2024 (10) TMI 702 - AT - Income Tax

Unexplained investment u/s 69B - addition on account of cash payment made on purchase of land - HELD THAT - We find that the Assessing Officer made addition by taking view that assessee has purchased the above land which is shown in the satakat found from the hard disc of Turnish Kania Advocate. All the particulars mentioned on the impugned satakat are exactly matching with the ultimate sale deed of the land. It was held that it cannot be said that Satakhat has no evidentiary value which contained details of seller and buyer which are actually recorded in a reversed manner but other specification like measurement of land and location are as per registered sale deed. We find that the assessee has furnished detailed written submission on 19/06/2018 and again on 21/01/2021, copy of acknowledgement of such uploading as well as receipt of such submission is already placed on record. Thus, the observation of ld. CIT(A) is contrary to the facts. However, the detailed written submission filed by assessee has already been recorded by us on the copy of copy of submission placed. As in Kalpesh Mafatlal Patel 2022 (12) TMI 936 - ITAT SURAT on the basis of similar draft Satakhat found from office of Tarnish B Kania, Advocate by holding that no specific query was raised in respect of impounded Satakhat from Tarnish B Kania, Advocate and held that no addition can be made in respect of unsigned, undated Satakhat found from a person not connected with assessee. Assessee appeal allowed.

Summary

Issues Involved:

1. Validity of reopening the assessment under Section 147 of the Income Tax Act.
2. Addition of Rs. 1.19 crore as unexplained investment under Section 69B of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Validity of Reopening under Section 147:

The primary issue concerns the reopening of the assessment under Section 147 of the Income Tax Act. The assessee challenged the reopening, arguing that the reasons recorded were factually incorrect and based on an unsigned and undated Satakhat obtained from a third party's computer during a survey action. The assessee contended that there was no tangible material to form a belief that income had escaped assessment, and the reasons were recorded mechanically without proper application of mind. The assessee relied on various case laws to support this contention.

The CIT(A) upheld the reopening, stating that the assessment was based on tangible material found during the survey action, which included a Satakhat indicating a cash payment. The CIT(A) concluded that the Assessing Officer had a justified reason to believe that income had escaped assessment.

However, the Tribunal found that the reopening was not justified as there was no live link or close nexus between the material before the Assessing Officer and the alleged escapement of income. The Tribunal noted that similar cases had been decided in favor of the assessee, where the reopening was held to be bad in law due to reliance on unsigned and undated documents found in a third party's possession. Thus, the Tribunal concluded that the reopening was not valid.

2. Addition of Rs. 1.19 Crore as Unexplained Investment:

The second issue involved the addition of Rs. 1.19 crore as unexplained investment under Section 69B of the Income Tax Act. The Assessing Officer made this addition based on the discrepancy between the registered sale deed and the Satakhat, which suggested a higher cash payment. The CIT(A) confirmed the addition, stating that the assessee did not provide any satisfactory explanation.

The Tribunal, however, found that the addition was made without any corroborative evidence. The Tribunal observed that the Satakhat was an unsigned, undated, and unstamped document found in a third party's possession, which had no evidentiary value. The Tribunal referred to similar cases where such additions were deleted due to lack of evidence and corroboration. The Tribunal also noted that the Hon'ble Jurisdictional High Court had upheld decisions where similar additions were deleted, emphasizing that such documents have no legal evidentiary value.

In light of these findings, the Tribunal directed the Assessing Officer to delete the entire addition of Rs. 1.19 crore, thereby allowing the appeal in favor of the assessee.

Conclusion:

The Tribunal allowed the appeal, concluding that both the reopening of the assessment and the addition of Rs. 1.19 crore were not justified. The Tribunal's decision was based on the lack of tangible material and corroborative evidence, as well as precedents from similar cases. The order was announced in open court on 10th October 2024.