2024 (8) TMI 1225 - AT - Income Tax

Addition u/s 69 - unexplained investment in agricultural land at Ratlam - addition based on presumption v/s evidence - HELD THAT - The sale-deed is executed and registered by stamps authority and cannot be brushed aside. Secondly, we find that the bank statement of Stare Bank of India clearly mentions the details of debit entries of those six cheques cleared on various dates as narrated earlier. The bank statement is also a document issued by bank and cannot be brushed aside. Thus, from these documents, it is clearly established that the entire consideration was paid only through cheques. Undoubtedly this clearly shows that there is no passing of cash between the parties. So far as clearance of cheques after about two years is concerned, Ld. AR has made a submission that this was due to a mutual understanding of parties. Ld. AR has further made a clear submission standing at the bar that both parties belong to Dowdy Bohra Community of Muslims where interest is not charged following customary practice. These factors pointed by Ld. AR certainly make a sense and dislodge the apprehensions made by authorities. Lower authorities have no basis or proof to establish that the assessee or his brother had made any cash payment to the sellers and subsequently recovered the same on clearance of cheques. Such a conclusion taken by authorities is merely based on apprehension, presumption or suspicion. It is an established judicial wisdom that presumption howsoever strong can never become an evidence. When we have two sets of evidence, one documentary evidence in the form of registered-deed and bank statement showing the factum of payment through post-dates cheques and other a mere presumption that cash mush have exchanged the hands, we must necessary give credence to the documentary evidences and should not be guided by mere presumption. Assessee appeal allowed.

Summary

Issues Involved:
1. Addition of Rs. 37,75,000/- as unexplained investment.
2. Treatment of Rs. 37,75,000/- as unexplained cash in hand.
3. Legality of reopening the assessment under Section 147.
4. Reopening assessment without prior approval under Section 151.

Detailed Analysis:

1. Addition of Rs. 37,75,000/- as Unexplained Investment:
The assessee challenged the addition of Rs. 37,75,000/- made by the Assessing Officer (AO) under Section 69 of the Income-tax Act, 1961, on the grounds that the addition was based on surmises and conjectures. The assessee argued that the investment in agricultural land at Ratlam was made through six post-dated cheques, which were cleared from the assessee's bank account on various dates in 2013. The documentary evidence, including the registered sale-deed and bank statements, corroborated this claim. The Tribunal found that the AO and CIT(A) had made the addition based on mere presumption without any concrete evidence of cash transactions. Consequently, the Tribunal deleted the addition of Rs. 37,75,000/-.

2. Treatment of Rs. 37,75,000/- as Unexplained Cash in Hand:
The CIT(A) upheld the AO's addition by treating the amount as unexplained cash in hand under Sections 69A/69B of the Act. The CIT(A) presumed that the assessee must have paid the consideration in cash and subsequently received the cash back when the post-dated cheques were cleared. The Tribunal rejected this presumption, stating that the authorities had no evidence to support such a conclusion. The Tribunal emphasized that no addition can be made on mere suspicion or presumption, citing judicial precedents. The Tribunal found that the documentary evidence clearly showed that the consideration was paid through cheques, and there was no passing of cash between the parties. Therefore, the Tribunal deleted the addition made by the authorities.

3. Legality of Reopening the Assessment under Section 147:
The assessee initially challenged the reopening of the assessment under Section 147 of the Act. However, during the hearing, the assessee did not press this ground. Consequently, the Tribunal dismissed this ground as non-pressed.

4. Reopening Assessment without Prior Approval under Section 151:
Similarly, the assessee challenged the reopening of the assessment without obtaining prior approval of the Principal Commissioner of Income Tax (Pr. CIT) as required under Section 151 of the Act. This ground was also not pressed by the assessee during the hearing and was dismissed by the Tribunal as non-pressed.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, deleting the addition of Rs. 37,75,000/- made by the AO under Section 69 of the Income-tax Act, 1961. The Tribunal found that the addition was based on mere presumption without any supporting evidence, and the documentary evidence clearly showed that the consideration for the land was paid through cheques. The grounds challenging the legality of the reopening of the assessment were dismissed as non-pressed. The order was pronounced in the open court on 05.02.2024.