Income Tax Appellate Tribunal - Chandigarh
Shri Satnam Singh, Ludhiana vs Assessee on 26 September, 2016
I N T H E I N C O M E T A X AP P EL L AT E T R I BU N A L
' S M C ' BEN C H , C H AN D I G AR H
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA No.144/CHD/2016
Assessment Year : 2008-09
Shri Satnam Singh, Vs The DCIT,
B-XX-3152, Gurdev Nagar, Circle-VI,
Ludhiana. Ludhiana.
PAN: ACFPS2754L
(Appellant) (Respondent)
Appellant by : Shri Sudhir Sehgal
Respondent by : Shri Yogendra Mittal,DR
Date of Hearing : 21.09.2016
Date of Pronouncement : 26.09.2016
O R D E R
This appeal by assessees has been directed against the order of ld. CIT(Appeals)-3 Ludhiana dated 30.12.2015 for assessment year 2008-09, challenging the orders of authorities below in re-opening the assessment under section 147/148 of the Income Tax Act and addition of Rs. 25,73,900/-.
2. Briefly the facts of the case are that assessee filed the return of income declaring income of Rs. 19,44,200/- which was processed under section 143(1) of the Act. Subsequently the information was received from DCIT, Central Circle-I Ludhiana vide letter dated 30.09.2011 that during search operation under section 2 132(1) of the Income Tax Act conducted on 21.02.2008 at the residence of Shri Suresh Khanna and Shri Rupinder Deep Singh, Directors of M/s Basera Realtors Pvt. Ltd. and also of other persons, certain incriminating documents were found and seized. The Assessing Officer reopened the assessment under section 148 of the Act and made addition of Rs. 25,73,900/- on the basis of photo copy of unsigned agreement found during the course of search and transferred to the Assessing Officer.
3. The assessee challenged the re-opening of the assessment and addition of Rs. 25,73,900/- before ld. CIT(Appeals). It was submitted that re-opening and addition have been made on alleged unsigned agreement which was with the Assessing Officer. It is only a draft in the name of seller/purchaser and even witnesses have not signed the agreement, therefore, it cannot be relied upon in evidence. The propery in question No. B-21- 1074/274/I, Industrial Area-B measuring 577 sq.yds. was purchased by Shri Bhagveer Singh S/o Shri Satnam Singh for Rs. 36 lacs vide Registered Sale Deed dated 21.05.2008. He is existing assessee and entire sale consideration including registration expenses have been given by assessee on behalf of his son to the seller. It was, therefore, submitted that photo copy of unsigned agreement is not valid evidence and is illegal and cannot be read in evidence.
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4. The ld. CIT(Appeals) found that return was earlier processed under section 143(1) of the Act, therefore, relying upon decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500 and that assessee has not made submissions for re- opening of the assessment, confirmed re-opening of the assessment under section 147/148 of the Act. The ld. CIT(Appeals) also confirmed the addition on merit. The ld. CIT(Appeals) noted that the property mentioned in the seized document and contents thereof were found correct and true as the property was purchased by son of the assessee and entire consideration have been paid by the assessee. The details of property and some cheques found tallied with the sale deed and the agreement found during the course of search. The appeal of the assessee was, accordingly, dismissed.
5. I have heard ld. Representatives of both the parties and perused the material on record. The Assessing Officer reopened the assessment under section 147 of the Act by recording the following reasons, copy of which is filed at page 1 of the Paper Book :
1. Name & Address of the assessee : Shri Satnam Singh S/o Shri.Ranjit Singh,B-20/3152, Gurdev Nagar, Ludhiana.
2. Permanent Account No. : ACFPS2754L
3. Status : 01(Individual)
4. Assessment year : 2008-09
5. Date : 09.11.2011 4 Reasons recorded for issue of notice u/s 148 for the belief that the income has escaped assessment Return declaring' income of Rs. 19,44,200/- was filed by the assessee on 29.09.2008 and the same was processed u/s 143(1) of the Income Tax Act, 1961 on 22.03.2010.
As per information with the department, Sh. Satnam Singh S/o Sh. Ranjit Singh R/o B-20-3152, Gurdev Nagar, Ludhiana purchased property No. B-21-1074/274/1, Industrial Area - B,Ludhiana measuring 577 Square Yards from Sh. Gurinderjit Singh S/o Sh. Surinder Singh R/o F-l/5, South City, Ludhiana (1/3 share), Sh. Rupinderjit Singh S/o Surinder Singh R/o Maraj Avenue, Ontario, N-8- B, 3-X-3, (1/3 Share) and Sh. Parminderjit Singh S/o Sh. Surinder Singh R/o 42-B, Sarabha Nagar, Ludhiana (1/3 share), @ Rs. 10,700/- per square yard. As per agreement the assessee paid Rs. 25,00,000/- to sellers as biana for the said transaction during the financial year 2007-08 relevant to the assessment year 2008-09. As per agreement the balance amount was to be paid at the time of registration of the said- property, which was fixed to be registered on or before 31.12.2007. The source of investment in the said property including biana of Rs. 25,00,000/- remained unexplained.
Therefore, I have reasons to believe that the income of Rs. 61,73,900/- including advance money of Rs. 25,00,000/- has escaped assessment in view of section 147 of the Income Tax Act, 1961 which is required to be assessed for the assessment year 2008-09.
Issue notice u/s 1 48 of the income Tax Act, 1961.
Sd/-
(Gurmeet Singh Sohal) Income Tax Officer Ward-VI(3), Ludhiana."
6. It is well settled law that validity of the re-opening of assessment shall have to be decided on the basis of the reasons recorded by the Assessing Officer for re- opening of the assessment. It is admitted fact that during the course of search conducted on 21.02.2008 at 5 the residential premises of Directors of M/s Basera Realtors Pvt. Ltd. and others, photo copy of the unsigned agreement between Shri Gurinderjit Singh etc. and Shri Satnam Singh (assessee) was found, copy of which is filed at page 4-5 of the Paper Book and translated copy at page 6 of the Paper Book. It is, therefore, admitted that the seized document is photo copy of unsigned agreement, therefore, neither the seller nor the purchaser and witnesses have signed this agreement. No persons from whose possession this unsigned agreement was found have been examined by the Income Tax authorities. The agreement is not found from the exclusive possession of the assessee. Hon'ble Delhi High Court in the case of CIT Vs Kulwant Rai 291 ITR 36 held as under :
"Held, dismissing the appeal, (i) that, admittedly, the assessee had not signed the agreement in question and since he had not signed the agreement, no liability could be attributed qua that that agreement towards him since he was not a party to the agreement till he had signed the agreement. The mere fact that this agreement was found in the possession of the assessee did not lead anywhere. Thus, the addition of Rs. 17,00,892 made by the Assessing Officer by way of half share of the assessee in the earnest money was based on surmises and guess work only and was liable to be deleted."
7. The ld. counsel for the assessee also relied upon decision of Hon'ble Punjab & Haryana High Court in the 6 case of Smt. Darshan Kaur Vs The Amritsar Primary Cooperative Agricultural Development Bank Ltd. (2010) (2) PLR 289 in which it was held that "Photo copy of mortgage deed brought on record is no proof of execution of d o c u me n t . Photo copy of d o c u me n t is neither a primary nor secondary evidence." This unsigned agreement have been forwarded by DCIT, Central Circle-I Ludhiana to the Assessing Officer on the basis of which the aforesaid reasons have been recorded by Assessing Officer for re-opening of the assessment. Since the seized document is not found from the possession of the assessee and admittedly the assessee had not signed the agreement in question and since he had not signed the agreement, no liability could be attributed qua that agreement towards him, since he was not a party to the agreement till he had signed the agreement. The decisions in the cases of Kulwant Rai (supra) and Smt. Darshan Kaur (supra) squarely apply to the fact of the case since photo copy of unsigned agreement was found, therefore, it cannot be read in evidence against the assessee It is not a valid document to be considered adverse in nature against the assessee, therefore, there is no reason to believe for the Assessing Officer to have any information that income chargeable to tax has escaped assessment.
7(i) The authorities below have been holding that the agreement in question is admissible against the 7 assessee because two of the cheque amounts mentioned in the agreement tally with the sale consideration mentioned in the sale deed of Shri Bhagveer Singh dated 21.05.2008. The date of sale deed i.e. 21.05.2008 would not fall in assessment year under appeal i.e. 2008-09 and there is no evidence or material available on record to prove genuineness of the photo copy of the unsigned copy of the agreement. Therefore, merely because some cheque amount is same in both these documents, would not prove that addition could be made against the assessee on the basis of photo copy of unsigned agreement. Therefore, there was no reason for the authorities below to hold that the contents given in the photo copy of unsigned agreement are correct. Since on the basis of unsigned agreement, no liability could be attached to the assessee and it is not admissible in evidence against the assessee, therefore, there is no valid reason recorded by the Assessing Officer for the purpose of re-opening of the assessment in the matter. There is also no basis for making any addition on merit on the basis of photo copy of unsigned agreement.
8. In this view of the matter, I am of the view that Assessing Officer was wholly unjustified in re-opening of the assessment under section 147/148 of the Act and also in making addition of Rs. 25,73,900/-. I, therefore, set aside and quash re-opening of the assessment under 8 section 147/148 of the Act and also delete the addition of Rs. 25,73,900/-.
9. In the result, appeal of the assessee is allowed.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/-
(BHAVNESH SAINI) JUDICIAL MEMBER Dated: 26th September, 2016.
'Poonam' Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar, ITAT/CHD