition u/s 69A - CIT(A) deleted the addition - In search proceedings data retrieved from the hard disk revealed undated, unsigned and unexecuted Draft Deed and draft cash receipt relating to the transaction of sale of property between assessee and Shri Munish Arora - HELD THAT - While deleting the addition, we find that the Ld. CIT(A) was guided by the fact that the addition was made on the basis of undated, unsigned and unexecuted Draft Deed and draft cash receipt retrieved from the hard disk of Shri Naresh Gupta, there being no 3rd party confirmation or corroborating evidence of the receipt of cash. We do not agree with the reasoning given by the CIT(A) for deleting the addition. We find that A.O. has noted that the Draft Deed retrieved from the hard disk showed that the major constituents like the Vendor, Vendee, the name of the shareholders and their shareholdings, the sale consideration were exactly similar in the Draft Deed and original Sale Deed executed by the assessee. In the Draft Deed there was mention about the part of sale consideration of Rs.5 crore paid by Cheque No.222546 dated 16.04.2010 drawn on Bank of Maharashtra, Greater Kailash which matched with the part of sale consideration mentioned in the original Sale Deed executed by the assessee. Thus, when the part of the sale consideration of Rs.5 crores along with the date of cheque, its number and the bank on which it was drawn matched with the Draft Agreement, then this material evidence cannot be simply ignored and brushed aside and overlooked by holding that the Draft Agreement was undated, unstamped and, therefore, cannot be relied upon. A bare reading of Section 69A makes it clear that where the property described under section 69A of the I.T. Act, 1961 is not recorded in the books of account, if any, maintained by the assessee from any source of income and the assessee does not offer any explanation about the nature and source of acquisition of such property and the explanation offered is not satisfactory in the opinion of A.O, then the value of such property would be deemed to be the income of the assessee for such financial year. We find that in the case of Commissioner of Income Tax vs., Bimal Parkash Gupta 1989 (1) TMI 42 - PUNJAB AND HARYANA HIGH COURT has held that the expression income as used in Section 69A has a wide meaning and means anything which come in or resulted in gain. The case law relied upon by the assessee are distinguishable on facts and, therefore, not applicable to the facts of the present case - we are of the view that the Ld. CIT(A) was not justified in deleting the addition. We, therefore, set aside the order of Ld. CIT(A) and uphold the order of A.O. Thus, the ground of Revenue is allowed.

Summary

Issues Involved:

1. Deletion of addition of Rs. 4,00,00,000/- under Section 69A of the Income Tax Act.
2. Validity of assumption of jurisdiction under Sections 147/148 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 4,00,00,000/- under Section 69A of the Income Tax Act:

The Revenue challenged the deletion of an addition of Rs. 4 crores made by the Assessing Officer (A.O.) under Section 69A of the Income Tax Act, which was found during a search operation on the AKN Group. A hard disk retrieved from Shri Naresh Gupta's premises indicated that the assessee had received Rs. 4 crores in cash from Shri Munish Arora for the sale of property. The A.O. issued a notice to the assessee, who denied receiving any cash. However, the A.O. noted that the draft deed found during the search had major constituents matching the original sale deed executed by the assessee, including a tranche of payment of Rs. 5 crores by cheque, which was reflected in both the draft and original deeds. The A.O. concluded that the draft cash receipt of Rs. 4 crores was indeed executed by the assessee and made the addition under Section 69A.

The Ld. CIT(A) deleted the addition, stating that the documents relied upon were undated, unsigned, and unexecuted, thus lacking evidentiary value. The CIT(A) also noted that the documents were not found in the possession of the assessee and that the A.O. did not examine the buyer, Shri Munish Arora, to confirm the cash payment. The CIT(A) further argued that Section 69A could not be invoked as the assessee was not found to be the owner of any money, bullion, jewelry, or other valuable articles.

The Tribunal disagreed with the CIT(A)'s reasoning, noting that the draft deed and original sale deed had matching details, including the cheque number and amount, which could not be ignored. The Tribunal held that the provisions of Section 69A were applicable as the expression "income" under this section has a wide meaning, encompassing anything that results in gain. The Tribunal thus set aside the CIT(A)'s order and upheld the A.O.'s addition of Rs. 4 crores under Section 69A.

2. Validity of Assumption of Jurisdiction under Sections 147/148 of the Income Tax Act:

The assessee challenged the validity of the assumption of jurisdiction under Sections 147/148 of the Income Tax Act. The assessee's counsel relied on the decision of the ITAT, Amritsar Bench, in the case of ITO vs. Arunkumar Kapoor, arguing that the proceedings should have been initiated under Section 153C instead of Section 148.

The Tribunal found that the facts of the present case differed from those in the Arunkumar Kapoor case, where the issue was whether proceedings should have been initiated under Section 153C or Section 148. In the present case, the Tribunal found no merit in the assessee's argument and upheld the A.O.'s assumption of jurisdiction under Sections 147/148.

Conclusion:

The Tribunal allowed the Revenue's appeal, reinstating the addition of Rs. 4 crores under Section 69A, and dismissed the assessee's cross-objection challenging the jurisdiction under Sections 147/148.