Income Tax Appellate Tribunal - Delhi
Alka Mendiratta , Delhi vs Acit, Circle Cc 15, New Delhi on 8 March, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Ms. Astha Chandra, Judicial Member
ITA No. 1863/Del/2021 : Asstt. Year : 2016-17
ACIT, Vs Yash Pal Mendiratta,
Central Circle-15, House No. 10, Road No. 41, Punjabi
New Delhi-110055 Bagh, New Delhi-110026
(APPELLANT) (RESPONDENT)
PAN No. AAIPM3927A
CO No. 28/Del/2022 : Asstt. Year : 2016-17
Yash Pal Mendiratta, Vs ACIT,
House No. 10, Road No. 41, Punjabi Central Circle-15,
Bagh, New Delhi-110026 New Delhi-110055
(APPELLANT) (RESPONDENT)
PAN No. AAIPM3927A
ITA No. 1864/Del/2021 : Asstt. Year : 2016-17
ACIT, Vs Alka Mendiratta,
Central Circle-15, House No. 10, Road No. 41, Punjabi
New Delhi-110055 Bagh, New Delhi-110026
(APPELLANT) (RESPONDENT)
PAN No. AALMP5560E
CO No. 25/Del/2022 : Asstt. Year : 2016-17
Alka Mendiratta, Vs ACIT,
House No. 10, Road No. 41, Punjabi Central Circle-15,
Bagh, New Delhi-110026 New Delhi-110055
(APPELLANT) (RESPONDENT)
PAN No. AALMP5560E
Assessee by : Sh. Amit Goel, CA &
Sh. Pranav Yadav, Advv.
Revenue by : Ms. Sapna Bhatia, CIT-DR
Date of Hearing: 14.02.2024 Date of Pronouncement: 08.03.2024
2 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022
Yash Pal & Alka Mendiratta
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals and the Cross Objections have been filed by the assessees against the orders of ld. C IT(A)-26 , New Delhi dated 23.08.2021.
2. Common issues raised by the Revenue in ITA Nos. 1863 & 1864/Del/2021. In ITA No. 1863/Del/2021, following grounds have been raised by the Revenue:
" 1. " On th e fa ct s & ci r c um s ta n c e s o f th e ca s e th e Ld . C I T( A) h as er r e d i n d el eti n g th e a d di t i o n of R s. 1 2, 0 3 ,00 ,0 0 0/ - m a d e by A O on a c c ou nt of un di s cl o s ed in v est m ent u / s 69 r .w . s 1 15 B B E o f t h e I T A c t 1 9 6 1 ."
2 . " O n t h e fa ct s a nd in th e c i r cu m s t a nc e s o f th e c a s e , th e C I T( A) e r r e d b y ig n o rin g t h e fa c t th a t a s p e r s ei z ed d ocu m en t s ( cop y of ag r e em en t ) s eiz e d f r o m th e r e si d en c e o f S h . Y a s hp a l M en di ra tt a , t h e a s s e s s e e h a s pu rc h a se d t he sa m e p r op e rt y a t an d ar ou n d t h e s a m e p e ri od a n d th u s, t he C I T( A ) w a s in c o r r e ct in con s id e rin g th e c on si d e ra ti on o f n ot sa l e R s. 40 , 0 6 ,0 0 ,0 00 /- as st at ed in t h e sa i d in c rim in a t in g d ocu m en t "
3 . " O n t h e fa ct s a nd in th e c i r cu m s t a nc e s o f th e c a s e , th e C I T( A) f a i l ed t o a p pr e cia t e t ha t th e d o cu m en t b a s e d on w hi ch th e ad di ti on w a s m a d e w a s w it h r e sp e c t t o t he h ou s e p ro p e rt y pu r cha sed by t h e Ap p el l a n t a n d w a s a ls o f ou nd du ri ng th e c ou rse o f s ea r c h i n th e ca s e o f Sh . Y a sh p a l M en di ra tt a . Th e C I T( A) oug ht t o h a v e c on s i d er e d t h e ci r cu m st a n tia l e vid en c e ."
4 . " O n t h e fa ct s a nd in th e c i r cu m s t a nc e s o f th e c a s e , th e C I T( A) fai l ed t o a pp r e ci a t e t h a t t h e a ss e ss e e h a s n o t b e en a b l e to a dd u ce a n y e v i d en c e b ef o r e t h e A O or ev e n b e f o r e th e C I T( A) wh i ch c ou l d p r o v e o r j u st i f y th e fa ll in t h e fa ir m a r k et v alu e o f th e p r op e r t y b y 4 0 % w it hi n a sh o rt t im e s p a n o f 3 -4 mon t hs . Th a t on t he fa ct s a n d in t h e ci r cu m st a nc e s o f th e c a s e , th e C I T( A) f a i le d t o a pp r e ci a t e t h e fa c t th a t th e h o u s e pr op e rt y w i t h r e s p e c t t o w h i c h th e i n c ri mi n ati ng d ocu m ent wa s s eiz ed wa s r en o va t ed/ r e c on st ru ct ed b y th e a s se s s e e a n d t h us , th e c ont en t i on of t h e a s se s s e e d en y in g t h e o wn e r sh ip o f su ch do cu m en t a s ha v i ng l e ft ov e r a t h is p l a c e b y u n kn o wn p e r s on is in c or r e ct ."
5 . " O n t h e fa ct s a nd in th e c i r cu m s t a nc e s o f th e c a s e , th e C I T( A) f ail ed t o a pp r e c i a t e th a t th e p a rt i e s b ein g sel l e r s , 3 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta w h ose n am e s h a v e b e en st a t e d i n th e in cri m i na t i ng e vi d en ce h ad in -f ac t s old th e pr op e rty t o th e a s s e s se e a n d t h us , i n v ie w o f th e ci rcu m st a n t i a l ev id en c e, t h e C I T( A) oug h t t o h a v e c onf i r m ed th e a d d it i on "
6 . " O n t h e fa ct s a nd in th e c i r cu m s t a nc e s o f th e c a s e , th e C I T( A) fai l e d t o a pp r e c ia t e t h a t th e a dd it io n wa s m a d e by t h e AO on t h e ba si s o f ci r c um st a n ti a l ev id e nc e, w h ic h i s th e b e s t e v id en ce u nd e r C iv i l L a w s. T h e d el et io n of s ol e a d dit i on o f Rs . 1 2, 0 6 ,00 ,0 0 0/ - ba s ed on t ech ni c a lit i es , if a n y, i s con t ra r y t o pr ob ab il it y t h e h u m a n a nd ci r cu m st a n ti a l e vid en c e ."
7 . ( a) Th e L d. C om m i ss i on e r o f I n c om e T a x ( Ap p e a l s) is e r r on e ou s an d n o t t ena bl e i n l a w a nd o n f a c ts .
( b) T h e a p p el l a n t c ra v e s l e a v e to a d d, a m end a n y/ a ll g r o un ds o f app ea l b efo r e or du ri n g t h e c ou r s e o f h ea rin g o f a p p ea l . "
3. Common issues raised by the assessees in CO Nos. 25 & 28/Del/2022. In CO No. 28/De l/2022, following grounds have been raised by the assessee:
" 1 . Th at th e n ot i c e i s su ed un d e r s e ct i on 1 5 3 A o f t h e A c t is il l eg al , b a d in l a w a n d w it h out ju ri sd i cti on .
2 . Th a t t h e a s s e ss m en t o rd e r da t e d 1 9. 0 3 .20 2 1 pa ss e d u /s 1 53 A r . w . s . 1 4 3( 3) o f t h e I n co m e Ta x Act , 1 96 1 ( " th e A ct " ) b y th e A s se s sin g O f fi c e r ( "A . O. " ) a n d th e a d di ti on s m a d e th e r ein ar e il l egal , ba d in l a w , w i th ou t j u ri s di c ti on a nd ba r r ed b y ti m e li mi t a t i on .
3 . Th a t on t h e f a c t s a n d ci r cu m sta n c e s o f th e ca s e a n d i n la w C I T( A) ha s e rr e d in n ot a p p r e ci a ti n g t ha t a d dit i on o f Rs. 1 2, 0 3 ,00 ,0 0 0/ - made by the AO is b e y on d t he s co p e/ ju ri sd i c ti on o f se cti on 1 5 3A of th e A ct a s th e r e w e r e n o in c ri m in at in g m a t e ri a l b el on g in g t o A ss e ss e e f ou n d du ri ng th e c ou rse o f s ea r ch on th e b a s i s of wh i ch a dd it i on i s ma d e .
4 . Th a t on t h e f a c t s a n d ci r cu m sta n c e s o f th e ca s e a n d i n la w C I T( A) h a s e rr e d i n not a p p r e ci a t i ng t h a t p h ot o co p y o f do cu m en t d o e s n ot c on st it u t e a va l id e vi d en c e i n t h e ey e s of law an d a s s u c h t h e a dd iti on ma d e m e r el y /s o l ely on t h e b a s i s o f p h ot o c op y o f d o c um e n t wi th ou t d et e rm i ni ng t h e a u th ent i ci t y o f th e o rig in a l d o c u men t i s b a d in la w .
5 . Th a t on t h e f a c t s a n d ci r cu m sta n c e s o f th e ca s e a n d i n la w C I T( A) h a s e r r ed in n ot a pp r e c i a t in g th a t n o sh ow c a us e n ot ic e pr op o sin g t h e a dd it i on un d er s e c t i on 6 9 o f th e Ac t w a s i ss u ed by A O b e fo r e p a s s i n g t he i mpu g n e d a s ses s m en t o rd e r. H e n ce, 4 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta th e add it i o n made is il l eg a l , bad in law and w it h out j uri sd i ct io n .
6 . T h at on t h e f a c t s a n d ci rc u m sta n c e s o f t he ca s e a nd in l a w , pr o v i si on s of S ec ti on 6 9 a r e n o t a p pl ic a bl e a s t h e b a si c c ond it io ns / in g r ed i en ts o f th e sa i d s ect i o n a r e n ot fu l fil l ed .
7 . T h a t t h e a l l eg ed a p p r o v a l u / s 15 3 D o f th e A ct i s il l ega l , b a d in l aw an d w i th ou t a ny a ppl i ca t i on of mi nd a n d th e A ss e s sm ent o rd e r p a s s ed wi th o u t ob t a i n in g v a li d a p p r ov a l is l i a b l e t o b e qu as h ed .
8 . T ha t th e a s s e s s men t o rd e r p a s s e d w ith ou t v a l id a p p r ov a l U/ s 1 5 3D o f th e A ct is ill eg a l , b a d i n l a w a n d w it h out j uri sd i ct io n a n d t h e C I T( A) h a s e r r ed in l a w a n d on f a c t s i n u ph o ld in g t h e s a m e .
9 . Th a t w i th ou t p r eju d ic e , th e A O h a s w r on gl y a n d i ll eg a l ly app li e d th e p r o v i s i o ns of S e cti on 1 1 5 B B E a nd ch a rg ed hi g h e r ra t e o f ta x. Th e a m en d m en t m a d e i n Se c ti on 1 15 BB E in D e c em b er 2 0 16 i s a l s o n ot a ppl i c a b l e t o th is ca s e.
1 0. Th a t t h e ev i d e n c e f i l ed a n d m a t er ia l s a v a i l a b l e on r e co rd h av e n ot b e en p r op e rl y c on st ru ed a n d j ud ic io usl y in t e rp r e t ed by A s s es si ng O ffi c e r , h en c e th e a d di ti on /d i sa l l o w a n ce ma d e ar e un cal l ed f o r ."
4. The assessee filed return of income on 05.10.2020 declaring income Rs.1,57,99,610/-. During the year under consideration, the assessee has derived salary income from M/s Globe Group of Companies, income fro m House Property and 'Income from Other Sources' which includes interest from Savings bank/interest on FDR/post office MIS.
5. During the course of search and seizure action at the residence of Shri Yashpal Mendiratta, at 10/42, Punjabi Bagh West, New De lhi, an agreement to sale o f proper ty with respect to 10 /42, Punjabi Bagh West, New Delhi dated 15.07.2015 was found.
6. The Asse ssing Officer found that the above said property was owned by Sh. Praveen Kumar and Sunil Kumar who are 5 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta brothers and they have sold the property situa ted at 10/42, Punjabi Bagh West, New Delhi, to Mr. R.K. Chaw la and Mr. Brij Kumar for a total consideration of Rs.40,06,00,000/-. The stamp for registration of document was purc hased by Brij Kumar and others who are the 2nd party to the agreement. Further, it is observed that a sum of Rs. 10 crores were paid by the buyers to Praveen Kumar and Sunil Kumar on various dates out o f which Rs. 8.50 crores were paid by way of cash and remaining Rs .1.50 Crores were paid through cheque to the owners by Sh. Brij Kumar. The agreement to sell is also having the receipts duly acknowledged on revenue stamps of payments made to Praveen Kumar and Sunil Kumar and are signed by all the four parties to the agreeme nt namely, Sh. Praveen Kumar, Sh. Sunil Kumar, Mr. R .K. Chaw la and Mr. Brij Kumar.
7. In short, it is the agreement to sale between the owners Sh. Praveen Kumar and Sh. Sunil Kumar as the first party and Sh. Brij Kumar and Sh. R. K. Chawla as a second party. For the sale of property at Punjabi Bagh measuring 1088 sq. yrds. for Rs.40 .06 Cr.
8. The Asse ssing Officer has examined the agreement to sale dated 13.07.2015 which was se ized from his residence during the course of search proceedings conducted at his residence on 20.07.2018. The Asse ssing Officer held that the underlying property as mentioned in the Agreement to Sale is the same which the as sessee has purchased vide the sale deed dated 27.01.2016 and the sellers are also the same in both the Agreement to Sale and the Sale Deed. The price of the pro perty as mentioned in the Agreeme nt to Sale is Rs. 40.06 crores 6 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta whereas the price as per the sale deed is Rs. 16 c rores only, for the same property at West Punjabi Bagh, Ne w Delhi. The Assessing Officer held that agreement to sell me ntions dealing in cash as well as che que and the receipt of payments in cash are duly authenticate d through signature on revenue s tamp. Since the cheque payment and the cash payment have been made through the same document, therefore, the transaction amount of Rs.40.06 crores as mentioned in the agreeme nt to sell cannot be denied. The Assessing Officer held that when the cheque number along w ith the cheque amount me ntioned in the Agreement to Sell is being corroborated w ith the bank state ment of Shri Brij Kumar then the cash portion mentioned in the Agreement to Sell also get authenticated thereby giving crede nce to the fact that the purchase price as per the Agreement to Sell is R s. 40.06 crores only and that the actual consideration which has got exchanged for purchase of the property was infact Rs. 40.06 crores as against Rs. 16 crores for w hich Sale Deed has been executed.
9. The Assessing Officer further held that one of the buyers Shri R. K. C hawla is the same person whose name was appearing in the Agree ment to Sell as one of the purchasers and in the Sale Deed as one of the w itnesses and it is not diffic ult to observe here that his name has been put in the witness to the sale deed with a definite design so that no disputes ar ise in future.
10. Hence, based on all these circumstantial evidences , the Assessing Officer concluded that the sale consideration of the impugned pro perty cannot be less than Rs.40.06 crores and 7 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta treated the consideration of the impugne d property at Rs. 40.06 crores.
11. Aggrieve d, the assessee filed appeal before the ld. CIT(A) who deleted the additio n.
12. Aggrieve d, the assessee filed appeal before the Tribunal.
13. During the hearing, the ld. DR reiterated the rationale of the Assessing Officer w hile treating the difference of amo unt of Rs.40 .06 Cr. and Rs.16 Cr.
14. The submission of the ld. DR is reproduced as under:
"During the co urse of hearing, e xhaustive arguments were made with regard to the De partment's Appe al in these cases . A reiteration o f the arguments fo r the bene fit of the Bench is be ing made as under:
In this case , a photocopy of an 'Agr eement to Sale' (ATS) was seize d from the residentia l premises of the asssessee bearing address House No 10, Road No 42. Punj abi Bagh West, New Delhi during the course of se arc h u/s 132 of the I. T . Act on 20.07.2018. The ATS w as in res pect o f the same reside ntial property in which the assessee was residing at the time of search. T he ATS date d 13.07.2015 w as between sellers (Pravee n Kumar and Sunil Kumar) and buye rs (Shri Brij K umar and Shri R. K. Chawla) accompanied by receipts of cheque a nd cas h payments duly signed by the parties invo lved. The total cons ide ration for the purchase of this prope rty as per ATS was Rs. 40 cr . Subse quently, the pro perty was purchased by the assessee and his wife Smt. Alka Mendiratta, vide registe red agreement dated
15.01.2016. One of the buyers in ATS, Shr i R. K . C haw la w as the witness to the r egistered deed fo r the purc hase of pro perty by assessee. T he tota l conside ration for the purc hase of this property as 8 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta per registere d de ed was Rs. 16 crore. The N O has added Rs. 24 crore , being the difference amount, by establishing a link of the assessees to the ATS.
Whereas , the asse ssee has contende d that it has no re lation with the document se ize d and tha t it is not aware how it came about at his residence. Dur ing the course of last hearing, with regard to the links that co nnect the assessee to the AT S, it w as argued as under:
1. A copy of the Agre ement to Sale was found and seized from the residentia l premises of the assessee.
The ATS which was executed in July 2015, was se ized afte r a gap of 3 yea rs fr om the residential premises of the assessee. The contention of the assessee that it is not a party to the ATS and that it is not awa re how it cam e to his premises is absurd conside ring the fact that it was seized from the assessee's premises a fter a gap of 3 years and afte r major reno vation o f the property for residentia l use by the assesee since its acquisitio n. Undoubte dly, the ATS has been kept/re taine d by the assessee at his premises e ven after 3 years.
2. Shri R . K. Chawla, w ho was one of the or iginal buyers and signato ry of the ATS was a Witness in the registe red agreement fo r purchase o f pro perty by the assessee.
As is evident from the dates of execution of ATS and the regis tere d dee d, there is a gap o f o nly 6 months between the two. Shr i R. K . C haw la, who was a buye r in the ATS, was a witness in the re giste red deed. The statement of S hri R . K. Chawla w as recorded u/s 131 o f the IT Act and the same is forming pa rt of the ld. CIT(A) orde r. Sh Chawla has s ubmitted that he is a relative of Praveen Kumar and Sunil Kumar, the 9 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta sellers of the property . He has de nie d that the signature in the ATS are his. Howe ver, his signature in the rece ipts and ATS are the same as in statement u/s 131 and the register ed deed. Evidently, Shri R. K. Chawla w as known bo th to the sellers and the assessee and acted as a link .
3. Shri Brij Kumar, the other buyer in ATS had bank ing transac tio ns with assessee till the time of purchase o f property by the assessee.
The payments of cheque and cash to the sellers had be en made by Shri Brij Kumar in the ATS. On page 10 of the As sessment Orde r, receipt forming part o f the ATS is produced. As per the receipt, two cheque of Rs.75,00,000/-eac h were given in favour of the sellers. These payments were made by Shri B rij Kumar to Pra veen Kumar and Sunil Kumar. Howe ver, in the statement reco rde d u/s 131 o f the I.T. Act, he has de nied any knowle dge abo ut the ATS. He stated that he had lo aned the cheque amounts of Rs. 75 lakh each to Praveen Kumar and Sunil Kumar on which no interest had been c harged. Evidently, this is a sto ry that has been made up to cover the transaction. Further, the bank account statements of assesses , Yas hpal and Alka Mendiratta, contain t ransactio ns with Shri Br ij Kumar in the period aro und ATS and regis tere d dee d. A co py of the bank statement of assessee and his w ife showing the financial transac tio ns with assessees during the same financial year w as submitted during the course of he aring. The assesse e and his wife through the ir Joint A/e ha d made a payment of Rs.3 cro re to Shri Brij Kum ar o n 07.12.2015, 2 days be fore making a payment of Rs. 2.5 crore to Shri Praving Kumar. Subs equently, an amount of Rs.1 crore was received from Brij K umar on 16.01.2016. Evide ntly, Shri Br ij Kumar was k nown both to the sellers and the assessee and was a connecting link .
10 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta In view of the fa cts as mentioned above , it is evident that even though the name of assessee and his wife is not appearing in ATS , yet the y are connected to the ATS through Sh. R. K. Chawla and B rij Kumar, who have been shown as buyers in ATS. The registe red deed of the pro per ty was executed w it hin 6 months of the ATS and financ ial trans actions took place w ith erstwhile buyers and they also par tic ipate d in the registering of the pro per ty. The surrounding circums tances c lea rly establish the link of assessee to the ATS.
It is humbly submitted that while purchasing a pro perty, the usual market prac tice is to pa y the cons ideratio n in cash and in cheque . The ratio may vary , but is usual ly around 60% c ash and 40% cheque . In the present case , the transactio n amount in ATS was Rs . 40 c rore, whe reas it was registere d for Rs. 16 crore by the asse ssee. As can be seen, the cheque amount of Rs. 16 crore is approximate ly 40% of the entire trans action amount of Rs. 40 cror e. The AO has rightly added this differe nce amount of Rs. 24 cro re e qually be tween the assessee and his wife.
The ld. CIT(A) has deleted the addition by dis regarding this connection and holding Shri R. K. Cha wla to be a weak link. However, he has not facto red the bank ing transactions of the assessee with Shr i Brij Kumar. In view of the facts as mentioned above, it is humbly submitted that the mesesses are connecte d with the ATS, where in the original buye r, Shri R. K. C haw la, a relative of sellers was a witness in the registe red deed and Shr i Brij Kumar, the original buyer and a pe rson who had made cheque cash payments i n ATS received the cheque amount from assessee before registe red deed.
The Hon'ble Supre me Court in the cases of Sumati Dayal vs. CIT and CI T vs. Durga Prasad More had held that the courts must judge the 11 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta evide nce be fore them by apply ing the test o f human probabilities. I t is humbly s ubmi tted that the present case merits the same attentio n. Why would the se llers of the pro perty sell it at such a substantial loss, that too with the involvement of the o riginal buyers. It is also submitted that in terms of provisio ns of section 292C of the IT ACT , as the doc ument was found and seized from the possession o f assessee, the presumption is tha t the same be longs to the assessee . The assessee has not brought any credible evidence to refute the same. Accordingly , it is humbly submitted that the addition made by the AO may be sustained."
15. On the o ther hand, the ld. AR relied on the order of the ld. CIT(A).
16. We have examined the adjudication of the ld. CIT(A) which is as under:
"10.1.1 F rom a bare perusal o f the above ATS (i.e. Pages 10 to 19 o f Annexure A1 Party BW) , the follow ing pertinent fac ts are observe d:
1. That the ATS was found from the premises of the A ppellant in pho tocopied for m and no t in or iginal fo rm.
2. That e ven though it was found fro m the premises o f the Appellant ( i.e . fr om Prope rty bearing house no . 10, road no.42, West Punjabi Bagh, Ne w De lhi), fo r proving possessio n it is necessa ry to show that the person concerne d ha d the intentio possessendi. There is no thing on record which wo uld pro ve that the Appellant eve r had any intention to execute it as it was even not a par ty to the agreement.12 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
3. That the A ppe llant and the spouse o f the A ppe llant wer e not authors or even party in any capacity o f ATS.
4. That the ATS was not e ven prepare d or signe d by any other person on behalf of the Appellant or the spouse o f the Appellant or under their instructions. The re is no such alle gation eve n in the assessment or der.
5. That the Appellant a nd the spouse of the Appellant had nowhere put their signatures in the ATS.
6. That the A ppe llant and the spouse o f the A ppe llant wer e not even re lated to either any party in ATS or any witness to ATS.
7. That in the ATS, details o f certain payments by way of cheques have been reco rded. It is evident that the re is no alle gation o f the AO that these che ques were iss ued by the Appellant or the spouse o f the Appellant.
8. That the parties whose names are appearing as purporte d buye rs in the purported incriminating document (i.e . Sh. Brij Kumar and Sh. R.K. Cha wla) had refused to identify the purpor ted agreement.
9. That the purpor te d buye rs in the ATS (i.e. Sh. Brij Kumar and S h. R .K.Cha wla) had expressly denied that the y ha d never eve r ente red into any such purpo rte d agreement. They ha d denied hav ing ever put their signature on the purpor ted agreement.
10. That the one of party whose names is appeari ng as purpor ted buyer in the ATS (i.e . Sh. Brij K umar) had denied 13 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta that the money paid by him to the purporte d selle r was on account of sale co nsideration to wards property.
11. That there is no evide nce that the persons w hose names have bee n stated as witnesses in the ATS were ever examine d by the Investigatio n wing or by the AO and they have confirmed that signatures of this ATS by A ,B ,C ,D were put in their presence.
12. That with respect to the cash amo unts stated in the ATS, there is no observation or allegation that the said cash amount re flected on the seize d receipts had emanated out of the co ffe rs of the Appellant or the spo use of the Appellant.
13. That the re is no allegation of the AO that the purported incriminating document was execute d in the presence of the Appellant or spouse of the A ppe lla nt, though not being a witness.
14. That the stamp paper o n which the ATS was executed i s neither in the name of the Appellant nor in the name of the spouse o f the Appellant.
15. That the re is no allega tion that the original of the pro posed ATS was ever ascribe d to the Appellant. In-fact the AO in the as sessment or der had admitte d that this agreement to sell was rescinded. This fact is emanating fro m the repayments made by the sellers on 10.12.2015 in cheque to one of the sellers, who had made all the c heque payments as per A TS.
In the abo ve factual position, it is o bserved that only a pho tocopy o f a pur porte d agre ement to sell has been fo und, which has bee n 14 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta denie d by the buyers expressively on oath in their statement recorde d unde r Se ction 131 of the A ct. The mere fac t that the same prope rty has been bought by the Appellant at a lesse r amount, at a late r date , cannot perse , on its ow n and without any corrobo rative evide nce on recor d lead to any presumption or assumption of any unexplaine d investment. The fact that this pro perty as referred in the s aid propose d ATS w as purchased by the Appellant and the spouse o f the' Appellant from the parties who se names have been recorde d as se lle rs in the ATS. Thus, except for the mere coincidence of the property and the selle rs be ing the same, there canno t be a presumptio n, without any co rrobo rative e vidence that the Appellant and his spo use had at-least made pa yments e quivale nt to the amount stated in the purpo rte d A TS betwee n o ther parties, w hic h was never e xecuted.
10.2 From a conjoint perusal of the above statements on oath of both, i.e . Sh. Brij Kumar and Sh. R .K. Chawla, the fo llow ing observ ations are made:
a) That, bo th Sh. Brij K umar and Sh. R.K. Chawla have specific ally de nied having any kno wledge, about the exis tence of a ny agreement to sell ente red by into by them with Sh.
Sunil Kumar and Sh. Praveen K umar.
b) That, bo th Sh. Brij K umar and Sh. R.K. Chawla have completely denied that they knew ea ch other pe rsonally.
c) That, bo th Sh. Brij K umar and Sh. R.K. Chawla have specific ally confirmed that had never e ntered into a ny transac tio n relate d to sa le of prope rty situated at 10/42, West Punj abi B agh, N ew Delhi w ith Sh. Sunil Kumar and Sh. Praveen Kumar .
15 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
d) That, both Sh. Brij Kumar and Sh. R.K. Chawla had specific ally stated tha t the y had never ever made any payments to Sh. Sunil K umar and S h. Praveen Kumar regarding the purchase of property situate d at 10/42, Punj abi Bagh West, New Delhi.
e) That, both Sh. B rij Kumar as we ll as Sh. R .K. Chawla had specific ally state d that they had neve r eve r s igned the purpor ted incriminating document (i.e . Pages 10 to 19 of Annexure A1 Party BW) .
f) That, S h. Br ij Kumar in response to question no. 34 of his statement and Sh. R.K. Chawla in re sponse to questio n no. 14 of his s ta tement, had specifically s tated that he has nothing to do w ith the ATS.
g) That, S h. Br ij Kumar in response to question no. 35 of his statement and Sh. R.K. Chawla in re sponse to questio n no. 15 of his sta tement, had specifically state d that the signatures appe ar ing on the ATS were not their signatures.
h) That, S h. Br ij Kumar in response to question no . 21 o f his statement, had confirmed to ha ve advanced lo ans each of Rs.75,00,000/- S h. S unil Kumar as well as to Sh. Praveen Kumar some two years back (i.e. .2 years from the date o n whic h his statement was recorded). In response to questio n no. 22 of his statement, he had further stated that the lo ans of Rs. 75,00,000/- each advanced by him Sh. Sunil Kumar as well as to Sh. Praveen K umar were interest free loans and that Sh. S unil Kumar as well as to Sh. Praveen Kumar had both repaid back the loans to Sh. Brij Kumar after 4-5 months from the da te on which such loans were give n to them. He 16 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta fur ther stated that the lo ans wer e interes t-free lo an which were returne d back to him through banking channe ls.
i) That, Sh. Brij Kumar in response to questio n no. 23 of his statement, had s tated that the loans as afores aid we re given by him to Sh. Sunil Kumar as well as to Sh. Praveen Kumar since the ir fina ncial position was not good. F urther, in response to question no . 24 of his statement, as aforesaid, Sh. Brij Kumar had duly stated that names o f two other persons to w hom such loans were given by Sh. B rij Kumar.
j) That, Sh. R .K. Chawla in respo nse to question no . 10 of his statement, had state d that he personally knows Sh. Sunil Kumar a nd Sh. Pravee n Kumar. He stated that the se both persons are his ne phews and even the details of the city/town where each of the m was residing ha s been stated.
k) That, Sh. R .K. Chawla in respo nse to question no . 16 of his statement, as aforesaid, had stated that he had signe d the duly executed Sale deed entered into between the Appellant & the spouse o f the Appellant as buye rs and Sh. Sunil K umar & Sh. Praveen Kuma r as sellers with respect to Pro per ty bearing house no. 10, ro ad no.42, West Punjabi Bagh, New Delhi. He state d that being uncle o f Sh. Sunil Kumar and Sh. Praveen Kumar (i.e. Sh. Sunil Kumar and Sh. Praveen Kumar being the nephews o f Sh. R. K. Chawla) he had signed the s ale deed as a witness. Further he had specifically identified his signatures on the s ale deed of the appellant/ spouse.
10.2.1 Thus , fac ts emanating o ut of statements reco rded on oath o f Sh. Brij Kumar and Sh. R. K. Chawla are tha t,
(i) The proposed ATS was neve r signe d by them.
17 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
(ii) That the bank pa yments of Rs 1.5 Cr were made by Sh. Br ij Kumar to Sh. Sunil Kumar and S h. Pr aveen Kumar as loans (Rs.75lakhs each) and no t as sa le conside ration fo r purchase of any property. In his case, it may be a called a self serving statement of Sh. Brij Kumar as these c heque nos. are mentioned in the ATS as well as in receipts se ize d. This can corroborate the fact that he may be hiding the facts about his signatures on ATS to avo id any tax implicatio ns in his case. It had been asce rtained from the sellers that the amount of Rs 1.5 Cr ta ken by them from Sh. Br ij Kumar had bee n repaid back on 10.12.2015 from their respective bank accounts , much before the execution of the sale deed of the appe llant/ his w ife with these sellers.
(iii) Sh. R. K . Chawla ha d claimed that it had no t made a ny payment reflected in ATS. I n the abse nce of any cheque payment, propor tion to his propose d 25% s hare made by him in ATS, absence of his name as purchaser on stamp pape r of ATS and the fact that the re ceipts issue d by the proposed sellers do no t bear his signa tures, the cash po rtion paid by him canno t be established and only can be presumed provided the s ignature on ATS are prove d to be of him .
In these fac ts and discussion, it is obser ved that in the absence o f original ATS , the forensic expert opinion for verifying their signatures on ATS to rebut the ir statements c annot be undertaken. The witnesses have not been examined by the AO or the inves tigation wing, to as certain that it was witnessed by them, for plac ing signature of all the entities on the ATS. In the absence of it, their sta tements that they have no t put signature on any ATS cannot be rebutted. Howe ver, othe r ev idences can be evaluate d to rebut this fac t sta ted by bo th the proposed buyers. In the case of Sh. B rij Kumar, the ve rificatio n of evidences of cheques paid by him as per 18 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta the agreement, his name on one of the loo se doc ument against figures o f Rs. 4 Cr., reproduce d in the assessment o rder and the fac t that the stamp paper of ATS had be en purchased in the name of Sh. Brij Kumar do pro ve tha t he was party to this ATS. However , the re are no suc h evidences in the case of S h. R.K . Chw la, except his signatures , which canno t be proved with any other evidence in case of denial o f signa tures on this agree ment. Thus, in vie w of denial of his s ignatures o n ATS, it cannot be establishe d with admiss ible evide nces that Mr. R.K. Chaw la w as a par ty to this agreement. Hence, in these facts & circumstances, the finding o f the AO that Sh. R.K. Chawla was the common link between the ATS (as buyer) and Sale deed o f the appellant ( as w itness) is a ver y weak link to establis h.
10.3 The AO ha d complete ly igno red the evidences filed by the appe llant regarding the registe red Govt. Appro ved value r report as well as the compara tive registere d sales deeds submitted by the appe llant and contended in the remand report that the addition has been made only o n the basis of value of prope rty re flected in the photoco py o f ATS belonging to thir d pa rties. De taile d discuss ion o n this iss ue will be made in subsequent para, afte r conside ring the legal position a nd applying it to the facts of the case.
11. The firs t ple a tak en by the appe llant is that the photocopy o f the doc ument is not an admissible evide nce and no additio n can be made on the basis of photocopy o f the document, which per tains to third party. The appellant had relied on various judicial de cis ions on this issue .
11.1 In the case of Vikrant Dutt Chaudhary vs . Commissioner o f Income-tax, Panchkula (Haryana) [2017] 88 taxmann.com 727 (Punjab & Har yana), it ha d been he ld as under:
19 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "The very use of the word 'materia l' in sectio n 143(3) clearly shows that the Assess ing Officer is not fettere d by the technic al rules o f evide nce and the like and that he may act on material which ma y not, strictly spea king, be accepted as evidence in a court o f law . Photos tat copie s of documents, i n the absence of their o riginal constitute mater ial in the hands of the Assessing Officer if they are relev ant fo r the purpose of assessment and if they are no t successfully re butted by the assesse e."
In view of the above decisio n wherein it is held that pho tocopies o f documents do constitute "material", the plea of the appellant is rejected. Ho wever, the material is r ebuttable and for use against the assessee it had to be cor robo rated with o the r evidences/statements.
11.2 It is obse rve d the buyers C & D ( through s tatements ) who are the parties to alle ged agreement to sell, have denied the exec ution of agreement to sell. Selle rs A & B have not been confronted on this ATS. The buyers C & D have denie d to put the signatures o n this agreement and the forensic of a photocopy of a do cument is no t possible . There fore only corroborative evidences can establish the exis tence o f the ATS and its buyers. In vie w of it, once parties to alle ged agreement to sell themselves have denied, any reliance place d on tha t agr eement to sell otherwise is misplace d. The Hon'ble Delhi High Court in the case o f CIT v. S.M. Agraw al reporte d in 293 ITR 43 has held as under:
"12. It is well-settle d that the only person competent to give evide nce on the truthfulness of the contents of the do cument is the writer the reof. So, unless and until the conte nts o f the document are prove d agains t a person, the posse ssion of the doc ument or hand writing of that pe rson, on such document by itself cannot prove the contents of the do cument."20 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta Therefore, the pre sumptio n o f the transactions and values reco rded in the pho tocopy of ATS are although material, it need to be corroborated by independent evidences to be use d agains t the par ties to it, as its contents have been denied. Eve n afte r pro ving the e xis tence o f this ATS betwee n thi rd pa rties, in the case o f the appe llant (who is not a party to this ATS) , it is at the most an info rmation that the pro posed value of prope rty mentioned there in is at Rs . 40.06 Cr be tween these se t o f buyers & sellers and for raising the presumption of this value of prope rty, in the case of the appe llant, it is required to be corr oborated w ith o ther inde pendent evide nces. Further fo r mak ing addition u/s 69, the evidence o f unacco unted payment had to be brought on record. These aspec ts are disc ussed in subsequent para.
12. The appellant had contended that the show cause no tice dated 02.03.2021 was issued to the Appe llant re quiring the Appellant as to why the addition of Rs. 12,03,00,000/- be no t made unde r Section 69C o f the Ac t, though the additio n was finally made by the AO under Sec tion 69 of the Act.
12.1 In this regard, it is o bserved that that a show cause dated 02.03.2021 wa s issued by the AO to the appellant, requiring the appe llant to s how cause as to why the addition of Rs .12,03,00,000/- be not made under Sect ion 69C of the Act. The AO had, refe rre d the provisio ns of Section 69C o f the Act. Thus, e ven tho ugh there is a refere nce to a wrong sectio n, it cannot be said that the Appellant did not ge t an opportunity to put forwar d the c ontentions and submiss ions and the re levant ev idence be fore the AO . The Appellant had replie d to this SCN, but the A O had made addition u/s 69 of the IT Act 1961. In the case of Maneka Gandhi vs . Unio n of India [o n 25 January, 1978; 1978 AIR 597, 1978 SCR (2) 621], It was held by the Hon'ble Supreme Court as under:
21 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "I t is well established that e ven where the re is no specific provision in a statute or r ules made the reunder for showing cause aga ins t actio n proposed to be taken against an individual, which affec ts the rights of that individual, the duty to give reasonable opportunity to be heard will be implied from the nature o f the functio n to be perfo rmed by the authority w hich has the powe r to take punitive or damaging ac tio n."
However, in the case of CIT vs Rajinde r Nath [( 1972) 85 ITR 296 Delhi], on the ve ry issue o f refe rence to a w rong section, the Hon' ble Delhi High Court had held as under:
"I t is a well settled principle o f law that the exe rcise of a po wer would be refe rable to a jurisdictio n which confers validity upon it and merely because the Income-tax Office r while proceeding to assess the assessed, has quote d a wro ng se ction, the assessm ent c anno t be rende red invalid" .
Thus, from the co nspectus of the above facts and legal pos ition, it is observed that the Appellant was iss ued a spe cific and detailed show cause no tice wherein e xcept fo r mentio ning a w rong Sectio n (i.e. Section 69C), the AO had specificall y re ferre d to the expre ssion "undisc losed inve stment" . Also , the Appellant had furnished the submiss ions contr overting the obser vations of the AO and contending that no "undisc los ed investment" w as made by the A ppellant in the residentia l ho use pro perty purchased by the Appellant during the above assessment year jointly with his spo use. Here it is pe rtinent to refer to the obse rvatio ns of Hon' ble Justice P.N. Bhagwati while rende ring the judgment in the case of Distributors (Baroda) P Ltd. Vs. Union o f India & Otrs., reported in 155 ITR 120 (SC) - larger bench dec isio n as unde r:22 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "To perpetuate an error is no hero ism. To rectify it is the compulsio n of the j udicial conscience. In this, we der ive comfo rt and s trength from the w ise and inspiring words of justice Bronson in Pierce v. Dela meter (A .M.Y. at page 18): "a j udge ought to be wise e nough to know that he is fallible and, the refore, eve r ready to learn: gre at and honest enough to discard all mere pride of opinion and fo llow truth w herever it may lead :and courageous enough to ackno wledge his e rro rs" .
12.2 The AO had rectified his error of SCN, by making final additio n u/s 69 o f the IT Act 1961.T he power s of CIT(A) are co -terminus with the assess ing officer and the appe llant had been gr ante d enough opportunities in appella te proceedings to make submissions on the addition made u/s 69, which are being conside red i n the adjudic ation of this issue .
In view o f the a bove discussio n, the contention o f the appellant is not accepta ble and this plea of the appe llant is, he reby, rejec ted.
13. The AO had applie d the pro vis ions o f section 292C and section 69 fo r making the addition in the case of the appe ll ant.
13.1 The sectio n 292C , afte r the retrospective amendment w.e .f. 1975, made by the fina nce act 2007, read as under:
"Pre sumption as to assets, books o f account, etc .
292C. (1) Whe re any books of acc ount, other documents, money, bullion, jewellery or other valua ble article or thing are or is found in the posses sion o r contro l of any person in the course of a search under section 132 or surve y under sectio n 133A, it may, in any proceeding under this Act, be presumed--23 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
(i) that s uch boo ks of account, other documents, mone y, bullio n, jewelle ry or othe r valuable ar ticle or thing belong or belongs to suc h person;
(ii) that the contents of such books of account and other documents a re true; and
(iii) tha t the signature and every other part of such bo oks of account and o ther docume nts w hich purpo rt to be in the handwriting o f a ny par tic ular perso n or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular perso n, are in that person's handwriting, and in the case of a document stamped, executed or a ttested, that it was duly stampe d and executed or attes ted by the person by whom it purports to have been so executed or attested.
(2) Where any bo oks of account, other documents o r assets have been de livere d to the requisitio ning office r in accor dance with the provisio ns of section 132A , the n, the provisio ns of s ub-section (1) shall apply as if such books o f acco unt, o ther doc uments o r assets whic h had been taken into custody from the person referred to in clause (a) o r clause (b) or clause ( c), as the case may be, o f s ub-
section (1) of section 132A, ha d been found in the possession o r control o f that per son in the course of a search under section 132."
13.2 Section 69 read as under:-
"Une xplained inve stments
69. W here in the financial year immediately preceding the assessment yea r the assessee has made investments which are not recorde d in the books of account, if any, maintained by him for any source o f income, and the assessee offe rs no e xplanation abo ut the nature and source of the investments or the explanation offered by 24 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta him is not, in the opinio n of the Assessing Office r, s atisfac tory, the value of the investments may be deemed to be the income of the assessee o f s uch financial year ."
13.2.1 The salient fea tures of Section 69 are as under:
(a) Where in the financial year.......... the assessee has made inves tments.
(b) Which are no t re corded in the books of accounts , if any maintained by him fo r any source of income, And
(c) The assessee offers no explana tio n about the nature and source o f the inve stment, Or
(d) The explanation o ffe red by him is not, in the opinion of the Assessing Office r, Satis fac tory , The va lue of investments may be deemed to be the income of the assessee o f s uch financial year .
This may be noted tha t the pro vis ions under section 69 is a machine ry provisio n and is a r ule of evidence.
14. Let us examine the various judicial decis ions on the issue of presumptio n u/s 292C & sectio ns dealing with the deeming income u/s 69/69A/69B/ 69C and the legal position emerging from the se decis ions applied to the facts o f the case o f the appellant.
(i) In the case of Smt. Ha rmohinder Kaur v. Deputy C ommissioner of Income-tax, Central Circle-II, Jala ndhar [2021] (supra), the I TAT had held that:
25 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "Sectio n 69A, read w ith section 292C, o f the Income-tax Act, 1961 - Unexplaine d mone y (Presumptive addition) - Assessm ent year 2009- 10 - Asse ssee sold a prope rty and derived long-term capital gain -
During search, diary of a third party was se ize d from residence of assessee - This diary had no tings which showed an amount of Rs. 1.15 crores as s ale consideration - Assessing Officer observe d that i n regis tere d sale deed, total consideration w as sho w n at Rs . 29.50 lakhs - By making presumption as per section 292C, he considere d sale co nsideratio n shown in diary as actual consideration and made additions acco rdingly - The re was nothing o n record to suggest that assessee had underestimated value of property and violate d circle rate as prescribe d by gove rnment - Even diary adm itte dly did not belong to assessee, and noting of same were also no t in handw riting of assessee - Furthermore , entry recorded in diary qua amount of sale was no t confirmed from buyers of prope rty - Whether since Assessing O fficer had dr aw n presum ptio ns only on bas is of no tings o f diary w ithout making indepe ndent e xercise; and entry found in diary was without any corrobo rative evide nce and had no authenticity, no additions co uld be made in assessee's income - Held, yes [Paras 11 and 13]"
The facts o f the case of the appe llant are much stronger. In the above c ase, the fact was that the diary was found fro m the house o f the appellant ma intained by her husband w here in the higher s ales conside ra tion than the amounts in the sale dee d was mentione d. I n the case of the appe llant, there is no evide nce fo und relating to appe llant to suggest that the purchase conside ration o f the prope rty was higher. The seized ATS does no t relate to the transaction o f the appe llant.
(11) In the c ase of Dy. Cit- 2(1), Raipur (Cg) vs. Shri Chhaganlal Mundra, Raipur (supr a) a dia ry was seized from the residence o f the assessee and it was in the handwriting of the asses see. The diary 26 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta contained vario us figures aga inst vario us expenses. The AO on the basis of presumption under section 132(4A) added Rs.8,06,14,288/-
to the tota l income of the assessee as unaccounte d expenditure u/s.69C of the Act. The CIT(A) deleted the addition by holding tha t the presumption section 132(4A) ca nnot be draw n with regard to the incurrence o f the expenses by holding as unde r:-
"11. It is clea r that Section 69C is applicable (i) where the assessee has incurred any expenditure , and (ii) he offe rs no explanation or the e xplanation tendere d as to the source is not satisfactor y as regards the w hole or part the reof. The whole or part of suc h unexplaine d expenditure would be co nstrued as assessee's income of the financ ial year in which the expe nditure has been incurred. I find that before invok ing the provisio ns of Section 69C, it has to be prove d beyond all shadows of do ubt that the expe nditure has been incurre d as the wo rds "in the opinion of the Assessing Officer" do no t precede the phrase "an assessee has incur red any expenditure". The opinion o f the A .O is material and rele vant o nly with regar d to the explanation of the appellant and not with regard to the incurre nce o f the expenditure. In the i nstant case, the A.O has no t come ac ross even a single bill or vo ucher or de livery challan to even indicate that the appellant incurred any expenditure as alleged by the A .O. I t is not the case o f the A.O that the par ties whose name have been fo und recorde d in the diary have confirme d having receive d the payments from the appellant even remote ly or indirectly."
The Hon' ble ITAT upheld the or der o f CIT(A).
Applying the ratio of the above decision on the case o f the appellant, the AO has not established that any investment over and above the conside ra tion mentioned in the re gistered sale deed was made by the appe llant. There fore, the AO could not have drawn a presumptio n 27 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta that the appellant has made investment over and abo ve the conside ra tion mentioned in the re gistered sale deed.
(iii) In the case of Smt. Kundan Singh vs. The ACIT, Central Circ le- 25, New Delhi, IT A. No. 1797/De l./ 2015,during the c ourse of sear ch an agreement to sell in respect of certain land for the value of Rs.297.87 lac s was found. Ho wever, as per the registered sale deed these la nds were purchased fo r Rs.31 lakhs and Rs.29 lakhs . The assessing officer made the additio n on the bas is of the agreement to sell on the ground that subsequently the transactio n has actually took place, the parties to the a greement were same and e ven the cheque payment a s per the agreement to se ll was also reflected in the bank account of the assessee a nd the same was mentioned in the regis tere d sale deed. T he CIT(A) delete d all the additio n e xcept amount of Rs .50 lacs which w as mentio ned in the agreement to sell as the cash amount paid by the assessee to the sellers. On further appe al to ITAT by the assessee as w ell as the AO the ITAT confirmed the deletion of a ddition by the CIT(A) by holding that the re w as no evide nce tha t the assessee has actually paid the consideration of Rs . 297.87 lacs as m entio ned in the agreement to se ll. With regard to addition o f Rs. 50 lacs confirmed by CIT(A), the ITA T set aside the issue to the file o f the AO to verify the co nte ntion o f the assessee that the agreement to sell was never acted upon and the re was to exchange of money of Rs. 50 lacs between the ass essee and the seller for which the additio n w as confirmed by the CIT(A).
It is o bserved that the facts o f the case of the appellant are muc h stronger that the facts in the above case. In the aforesaid c ase, the ATS and registe re d sale deed was between the same parties i.e . the assessee a nd the selle rs w here as, in the present case of the appe llant, there is no ATS between the appellant and the seller. I n the afo resaid c ase, the re was mentio n of cash payment by the assessee to the se ller in the ATS, whereas in the pres ent case of the 28 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta appe llant, there is no mention of any cash payment by the appellant. In the a foresa id case there w as me ntio n of che que payments by the assessee to the s eller which w as fo und to be co rrec t from the bank account of the a ppellant and inspi te of tha t it was held that the addition o n the basis of amount o f pro perty mentioned in the ATS could not have been made w her eas in the prese nt case o f the appe llant, in the ATS, no payment by the appellant is reflecte d and even he/spouse ar e not party to this ATS.
(iv) The Hon'ble De lhi High Co urt in the case of CIT vs. Ved Pr akas h Choudhary (2008) 305 ITR 245 (Del.) held as under:
"During the sea rch conducted a t the reside nt ial premises of the assessee, two memorandums of unde rsta nding we re recove red. These memorandums were entere d i nto betwee n the assessee, R and M. In terms of the memorandum, the assessee had paid Rs.25 la khs each towards par t consideration for the purchase of agricultural land valued a t Rs. 123.30 lak hs to R and M. The As sessing Officer concluded tha t de nia l by the assessee was only to escape payment o f tax liabilities and added Rs .50 lak hs in the hands of the assessee under sec tion 69 of the Income-tax Act, 1961. The Commissioner (Appeals) as we ll as the Tribunal held that the re was no t enough evide nce to a dd the amount in the hands of the as sessee. On appeal:
Held, dismiss ing the a ppea l, tha t the assessee had stated that the re was no transfe r o f money be tween the assessee , R and M and the y had denied the re ceipt of any money from the assess ee. In the face of these denials, there ought to have been corrobo rati ve evidence to show tha t there was in fact such a tra nsfe r of money. Both the Commissioner (Appeals) as well as the Tribunal had come to the conclus ion that there was no such material on recor d. The Assessing Office r relie d on certain other transactio ns entere d into by the assessee w ith R and M fo r drawing a presumption in respect of the transfe r o f mone y but the Tribunal rightly held that those were 29 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta independe nt transactions and had nothing to do with the memorandums of understandi ng. No substantial questio n of law arose ."
The facts of the case of the a ppellant are muc h s tronger that the fac ts in the a bove case. In the afo resaid case, the MOU and regis tere d sa le de ed was between the same parties i.e. the assessee and the se lle rs whereas in the present case of the appellant, there is no MOU or ATS between the appel lant and the selle r. In the afores aid case, there was mention of cash payment by the assessee to the seller in the MOU, whereas in the present case o f the appellant, there is no mention of any cash payment by the appellant. I n the afores aid case the re was mention of cash payments by the assessee to the se ller and in spite o f this, it was held that once the buyers and sellers have denie d abo ut receipt o f any such cash amount, there ought to have been corrobo ra tive evidence to show that there was in fact suc h a transfer o f money. In the present case of the appe llant, the re is neither any admission by the appellant nor the seller about exc hange of any mone y for which the AO has made the addition. In fact, there is not even any seized doc ument show ing any cash pa yment, leave alone any othe r corroborative evidence to show that there w as in fact transfer o f money fo r which the AO has ma de the addition.
(v) The Hon' ble Madras High Court in the case of CIT vs . P.V. Kaly anas undaram (2006) 282 ITR 259 (Madras) has held as under:
"The burden of proving actua l consideration in such transaction is that of the revenue. The Tribunal had given factual finding and, inter alia, he ld that the Apex Court in K.P. Varghese v. ITO [1991] 131 ITR 597 / 7 Taxman 13 he ld that the burde n of proving actual conside ra tion in such transaction is that of the revenue. The Assessing Officer did not co nduct any independe nt e nquir y relating 30 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta to the value o f the property purchased. He merely re lied upon the statement give n by the se lle r If he would have taken independent enquiry by refe rring the matte r to the Valuatio n O fficer , the controvers y could have been avo ided. Failing to re fer the matter w as a fatal one. In view of the above, there was no error in the order of the T ribunal and required no inter ference."
The Hon'ble Supreme Court in the case of CIT vs. P.V . Kaly anas undaram (2007) 294 ITR 49 (SC) has co nfir med the abo ve Judgment of the Hon'ble Ma dras High Cour t by dismiss ing the Departmental Appeal.
The AO has not discha rge d the burden in the case of the appellant that the a ctual co nside ration of the prope rty was more that the value state d in the re giste red sale dee d. The AO has not made any independe nt enquiry. He has mere ly relied upon the seized ATS whic h does no t even figure the nam e of the appellant. In fact, the fac ts of the case o f the appella nt are much stronger than the facts in the aforesa id c ase . In the afo resa id case the re was no inde pende nt valuation repo rt a vailable whereas in the prese nt c ase , the appe llant has submitted the valuation repo rt of the inde pendent valuer and also the compa rative sale instances and the AO has not po inted out any discrepa ncy in these re por t/instances.
(vi) The Hon'ble Ker ala High Co urt in the case of CIT vs. Smt. K.C . Agnes ( 2003) 262 ITR 354 (Kerala) had held as unde r:
"Afte r consi dering the evidence and on the bas is of the assessment order passed a gainst the assessee, the case of the as sessee that the prope rty was purc hased at the rate of Rs.8,000 per cent, had been accepte d. Thus , the Tribunal allowed the appeal. T he sale deed showed that the price was Rs.8,000 per cent while the agreement showed that the parties agreed to purchase the pr operty at Rs .31 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta 12,951 pe r ce nt. A receipt was also relied on in the form of a fe tter to show that the property was agree d to be purchased at Rs . 12,951 per cent.
When a document shows a fixe d pr ic e, there wo uld be a presumptio n that it is the correct price agreed upon by the parties. It is true that on the bas is of the agreement, the sale deed is exec uted. But it is not necess ary that the pr ice stated in the agreement will be the price shown in the sale deed. Sometimes, it may be higher and sometimes it may be lower. Sometimes intentionally a lesser value may be shown in the s ale deed. Even if it is assumed to be so, unless it is prove d that the agreement was act ed upon and unle ss the amount state d in the agre ement was pa id fo r the sale , none c an come to the conclus ion that the price mentione d in the sale deed is no t co rrec t. In the ins tant case , in the assessment of the purchaser, it was finally found that the am ount wa s received only at Rs .8,000 per cent.
Taking a ll the se matters into consideration, the T ribunal held that the pro perty was sold at the rate of Rs.8,000 per c ent. Thus, the Tribunal, on the basis of the facts a nd circumstances of the case and on the a ppreciation of evidence, came to the conc lusion that Rs. 12,951 was not the amount fo r which the prope rty was sold. There is no rule that the amount show n in the receipt is the -actual amount paid. Accor dingly, the amount stated in the sale deed was the correct amount unless the re we re circumstances to ignore the same. In the above v iew of the matte r, the questions were answere d in favour of the asse ssee and against the re venue."
In the above case , it has been held that it may no t be necessary that the cons ideration as mentioned in the ATS and final sale deed will be same. Where sale deed have bee n registe red, the value stated therein cannot be disputed merely because some higher value was mentioned in the ATS unless it was prove d that the A TS was actually 32 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta acted upon. The facts o f the case of the appellant are much stronger that the facts in the a foresaid case. There is not even any ATS pertaining to the appellant. Eve n the seize d ATS(pertaining to others) , acco rding to AO himself, was cancelle d and the amounts exchanged betwee n the parties in ATS till its cancellation were less than the amount o f regd. sales deed of the appellant.
(vii) The Hon'ble Punj ab and Haryana High Co urt in the case of Paramjit Singh vs. ITO ( 2010) 323 ITR 588 (P& H) had held as under:
"Whether in view of set tle d principle that no oral evidence is admiss ible once documents contain all terms and conditions, sale conside ra tion disclosed in sale de ed in instant case was to be accepte d and no oral evidence could have been adduced to contradict such s ale cons ideration - Held, yes - Whether, thus , view taken by Assessing Office r as also confirmed by Tribunal was correct - He ld yes."
Applying the ratio of the aforesaid decision on the present case of the appellant, the AO co uld no t have drawn any adverse infere nce i n the case of the appe llant w.r.t. value reco rde d in registered sale deed. There is no corrobo ra tive evidence brought on record by the AO to disre gard the value state d in t he registered sale deed.
(viii) I n the case of CIT vs. Provestment Securities (P.) Ltd. [2016] 65 taxmann.com 69 (Delhi), the Hon'ble Delhi High Co urt has held as under:-
"14. At this s tage it is necessa ry to refer to Section 69 o f the Ac t, whic h reads as under:-- "69. Where in the financial year immediately preceding the assessment year the assessee has made investments whic h are no t recorded in the book s of account, if any, maintained by him for any source of income, and the assess ee offers no explanation about the nature and source o f the inve stments o r the 33 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta explanation offere d by him is not, in the opinio n of the Assessing Office r, satis fac tor y, the value of the investments may be deemed to be the income o f the assessee of s uch financial year."
15. I t is apparent from the plain language o f Section 69 of the Ac t that in orde r for any addition to be made under Section 69 of the Act, the following conditions mus t be met:
(a) It is established as a fact that the Assessee has made an inves tment;
b) That the investment made is no t recor ded in the books of the Accounts , if so maintained; and
(c) The Assessee offe rs no explanation as to the nature and source of inves tment made or the e xplanati on offered by the Assessee is , in the o pinion of the AO, not satisfactory.
16. Thus, first a nd foremost, A O must come to a conc lusion that an Assessee ha d, in fact, made an investment. Once an AO fi nds that an inves tment has been made , he has to e xamine the Assessee's explanation as to the source of that investment. It is only in ca ses where the Asses see is unable to e xplain the source of the investment made that pro vis ions of Sec tio n 69 of the Act can be applied to tax the value of the investment made .
............ ......... ...... ...... .
19. In the c irc umstance, we are inclined to agree with the Tribunal that the question whether an investment had been made or no t is a matter of fact a nd the same cannot be presumed."
The ratio of the aforesaid decision is squarely applicable to the facts of the present case of the appe llant. T he AO has not been able to 34 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta establis h through any evidence that the appe llant had, in fact, ma de the investment for which the additio n had been made the addition in the assessment o rder . Once this primary and bas ic condition of section 69 has not been fulfilled, as held by the Hon' ble High co urt in the above case, provisions o f Section 69 o f the Act canno t be applie d.
(ix) In the case of Ushakant N. Pate l vs. CIT [2005 ( 12) TMI 63] where in the Hon' ble Gujara t High Co urt had held as under:-
"The Tribunal lost sight o f the fact that sectio n 69 of the Act opens with the wor ds "Where in the financial year immediately prece ding the assessment year, the assessee has made investments ..."
Therefore, i n the first instance it was incumbent upo n the autho rity to establish that there were investments made by the assessee; that such inves tments were no t recorded in the boo k s of account maintained by the assessee; and that such investm ents had been made in the financial year immediately prece ding the assessment year in ques tion.
Unfo rtuna tely, despite the Commissioner (Appe als) having recorded a catego ric al finding, the T ribunal has failed to appr eciate the said finding and dealt with the same without giving cogent reaso ns. If the Tribunal found tha t the said finding was no t co rrec t, it was necessary for the Tribunal to have recorded reasons for rever sing the same. The observ ation of the Tribunal that the difficulty as to financial ye ar had to be finalized in accor dance w ith the pro visions and the date o f search and se izur e is too ge neral and vague . It do es not indic ate anything. When the provision requires fulfillment of certain prerequisite conditions be fore the assessee can be calle d upo n to explain, the Tribunal has to record its finding on this issue in a specific manner , because the case of the assessee all along has been 35 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta that in the first place the seize d documents do not reflect any inves tments , in the second pl ace, e ven if the entries c ould be treated as investments made by the assessee, it w as fur the r necessary to show tha t such investments ha ve been made by the assessee in the financ ial ye ar im mediate ly pre ceding the assessment year and are not reco rded in the books maintaine d by the asses see. The Tribunal's order does not re cord any finding. In fact, the Tribunal is hardly aware, it appe ars, as to w hat the requirements of s ection 69 are , and if it is aware , it has co nscio usly chosen to igno re the same. I t could not have done so in the face of the finding recorded by the Commissioner (Appeals) on this issue."
The ratio of the aforesaid decision is squarely applicable to the facts of the present case of the appe llant. T he AO has not been able to establis h tha t the appellant had, in fact, made the investment for whic h he has ma de the addition in the assessment order. Once this primary a nd basic condition of section 69 has not been fulfilled, as held by the Hon' ble High co urt in the above case, provisio ns of Section 69 of the Act canno t be applied.
(x) In the case of C IT v. Lubtec India Ltd (2009) 311 ITR 175 (Del.) it had been held that it is quite cle ar that what is pos tulated in section 69C of the Income-tax Act, 1961, is that firs t of all the assessee mus t have incurred that expenditure---"
The abo ve dec isio n, though, re ndered in the conte xt of provisions of section 69C will squa rely apply to the case of the appel lant as provisio ns of section 69 and 69C are similar and the only diffe rence is that section 69 deals with investment whereas section 69C deals with expenditure . In section 69, the prerequisite is of making o f inves tment whe re as in sectio n 69C the pre requisite is of incurrence of e xpenditure.36 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
(xi) I n the case of Pr. Commissioner of Income Tax-Ill, Ahmadabad Versus Vivek Prahladbhai Pate l 2015 (12) TMI 1287 - GUJARAT HIG H COURT the Ho n'ble High Court had held as under:-
"8. For the reasons stated he reinabove , this court is in comple te agreement with the findi ngs r ecorded by the Tribunal upon appreciation of the evidence on record and finds no r eason to take a different view . In the opinion of this court, having regard to the evide nce which has come on record, which reve als that there is an agreement to se ll executed betwee n the assessee and the se ller s, whic h show s the price o f the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have state d that they ha ve received higher amounts by way of on- money and have also shown rece ipt of such amount in their income tax returns , the circumstances do raise a suspicion. Ho wever , as he ld by the Supreme C ourt in Commissioner of Income tax v. Daulatram Rawatmull, (1964) S3 ITR 574 (SC), eve n if c ircums tances raise a suspicion, sus picio n canno t take the place of evide nce."
The fa cts of the case of the appe llant are even s tronger. There is neither any ev idence of any co nsideratio n made by the appellant over and a bove the amount reco rded in the registere d sale deed nor there is any confession/a dmissio n by the sellers o f having received any amount ove r and a bove the amount recorde d in the registe red sale deed. Applying the ratio of the aforesaid decis ion on the present case of the appellant, the AO could not have dr aw n any adve rse infe rence.
(xii) The Hon'ble Supreme Court in the case o f P.R . Metrani vs CIT (Appeal (c ivil) 5673-5675 of 2002 da ted 15/11/2006) held as under:
"A presumptio n is an infere nce of fact drawn from other known or prove d facts . It is a rule of law under which cour ts are autho rized to 37 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta draw a particular inference from a particular fact. It is of three types , (i) "may presume", (ii) "shall presume" and ( iii) "co nclusive proof" . "May presume" leaves it to the disc retion of the Court to make the presum ption acco rding to the circumstance s of the case . "Shall pres ume" leaves no option with the Court no t to make the presumptio n. The Court is bound to take the fact as prove d until evide nce is given to dispro ve it. In this sense s uch presumption is also rebuttable. "Conclusive proof' gives an ar tificial probative e ffec t by the law to cer tain facts. No evidence is allowed to be produced with a v iew to combating that effect. In this sense, this is irre buttable presumption.
The words in sub-section ( 4) are "may be presumed". The presumptio n under sub-section ( 4A) there fore , is a rebuttable presumptio n. The finding reco rde d by the High Co ur t in the impugne d judgment that the presumption under sub-section (4A) is a irre buttable presumption in so far as it re lates to the passing of an order under s ub-section (5) of Sectio n 132 and re buttable presumptio n for the purpose of framing a regular as sessment is no t correct. There is nothing either in Sectio n 132 or any other provisio ns of the Act which could war rant such an infere nce or finding.
Presumptio n unde r sub-section (4A ) would no t be available for the purpose of framing a regular assessment. T here is no thi ng either in Section 132 or any other pro vision of the Act to indicate that the presumptio n pro vided under Sec tio n 132 w hich is a self contained code fo r search and seizure and rete ntio n of books etc. can be raise d for the purposes of framing o f the regular asses sment as well. Wherever the le gislature intended the presumption to continue , it has provide d so . Reference may m ade to Section 278D o f the Ac t whic h pro vides that whe re during the course of any search under Section 132, any money, bullion, jewelle ry or o ther valuable articles 38 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta or things or a ny books of acco unt etc. are tendered by the prosecutio n in ev idence against the person concerned, the n the provisio ns o f s ub- section (4A) of Section 132 s hall , so far as may be, apply in relation to such assets or books of account or other documents . This clearly spells o ut the intention of legislature tha t where ver the legislature intended to continue the presumptio n under sub- sec tion ( 4A) of Section 132, it has provide d so . I t has not been provide d that the presumption a vailable under Sec tion 132 ( 4A) would be available for framing the regular assessment unde r Section 143 as well."
The ratio o f the a bove decision is that presumption u/s 132(4A) is rebuttable.
(xiii) Hon'ble Jurisdictional De lhi High Court vide its order dated 10.02.2016 in the case of Pr. CIT vs M/s Delco India Pvt. Ltd. repor ted at (2016) 2 TMI 607 ( Del.) w here in it has been held as under:
"17. Sec tion 292C of the Act, inter alia, pro vides that where any books of acco unts or other documents are found in possessio n or control of any person in the course of search under Section 132 or survey under Section 133A of the Act, it may be presumed that suc h books or doc uments belong to such pe rson. Undispute dly, suc h presumptio n is rebuttable."
As per this judgment, the presumption u/s 292C and 132 are rebuttable.
(xiv) The ITAT Mumbai Bench in the case of S h. Pandoo P. Naig vs ACIT in ITA Nos. 7089 & 7364/Mum/2011 and ITA No. 6671 & . 6672/Mum/2012 ( supra) vide order dated 24.06.2016 had held as under:
39 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "14. We find tha t the wording o f the sectio n 292C whic h supposes the presumption to be taken is qualified with the w ords 'may be', hence, it may or may not be presumed that such do cuments be long to the pe rson se arche d. F irstly, the section uses the word "may presume' and not 'sha ll presume', hence the presum ption o f facts under sec tion 292C is not a mandatory o r compulso ry pres umption, but, a disc retionary presumption; secondly, such a presumption is not a conc lus ive presumption but is a re buttable presumption because it is a presumptio n of fact not a presumptio n of law."
The presumption u/s 292C and 132 are not pres umption of law, but fac ts and are rebuttable.
(xv) I n the case of Vijay Kumar Aggarw al vs . ACIT, Centr al Circ le- 12, Ne w Delhi [No .- ITA No . 1182/Del/2011 dated 17/02/ 2017], the Hon'ble ITAT Delhi had held as unde r:
"12. From the observatio ns made in the afores aid refe rred to orders , it is c lea r that the presumption o f facts u/s 292C of the Act is not a mandator y or compulsory presumption but a discre tio nary presumptio n. Since, the word used in the said Sectio n is "may be "
and no t "s hall" . Secondly, such a presumptio n is rebuttable presumptio n and not a conclusive presumption because it is a presumptio n o f fact not a presumptio n of law ."
Applying the ratio of the aforesaid decision on the present case of the appellant, the AO could no t have drawn any adverse inference . The presumption a gainst the appe llant stood rebutted.
(xvi) I n the ca se of Ram Krishan Gupta vs. DCIT CC-4, New Delhi [No.- IT(SS)A.No.63/ Del/ 2008 date d.- July 31, 2013]; 2013 (8) TMI 329 the Hon' ble ITAT Delhi has held as unde r:
40 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta "Difference betwe en amount shown in agreement to sale and s ale deed - B lock assessment - 158BC - Addition u/s 69 - Addition made on account o f purchase of property - CIT upheld addition - He ld that:- Whe n the document shows a fixe d price, there will be a presumptio n that it is the co rrect price agreed upo n by the parties . It is true that on the basis of the agreement the sale deed w as executed. But it is not necess ary t hat the pr ice stated in the agreement w il l be the price sho wn in the sale deed. Sometimes, it may be higher and sometimes it may be lower . Sometimes intentiona lly a lesser va lue may be shown in the sale deed. Even if it is assumed to be so, unless it is proved that the agreement w as acted upon and unless the amount stated in the agree ment was paid for the sale one canno t come to the conclusion that the price mentioned in the sale dee d is not correct -The re is no rule that the amount shown in the rece ipt was the actual amount paid."
The facts of the c ase of the appe llant are even stronger. There is no receipt/agreement or any other ev idence of any consideration made by t he a ppella nt over and above the amount recorded in the regis tere d sale deed. Applying the r atio of the afo resaid decisio n on the prese nt case of the appella nt, the AO could not have drawn any adve rse inference.
(xvii) The Ho n'ble A.P. High Court i n the case of Smt. K.V. L akshmi Savitr i Devi v . ACIT in ITTA 563 of 2011, he ld as under:
"We are of the view that the Tribunal has rightly hel d that the regis tere d do cument date 21- 8-2006 under which the responde nt purc hase d the abo ve prope rty showe d that only Rs . 65.00 lakhs was paid to the vendor by the respo ndent; that the re was no evidence to show that the res pondent had paid Rs. 1.00 cro re in c ash also to the vendo r; that no presumption o f such payment of R s. 1.00 crore in cash c an be draw n on the basis of an entry found in a diar y/loose 41 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta sheet in the premises of C . Radha Krishna Kumar whic h is no t in the respondent' s handwriting and w hich did not contain the name of the respondent or a ny date o f payment or the name of the perso n w ho made the payments.
It rightly he ld that the Revenue failed to establish the nexus of the seized ma terial to the responde nt and had dr awn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tr ibunal that the assessing officer did not conduc t any independent enquiry relating to the value of the prope rty purcha sed and the burden of proving the actual conside ra tion in the pur chase o f the property is on the Revenue and it had fa iled to dischar ge the said burden."
The facts of the c ase of the appe llant are even stronger. There is no receipt/agreement or any other ev idence of any consideration made by t he a ppella nt over and above the amount recorded in the regis tere d s ale de ed.
(xviii) In the case of ACIT vs. Rakesh Nar ang, 64 taxmann.com 332 ( Del) , the Court ha d held as under:-
"4. We have heard the rival submissions and peruse d the relevant material on re cor d. It is noticed that the e xtant addition was made by the AO u/s 69B of the Act. T he rele vant part of this sec tion stipulates that: ' Where in any financial year the ass essee has made inves tments or and the Assessing Officer finds that the amount expended o n mak ing such investm ents or .... excee ds t he amount recorde d in this behalf in the boo ks of acco unt maintained by the assessee for any source of incom e, and the asses see offe rs no explanation about such excess amo unt or the explanation offered by him is not, in the opinio n of the Assessing Office r, s atisfac tory, the excess amount may be deemed to be the income of the assessee for 42 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta such financ ia l year.' The pre-requisite conditions for making an addition under this section are that firstly , the assessee should have made investment and then the A O sho uld find that the amount actually expended on making such investment is more than the amount reco rded in the books of account. I n othe r words , there should be some positive evidence with the AO to find that the assessee had, in fact, invested more amount than that act ually recorde d in the books of account. Such a finding by the AO can be based on some positive evidence about the m aking of more inves tment than that declared in the books of account. This sec tion canno t be tr igge red on a mere pr esumptio n of the AO. When the legis lature has unambiguously pro vide d so , it is impermissible to substitute suc h a finding with a presumptio n about actual investment hav ing been made by the assesse e at a leve l higher than that depic ted in the books of account. O nly some positive and irre futa ble evide nce converts a presumption into a finding. Abse nt affirmative evide nce, what r emains is a mere suppositio n of une xplained inves tment etc., which ca nnot take the place o f a finding o f the AO towards une xpla ined investment."
(xix) In the case of CIT vs Dinesh Jain HUF, ITA no. 610/2012, Dated 19.10.2012 (Del), the Cour t ha d held as under:-
"This Court in its order dated 28.9.2012 held that ( a) Section 69B in terms re quires the assessing office r to first prove that the assessee has actually expended an amount which he has no t fully reco rde d in his books of account; (b) the re has to be a finding that such amount was actually paid by the assessee over and above the declare d conside ra tion and the extra amount was not rec orded in the assessees boo ks o f acco unt; (c) the provisio ns o f the Wealth Tax Ac t and Schedule III there to canno t be impor ted into the pro vis ions o f Section 69B because the enquir y under the Wealth Tax Act is towar ds estimating the ma rket v alue o f the prope rty which is differe nt from 43 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta the ac tua l price paid fo r the property; ( d) Section 69B does no t permit a n infe rence to be drawn fro m the circ umstanc es surrounding the tra nsac tio n that the pur chase r of the prope rty must have paid more than what was actually reco rded in this book s of account, because s uch a n inference could be very subjective and could lead to the taxation of notional or fictitio us income contrary to the str ict provisio ns o f Article 265 of the Constitution of India as held by the Supreme Court in the case o f KP V erghese \/s . ITO ( 1981) 131 ITR
597."
(xx) In the c ase of CIT vs. N aresh Kha ttar (HUF) 261 ITR 664 ( Del) , the Court had held as under:-
"8. There is no gainsaying tha t to invoke the pro visions of section 69B of the Ac t, the burden is on the Revenue to prove that the re al inves tment e xceeds the investments shown in the boo ks of accounts of the appellant. As observed by the Apex Court in K.P. Varghese v . ITO [1981] 131 IT R 597. to thro w t he burde n of sho wing that there is no understatem ent of the conside ration rece ive d, on the appellant would be to c ast an a lmost impossible burden upon him to establis h in negative, namely , that he did no t receive any consider ation more than wha t has bee n declared by him. Therefore, if the Revenue seeks to hold that the appe llant has received more than what has been declared by him in respect o f the assessment in question, the o nus would lie on the Revenue to pro ve this fact by bringing some material on reco rd."
(xxi) In the c ase of in the case o f CIT vs. Kulwant R ai reporte d in 291 ITR 36, Delhi High Co urt had he ld as unde r:
"12. Coming to the facts of the present case w ith regard to the addition of Rs. 17,00,892/- made by the Assess ing Officer as undisclose d incom e of the Assessee for the block period, we may 44 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta refer to the findings of the Tr ibunal on this po int and the relevant portion re ads as under:-
"On cons ider ation of the matter we find that the additio n has been made by the learned Assessing Officer on the basis o f surmises and guess wo rk . He has ignored the fact that the agreement was found in possessio n o f the Assessee.
........The re asoning given by the learned Assessing Officer is entire ly guess work. It is well settled legal position in res pect of income tax assessment proce edings that although strict rules o f Evidence Ac t do not apply to I ncome-tax procee dings, assessments canno t be made on the bas is of im agination and guess work. Referenc e in this respect may be made to the judgment o f Hon'ble Supreme Court in the case of Dhakes wari Cotton Mills Ltd. vs. CIT(1954) 26 ITR 775 (SC) and a host of Supreme Court and High Court's judgments thereafter on the subject. We, the re fore , direct deletion of the s um of Rs.17,00,892/- assessed by the Assessing Officer by w ay of half share of the Assessee in the alleged e arnest money.
13. It is an admitted fact that the present Assessee had no t signed the agreement in question and since the Assessee had not signe d the agreement, no liability can be attr ibuted qua that agreement tow ards the Assessee since he is no t party to the agreement till he had signed the same. The mere fac t tha t this agreement was found in the possessio n of the Assessee does not lead us anywhere. We find no hesitation in ho lding that this addition of Rs. 17,00,892/- made by Assessing Officer is base d on surmises and guess work and on this point case of D hak eswari Cotton Mill s Ltd v. Commissioner of Income Tax, ( 1954) 26 IT R 775, may be referred to ..."
(xxii) The Hon'ble Delhi High Co urt in the case of CIT vs. Ved Parkash Chaudhar y re ported in 305 ITR 245 held that even where a 45 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta MOU was found then too in view of the denial of the parties to the MOU, it w as held that, no addition is tena ble in vie w of the non- availability of the corroborative ev idence. Infact, in the abo ve case , it was he ld by Their Lordships as under:
"12. In so far as the present case is co ncer ned, the Assessee had state d that in fact there was no transfer o f money between him and Ravi Talwa r a nd MadhuTalw ar . On the other hand, Ravi Talwar and Madhu Ta lwar had denie d rece ipt of a ny money from the Assessee. I n the fact o f these denials, there o ught to have been corro borative evide nce to sho w that there was i n fact such a transfer o f money. Both the Commissioner as well as the Tribunal have come to the conclus ion that there was no s uch material o n record."
(xxiii) In the case of CIT vs. Mothe r India Refrigeratio n Indus tries ( P.) Ltd -SC-155 ITR 711, the Hon' ble Supreme Court observed that-
"10. It is true tha t proviso (b)to section 10(2)(vi) (Correspo nding to section 32(2) o f Income Tax Act 1961) cre ates a le gal fic tio n and under that fiction una bsor bed depr eciation either with o r witho ut curre nt year's de preciation is deemed to be the curre nt year's deprec ia tion but it is we ll settled, as has bee n observed by this Court in Bengal Immunity Co . L td. v. State of Bihar [1955] 2 SCR 603 at p. 606, that legal fictions are create d only fo r some definite purpose and these must be limited to that pur pose and should not be extended be yond that le gitimate field.
11. Suc h being the purpose for which the legal fiction is created, it is difficult to extend the same beyond its legitimate field and w ill have to be confi ned to that purpose . It is, therefo re, not pos sible to accept the conte ntion of the counsel for the assessees that because of the le gal fictio n the unabso rbed carried fo rward lo sses should be 46 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta give n prefe rence not merely o ver the unabsor bed carried fo rward deprec ia tion but also ove r the curre nt yea r's de preciation. T here is, thus , no modificatio n of no r de viation from the basic and well recognize d principle of commercial accountancy by the statute a s is contended by the counsel fo r the assessees."
(xxiv) The Ho n'ble Supreme Court in the case o f CIT vs. Moon Mills Ltd - 59 ITR 574 [larger bench of 3 j udges] held that -
"But the fourth proviso introduces a fiction that in case any insurance, salv age or compensatio n money received in respect of the said prope rty exce eds the difference between the wr itten dow n value and the scrap va lue, so much of the excess as mentio ned therein wi ll be deemed to be the pro fits of the previous ye ar in which suc h money is received. Though in fact the said compens ation represents a capital asset, to the extent mentione d in the proviso , the compensation is deemed to be the profits of the previous ye ar in whic h such mone y is received. The proviso , there fore , introduces a fic tion. What is not a pro fit in the previous year is deemed to be a profit in tha t ye ar. The pre vious year is that year in w hich such moneys were received. The fiction is an indivisible one . It canno t be enlarged by importing anothe r fictio n, namely; that if an amount w as receiv able during the previous year it must be deemed to have been receive d during that year.
So too, in the ins tant case, the fiction serves the purpose, if the s aid compensation was deemed to be the pro fits of the previous year or of the ye ar in which it was received. This fiction cannot be e nlarge d by giving the e xpression "received" a technical meaning which it may bear in the merca ntile system o f accountancy."47 ITA Nos. 1863 & 1864/Del/2021
CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta (xxv) In the case of ACIT vs. M/s V atik a Greenfield ( P) Ltd. ITR 113 (AT) (Del), the court ha d held as under:-
"21. A conjo int reading of the above decisio ns sugge sts that taxing statutes have to be interpre ted str ictly. In the deeming provisio n what is presc ribed is to be deemed and deeming pro vision canno t be extended beyond the legislative scope . The presumptio n as envis aged in s. 292C is limite d to the correctness o f the documents found a t the time of search or surve y, but that presumption has no t been e xtended by the sta tute to be presumed to be the income o f the as sessee. If it is so , then unless some evidence/material is brought o n record by the Revenue to say that what is state d in the seized do cument is not co rrect, state of affairs, the s tate o f affairs state d in the impounde d document has to be pre sumed to be true . I t has already bee n observed that there is no material/evide nce on record to suggest alle ged excess pa yment of Rs . 1 crore received by the assessee from Raja Singh Sethi was in any way in the shape o f income and not an unsecured inter est-free loan. The refore also , the argument of learned Departmental Representative that on the bas is of s. 292C, the action of the AO should be upheld, c anno t be accepte d. The refo re, we find no material to interfere in the dec ision arrived at by the CIT(A) vide w hich impugned addition has been delete d."
15. The ratio-decidendi on section 292C emerging from the above judic ial prece dents is that,
(a) The presumptio n of facts u/s 292C of the Ac t is not a mandator y or compulsor y presumption but a discretionary presumptio n. Since, the word use d in the said Section is "may be" and not "sha ll".
48 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
(b) Such a presumption is re buttable presumptio n and not a conclus ive presum ptio n beca use it is a presumptio n of fac t, not a presumption of law .
15.1 The above judgments of various courts had held that the presumptio n ava ilable in sectio n 292C of the Act is a rebuttable presumptio n, Mere possession o f do cuments pe rse do es not warrant any addition on the basis of values in non e xecuted documents . The AO cannot make a ny addition simply on the bas is o f this presumption but need to bring other corrobo rative evi dences on record.
16. Conc lus ion:
16.1 Regarding the photocopy of the ATS and the rece ipts signed by the se ller in conte xt of this ATS, following fac ts are observed:
(i) This ATS and the receipts are in no way connec ted to the appe llant, as the transactions are between different parties mentioned in this ATS. The appellant is in no way connecte d with this ATS as discussed in Para 10 above.
(ii) The AO had mentioned in the asse ssment or der that this ATS was the re scinde d a nd not executed be yond the payments of R s. 10 crore as reflected in the seized photoco py of re ceipts. This fact is evident fro m the statement o f Sh. Brij Kumar and evide nces of return o f cheque amounts m entio ned in this A TS by sellers to him.
(iii) The AO had initiated 153C proceedings in the case of sellers & buyer s mentione d in ATS, the reby himself admitting that this agreement and the transactions mentioned the rein belong/pertain to the pe rsons mentioned in this ATS and not the appellant. In fact, on the basis of cash transactions reflected in the seized documents, the 49 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta addition o f Rs 6 Cr had been made by the AO, in the case of Sh. Brij Kumar (one of the buye rs in ATS) in the, 153C order passed on 06.08.2021.
(iv) This property was late r registere d at value of Rs. 16 crores in the name of the appellant and his wife and no evidence of any payment propose d or made over & abo ve this amount had been brought o n recor d by the AO. Ho wever, the AO had presumed on the basis of the value mentioned in the ATS tha t the actual value o f the pro perty could be at Rs. 40.06 crores.
16.2 As disc ussed abo ve, the presumption u/s 292C is rebuttable and the appe llant had rebutted the value of property mentio ned i n the photocopy o f ATS of thir d parties with fo llo wing the evidences:
(i) The agreements on stamp papers are private commercial agreements be tw een two parties. The ATS is be tween buye rs C & D with sellers A & B , whe reas the registe red sale deed is between o ther set o f buyers E & F with selle rs A & B. The price and the terms of agreement are specific between the parties and canno t be generally importe d from the agreement between one set of parties with the agreement betwee n the o ther set o f parties. Furthe r, the ATS was never eventually acted upon and the amount exchanged in this ATS before cancellatio n was lesse r (Rs.
10 cro res) than the amount mentioned in sale dee d (16 crores). However, in this case the sellers and the property in question are same in the ATS between one se t of buyers and re gistere d sale deed with another set of buyers , therefore, some reference can be draw n from the co ntents of ATS.
50 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
(ii) There is no adverse statement o f any perso n connec ted with ATS or the re gistered sa le deed, from where the value of prope rty at Rs. 40.06 cro re can be established independe ntly.
(iii) It is observe d that as pe r the photoco pies of seized documents , the payment of only R s. 10 crores had been made by the buyers to the sellers of this ATS. There are evide nces that the payment made in c heque had been returned back to the buyer after fe w months . There is no evide nce on record, who have cancelled the agreement and under what circum stances it had bee n cancelled. As per the terms of agreement, the earnes t money o f Rs . 5 c ror e was eithe r to be forfeited by selle rs or it w as to be returned double o f this am ount alongw ith the other advances by the sellers, de pending on the default of party. There is nothing on record, exce pt the re turn of payment of Rs. 1.5 crore receive d by se llers in cheque from Shri. Brij Kumar as per the ATS. Thus , the penal te rms of the ATS have not been complied either by buyers o r sellers mentioned in this ATS, Further, as discussed in Para 10.2.1 abo ve, it has been observed that the linkage of Sh. R. K. Chawla as buyer in ATS and as w itness in registere d sale deed o f the appellant canno t be established in the give n circumstances. It is observed that the value e xchanged between the buyers and sellers as pe r sei zed pho tocopies of documents was just Rs. 10 cro res, which is not more than the value of Rs. 16 crores as mentioned in sale deed. These facts cause do ubts on the purpose of execution of this ATS and the value of pro perty mentioned there in.
(iv) The agreement to sell is a pro pose d contract between the par ties and in this particular case; the appe llant is not a 51 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta par ty to this ATS . In the situation where the ATS has been denie d by all the parties to it and the conte nts & purpose of this pa rtly executed ATS is no t fully establis he d, the presumptio n u/s 292C, fo r the fair market value o f this prope rty at Rs. 40.06 crores, as mentioned in the ATS canno t be taken on the face value . There co uld be a case where buyers of ATS might have ne gotiated at higher value than the market value of the proper ty o r some issues might have c ropped up which le d to the cance llation of this agreement at mutually agreed terms between the buyers & sellers of this ATS and the penal terms of the ATS were not invoked. At the most, this info rmation of value of Rs. 40.06 crore mentioned in the agreement could have bee n the starting po int o f Investigatio n to bring on recor d evidences of a different va lue than mentione d in the sale dee d o f the appe llant.
(v) The value mentio ned in the re gistered sale deed of Rs. 16 crore w ith the Go vt. Authorities, without any evidence on record, of any o ther amount paid by the appellant/his spouse to the sellers and the confirmative affidavit o f the seller, which have not been rebutted by the AO in the assessment order. These are admissible concrete evidences, rebutting the presumption of the v alue adopted by the AO as per the seized ATS belonging to thir d parties.
(vi) The appellant had filed the valuation re port of a Govt.
regis tere d value r, where in the pro perty i n que stio n had been v alued at Rs. 15,46,43,516/- . The c irc le rate of the prope rty as pe r registe red dee d is at Rs.15,46,43,516/-. Further, the a ppe llant had file d two comparable instances of the sale of pro perty in the same are a, which also re fle ct the similar price as mentio ned in the sale deed of the appellant.
52 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta Neithe r any evidence have been found during the sear ch no r brought by the AO on record in the assessment procee dings, whic h sho ws that the appellant & his wife had made any payment over and above the amount reflec ted in sale deed. In the searc h on the appellant, no source of any unacco unted inco me generation by the appellant or his wife has bee n found. These are enough evide nces to rebut the presumptio n of 292C used by the A O against the appellant on the basis o f unexecuted photo copy o f ATS se ized to whic h the appellant or his wife not a party. With these evide nces on reco rd, the burden o f proof shifts to the AO and he ca nno t ado pt the va lue o f pr operty mentione d in the ATS to replace the figures of e xchanged price as mentioned in the re gistere d sale deed. Furthe r, the pro vis ion of se ction 69 canno t be invoked against the buyers only on presumptio n, in the absence o f any e vidence o f money actually paid over & above the re gistered sale dee d had been brought on record.
(vii) The abo ve judgm ents o f various courts had held that the presumptio n available in section 292C of the Act is a rebuttable presumption, mere po ssession of documents perse does not warrant any addition and the AO c anno t make any addition simply on the basis of this presumptio n. In the case laws cited abo ve, the courts have mentioned that presumptio n cannot be made for the value mentioned in ATS even if it belongs to the same parties , for the same prope rty, where the sale deed is at lower value than mentioned in ATS .
(viii) In order to invoke the provisions of Section 69 of the Act, the AO o ught to have establishe d:
53 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
a) That the Appellant had made investment during the above assessment year. Section 69 cannot be invoked o n the basis of suspicion. It is for the AO to prove that assessee has made the payment over and a bove the amount mentioned in the purc hase deed.
b) That the said investment was not recorde d in the books of accounts, if any, maintained by the Appellant for any source o f income, &
c) That the Appellant has either no t o ffered any explanation as to the nature and source of investment OR the explanation offe red by the A ppellant is not satisfac tory in the opinio n of the AO.
In the present case, the assessment order is comple te ly silent as to how and in which manner the AO had invoked the provisions of Section 69 o f the Act. There are no details in the assessment order of the unexplaine d inve stment added by the AO. No material has been brought on record, e xcept for presuming pro bability that the appe llant must have purchase d the residential house pro perty at- least for the amounts state d in the photocopy of the ATS. There is no other ev idence on record that anything o ver and above , as mentioned in the r egistered sale deed, is paid by the appellant.
(ix) From the abo ve decisions a t (xxiii) to (xv) in para abo ve, following note worthy principles follo w-
a) Every fiction created unde r law has a purpose and the meaning of expressions used in s aid deeming pro vision should be cons idere d in ordinary sense, in which purpose, deeming provisio n is create d se rves the purpo se.
54 ITA Nos. 1863 & 1864/Del/2021CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta
b) If the technical meaning ascr ibe d to the e xpressions used in legal fic tion enla rges the original scope for which legal fic tion was introduced, in such case , such ( technical) meaning should not be co nsidere d.
c) If the terms used in the deeming provisio n are defined somewhere else in the Act and if ado pting suc h meaning would fac ilita te work ing of the Act in acco rdance with the o bject of such deeming provision, then such meaning should be adopted. Howeve r, the intent and purpose o f bringing deeming provisio n cannot be allowe d to be whittled down by bringing into play the mea ning of terms use d somewhe re else in the Act by the le gislature.
d) There canno t be deeming w ithin deeming while inte rpre ting deeming provision.
16.3 The Hon'ble Ape x Court decisio n i n the case of K.P. Vargheser vs. ITO [1981] 131 ITR 587, had he ld that the burden of proving is that on the Revenue whe n there is allegation of unde rstatement o r concealment in the conside ration shown. Further it had been he ld by Delhi High co urt in the case o f ACIT vs. M/s Vatik a Gre enfie ld ( P) L td (Supr a) that the deeming prov isio ns of the statue should be strictly interpreted and canno t be e xtended beyo nd the legislative scope. The presumptio n u/s 292C is re buttable and the appe llant had rebutte d it with sufficient e vidence s. The AO had observed that Sh. R.K. Chawla is a common link be twe en the ATS (as buyer) and Sales deed (as witness) of the appellant, however as disc ussed in para 10.2.1 above , it e merges that this link is very weak link to establis h in the given facts & circumstances. The gustimate of the AO that these seized papers might have been kept by the appellant to complete the cha in of prope rty transactio ns. It is observed that these are pho tocopies o f the documents, which are not adm issible 55 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta evide nces in the Court of L aw . The une xecute d ATS, otherwise also , will not fo rm part of the complete chain of transac tions. Furthe r no proof of any pay ment made by the appellant & his wife, over and above the amount mentioned in the registe red sale deed had been found during the search on the appe lla nt. As held in the case of CIT, Delhi-V vs . Provestment Secur ities (P.) Ltd (Supra), that fo r invo king section 69, the re is precondition to bring e vide nce that the appe llant had made investm ent, which had not been recorded in the books. I n the case o f Dy. C IT-2(1) , Raipur (Cg) vs Shri Chhaganlal Mundra,, Raipur (supra), the ITAT had he ld that "I find that before invoking the pro vis ions of Sectio n S9C , it has to be proved beyond all shado ws of doubt that the expenditure has bee n incurre d as the words " in the opinion of the Assessing Officer" do not precede the phrase " an assessee has incurred any e xpenditure" . The opinio n of the A.O is mater ial and rele vant only with regar d to the explanation of the a ppe llant and not with regard to the incurre nce of the expenditure . I n the insta nt case , the A.O has not come across even a single bill or voucher o r delivery challan to eve n indicate that the appe llant inc urred any e xpe nditure as alleged by the A.O. It is no t the case of the A.O that the parties whose name have been found recorde d in the diary have confirme d having receive d the payments from the appellant even remotely or indirectly" . In the case of Ram Krishan G upta vs. DCIT CC-4, New Delhi , the ITAT Delhi had he ld that" But it is not necessar y that the price s tated in the agreement will be the price shown in the sa le deed. Sometimes, it may be higher and sometimes it may be lower. Sometimes intentionally a lesser va lue may be show n in the sale dee d. Eve n if it is assumed to be so, unless it is prove d that the agreement was acted upon and unless the amount state d in the agreement was paid for the sale one canno t come to the conclusion that the price mentioned in the sale deed is not correc t -There is no rule tha t the amount shown in the receipt was the a ctua l amount paid." In the case o f Smt. Kundan 56 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta Singh vs ACIT (Supra) where the AT S of higher value and sale deed of lower value, w ere found for same set of buyer s/s ellers/ pro perty, there was mention of cheque payme nts by the buye r to the seller in ATS whic h w as found to be correct from the bank account of the appe llant and inspite of that it was held that the additio n on the basis of ATS could not have been made in the case of buyer. In the case of CIT vs. Ved Pra kash Choudhary (2008) 305 ITR 245 (De l.) , the juris dic tio nal court had he ld that no additio n can be made if there is no ev idence found of any payment as per MoU(ATS) by the buye r to the se ller, altho ugh the amount as written i n MOU w as higher. It was held that once the buye rs and sellers have de nied about receipt o f any such cash amount, there o ught to have been corroborative evidence to show that there was in fac t such a transfer of money . In the case of ACIT vs. Rakesh Narang (Supra), the juris dic tio n of Hi gh Cour t had he ld that " there should be some positive evidence with the AO to find that the assesse e had, in fact, inves ted more am ount than that ac tually reco rded in the books o f account. Suc h a finding by the AO can be based o n some positive evide nce a bout the making of more investment than that declare d in the books of acco unt. This sectio n canno t be triggered on a mere presumptio n of the AO. When the legislature has unambiguo usly provide d so, it is impermissible to substitute such a finding w ith a presumptio n about actua l investment having been made by the assessee at a le vel higher than that depicte d in the books of account. Only some positive a nd irrefutable evidence converts a presumptio n into a finding. A bsent affirmative evidence, what remains is a mere supposition o f unexplained inves tment etc., which canno t take the place o f a finding of the AO towards unexplained inves tment."
Similarly in the case of CIT vs. Kulwant Rai (Supra), the Juris dic tio nal De lhi High Co urt ha d held that " since the Assessee 57 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta had not signe d the agreement, no liability can be attr ibute d qua that agreement towards the Assessee since he is no t party to the agreement till he had signed the same. The mere fact that this agreement was fo und in the posses sion of the Assessee does not lead us any whe re. We find no hesitatio n in holding that this additio n of Rs. 17,00,892/- made by Assess ing Officer is base d on surmises and guess work . The Hon'ble Supreme Court in Commissioner o f Income tax v. Daulatram Rawatmull , (Supra), had held that even if circums tances raise a suspicio n, suspicion cannot tak e the place of evide nce. In v iew of these facts and position of law it is obser ved that the c irc umstantial evidences in the case of no n executed ATS of third party, c annot ta ke the place of evidence in the case o f the appe llant. The AO had not brought any e vidence of any payment made by the appellant/his wife ove r & above the amount re flected i n the s ale deed of the appellant/w ife. The precondit ion to invoke section 69, that the appe llant had made unacco unte d investment in prope rty, is not backed by any evidence on record of unaccounted payment by the a ppellant/his wife to the selle rs . The appe llant had rebutte d the evidences found during the search with c redible admiss ible ev idences to establish the price of the pr operty paid by him/his wife was as pe r the registe red sale deed and thereafter the burden o f proo f shifts to the AO. As discussed abo ve the courts have not agree d to pre sumptio n o f 292C for invok ing sections re lating to deemed income/expenditure on the basis of highe r value in ATS , where the selle r/ buye r/property ar e same and the amounts in ATS were much higher tha t the v alue in the sa le dee d, in the absence o f any proof o f payment made by the buyers to the seller s. The facts o f the c ase o f the appellant are on ve ry so und footing as compared to the facts o f these cases cited above. The Kerala High Court in the case of CIT vs . Smt. K .C . Agnes ha ve even he ld that the value in ATS may be higher or lower than the va lue in sale dee d and the amount state d in the sa le deed was the co rrect amount unle ss there we re 58 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta circums tances to ignore the same. The appellant is not a party to the ATS, the refo re the presumptio n of v alue o f prope rty as mentione d in this une xecuted ATS between thir d parties & denied by all the parties canno t be take n against the appe lla nt, without bringing independent evide nces on this value of property to be ado pted in the case of the appe llant. Furthe r, during the se ar ch, post se arch investigations & the assessment proceedings, no e vidence of any amount paid over & above the value of Rs 16 Cr mentio ned in the registe red sale dee d had been brought on record. In these facts and circumstances of the case, it is held that the AO had been no t able to establish with evide nces on record that the appella nt had made any investment over and a bove the amount of Rs 8 Cr. (50% s hare of the appellant of tota l consideratio n of Rs. 16 crores) as mentione d in the regis tere d sale deed. Acco rdingly, the addition of Rs 12.03 Cr (correspo nding to his 50% share in the prope rty) made by the AO u/s 69 r .w .s 115BBE, is no t s ustainable and is hereby delete d."
17. In crux, the agreement found and seize d and the payme nts made thereon are no way connected to the assessee. The Assessing Officer clearly accepted that the agreement was cancelled and not executed.
Assessment u/s 153C concluded in the assessme nt of one of the buyer in the agreement mentioned being taxed a s per the cash transactions mentioned in the agreement. Hence, assessee canno t be held respons ible to co ntents of the agreement for which he is neither signa tory nor executor.
The property was re gistered by the assessee and no evidence of payment by the assessee is mentioned neither 59 ITA Nos. 1863 & 1864/Del/2021 CO Nos. 25 & 28/Del/2022 Yash Pal & Alka Mendiratta in the agreement nor on any material gathered during the searc h or post search enquiries.
Even the che que payments made by the alleged buyer in the agreement have been returned ba ck to the buyer. Hence, the assessee cannot be tied up w ith the agreement which is executed between four unrela ted parties to the assessee.
The ld. CIT(A) has duly examined the e vidences on record and the confirmative e vidence of the se ller and came to a conclusion that assessee canno t be taxed for the money which has not paid.
The ld. CIT(A) has also examined the comparable instance s of the sale of property in the same area which is at parity with the value adopted and purchased by the asse ssee.
18. Hence, in view of the tangible material on record duly examined by the ld. CIT(A), we hereby affirm the decis ion of the ld. CIT(A).
19. Since, the appeals of the Revenue are dismis sed, the Cross Obje ctions file d by assessees are dismissed as infructuous.
20. In the result, the appeals of the Revenue are dismissed and the Cross Objections of the assessees are also dismissed. Order Pronounced in the Open Court on 08/03/202 4.
Sd/- Sd/- (Astha Chandra) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 08/03/2024 *Subodh Kumar, Sr. PS*