2023 (8) TMI 917 - AT - Income Tax

Unexplained money u/s 69A - Unexplained investment u/s 69 - seized document found during search from third party relied upon - credit of said amount not disclosed by the assessee in its books of accounts - burden of proving receipt of cash -presumption u/s. 292C - HELD THAT - Presumption u/s 292C (1)(i) cannot be drawn against the assessee on the basis of the document found in the possession of third party i.e. Shri Naresh Gupta who was a deed writer in the present case. Addition made by the Assessing Officer as unexplained money u/s . 69A of the Act, which applies to a situation when assessee is found to be the owner any money bullion etc. not recorded in the books of accounts of assessee. As per facts gathered and alleged by the Assessing Officer we note that the main contention of the Assessing Officer based on unsigned ATS is that the credit of cash payment was not found to be recorded in the books of accounts of assessee which attracts the provision of section 69 of 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.

Summary

Issues Involved:
1. Deletion of addition of Rs. 1.50 Cr as unexplained money under section 69A of the IT Act, 1961.
2. Validity of unsigned Agreement to Sell (ATS) as evidence.
3. Applicability of presumption under section 292C of the IT Act, 1961.

Summary:

1. Deletion of Addition of Rs. 1.50 Cr as Unexplained Money under Section 69A of the IT Act, 1961:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 1.50 Cr made as unexplained money under section 69A by ignoring the seized document found during the search. The Tribunal upheld the CIT(A)'s decision, stating that the unsigned ATS found in the computer of a deed writer, who was a third party, could not be used to invoke section 69A. The Tribunal emphasized that there was no evidence of any cash exchange between the parties, and the ATS did not culminate into a registered sale deed. The Tribunal also noted that the assessee had shown capital gains in the return of income for AY 2015-16 from the actual sale of the property to a different party.

2. Validity of Unsigned Agreement to Sell (ATS) as Evidence:
The Revenue argued that the unsigned ATS should be considered valid evidence since other details in the ATS matched the particulars of the parties and bank account transactions. However, the Tribunal agreed with the CIT(A) that the unsigned ATS, which was not on any stamp paper and was denied by both parties, could not be considered valid evidence. The Tribunal referred to various judicial precedents, including the ITAT Delhi Bench's decision in the case of Shri Bhagat Singh vs. ACIT, which held that no addition could be sustained based on an unsigned draft agreement found from a third party without corroborative evidence.

3. Applicability of Presumption under Section 292C of the IT Act, 1961:
The Tribunal examined the legal position regarding the presumption under section 292C, which states that documents found in possession or control of a person during a search may be presumed to belong to such person. The Tribunal noted that this presumption is discretionary and rebuttable. In this case, the unsigned ATS was found in the possession of a third party (deed writer), and both parties denied its existence. The Tribunal concluded that the presumption under section 292C could not be applied to the assessee without corroborative evidence. The Tribunal also highlighted that the burden of proving receipt of cash under the ATS was on the Revenue, which failed to conduct an independent inquiry or provide any evidence to support the addition.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 1.50 Cr. The Tribunal found no valid reason to interfere with the CIT(A)'s findings and concluded that the addition could not be sustained based on an unsigned, unexecuted draft agreement found from a third party without corroborative evidence. The appeal of the Revenue was dismissed.