2024 (4) TMI 21 - HC - Income Tax

Determination of sale consideration - reliance on photocopy of the alleged agreement to sell which contains, inter alia the signatures of the assessee as a purchaser of the property - ITAT deleted addition - Whether the photocopy of a document, some part of information/facts recorded on it found to be correct in verification, could be treated as a valid document or not in the absence of the original? - HELD THAT - Hon ble Supreme Court in the case of S. Ganga Saran Sons (P) Ltd. 1981 (4) TMI 5 - SUPREME COURT has held that the Income Tax Officer must rely upon relevant material to form a reason to believe escapement of income and such belief should not be arbitrary or irrational. Hon ble Supreme Court in the case of Moosa S. Madha Azam S. Madha 1973 (2) TMI 5 - SUPREME COURT was of the opinion that photostat copies have very little evidentiary value. Admittedly, the entire foundation is laid on the basis of the photocopy of the alleged agreement to sell dated 5 March 2010. The original copy of the said document has not seen the light of the day. Further, there is no other evidence to support the veracity of the recitals made in the aforesaid alleged agreement. Therefore, under the facts of the present case, the same cannot be construed to be a sustainable ground for making addition to the income of the assessee. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of photocopy as evidence in the absence of the original document.
2. Justification for addition to income based on a photocopy of an alleged agreement to sell.
3. Burden of proof regarding the authenticity of the photocopy.

Summary:

Validity of Photocopy as Evidence:
The primary issue was whether a photocopy of a document, with some verified information, could be treated as a valid document in the absence of the original. The High Court emphasized that the entire foundation of the addition to the assessee's income was based on a photocopy of an alleged agreement to sell dated 5 March 2010, which was never verified by the original document. The Court referenced the Supreme Court's stance in cases like S. Ganga Saran & Sons (P) Ltd. v. ITO and Moosa S. Madha & Azam S. Madha v. CIT, highlighting that photocopies have very little evidentiary value and cannot be solely relied upon for making substantial additions to income.

Justification for Addition to Income:
The Assessing Officer (AO) added Rs. 9,00,00,000/- to the assessee's income based on the photocopy, alleging the land was purchased for Rs. 11,00,00,000/-. However, the CIT(A) restricted this addition to Rs. 1,37,00,000/- based on the same photocopy, attributing the amount to the relevant Assessment Year (AY). The ITAT overturned this, ruling that any addition based solely on a photocopy, whose authenticity was challenged and not verified, is unsustainable. The High Court upheld the ITAT's view, reinforcing that without the original document or additional supporting evidence, such an addition is unjustifiable.

Burden of Proof:
The Court noted that the AO failed to establish the authenticity of the photocopy. The assessee contended that the document was manipulated by her estranged husband, and the AO did not adequately verify this claim. The Court reiterated that the burden of proof lies with the Revenue to establish the authenticity of the document before shifting the onus to the assessee. The ITAT's decision was upheld, emphasizing that the Revenue cannot rely on unverified photocopies to substantiate additions to income.

Conclusion:
The High Court dismissed the Revenue's appeals, stating that the ITAT rightly concluded that sustaining an addition based on an unverified photocopy of an alleged agreement to sell is unwarranted and unjustifiable. The appeals did not raise any substantial question of law, and the pending applications were also disposed of.