2021 (11) TMI 80 - AT - Income Tax

Reopening of assessment u/s 147 - Addition of payment made from an unaccounted sources - Addition based on soft copy of a deed found from the computer of deed writer - HELD THAT - No copy signed by the assessee and seller parties with a transaction has been found during the course of the search of Sh Naresh Gupta. The deed writer, himself has denied of having aware of any money transaction between the parties, which was recorded in the computer. He stated during the course of search that amount mentioned may be as a result of cut/paste of various documents in the computer. We find that the Assessing Officer has made addition only on the basis of said unsigned deed and no corroborative evidences have been brought on record to show that purchase transaction was executed by the assessee at the rate mentioned in the computer of Sh. Naresh Sharma. Assessing Officer has not carried out any inquiries from the seller of the land also. The assessee cannot be penalised merely on the basis of an unsigned deed found from the premises of a third-party. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any error in the same. - Decided in favour of assessee.

Summary

Issues:
Addition made from undisclosed sources based on unsigned deed found during search operation.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2007-08. The case involved an addition of ?1,90,50,000 made by the Assessing Officer based on a soft copy of a deed found during a search operation. The deed indicated a land purchase transaction at ?2,90,50,000, whereas the recorded value in the books was ?1 Crore. The Commissioner of Income-tax (Appeals) deleted the addition, stating that the unsigned deed found during the search was not sufficient evidence to prove undisclosed income. The deed writer admitted discrepancies in the documents due to cut/paste errors and stated he was not aware of the transactions. The Commissioner relied on various case laws supporting the assessee's contention and emphasized the need for corroborative evidence to establish undisclosed income.

The Tribunal upheld the Commissioner's decision, noting that the Assessing Officer solely relied on the unsigned deed without further investigation or corroborative evidence. The Tribunal highlighted that no signed document confirming the transaction amount was found during the search. The deed writer's statements discrediting the transaction details in the seized document were crucial in the decision. The Tribunal agreed with the Commissioner that the Revenue failed to prove the entries represented undisclosed income. Additionally, the Tribunal emphasized the importance of following legal procedures and the burden of proof resting on the Department to establish undisclosed income. The Tribunal found no error in the Commissioner's reasoning and dismissed the Revenue's appeal.

In conclusion, the Tribunal affirmed the Commissioner's order, emphasizing the lack of concrete evidence to support the addition made by the Assessing Officer. The decision highlighted the necessity of corroborative evidence and proper investigation to establish undisclosed income, especially when relying on unsigned documents found during a search operation. The Tribunal's decision underscored the importance of following legal principles and ensuring the burden of proof is met by the Department in tax assessments.