Indian Kanoon - Search engine for Indian Law

"12.1 I have gone through the document in question and I find that the same did not bear the signature of the appellant and thus the seized document was an unenforceable agreement and no evidence for investment presumed to have been made by the appellant, was found during search or thereafter. In my considered view, according to the provisions of section 10 of the Indian Contract Act, any contract/ agreement should be signed by the parties to the agreement which is the first and foremost condition precedent for a valid contract. As admitted by the AO in the remand report dt 05-03-10 the impugned document did not bear the signature of the appellant. Even assuming that only one party has signed the contract/ agreement and the other party refused to sign the same, the same does not constitute a valid contract in the eyes of Law as there is no consent between the parties which is one of the essential ingredients of a valid contract. Simply because one party has signed the contract and the other has not, the same will not constitute a valid, contract because both the parties have to invariably execute and sign such document to make such agreement/ contract authentic, since a contract without consent between the parties is ab initio void. In CIT v. Kulwant Rai [2007] 163 Taxman 585/291 ITR 36 (Delhi) the facts of the case before the HC were that the appellant had not signed the agreement in question and since the appellant had not signed the agreement, it was held by the Del. HC that no liability could be attributed qua that agreement towards the appellant since he was not a party to the agreement till he had signed the same. The mere fact that agreement was found in the possession of the appellant did not lead one anywhere. The addition made on surmises and guess- work was deleted . In M.M. Financiers (P.) Ltd. v. Dy. CIT [2007] 17 SOT (Chennai) (URO) the AO made addition towards undisclosed purchase consideration of certain property on the basis of third party's statement and an unsigned agreement found during search. On these facts, it was held that the third party statement and unsigned agreement cannot be acted upon since there was no valid seized material representing the impugned addition towards undisclosed purchase consideration. The addition was based only on surmises and statement recorded from third party. It was held by the Hon'ble Tribunal that while determining the undisclosed income in the search assessments, the AOshall be specific in his statement. He cannot draw his inference on the basis of suspicion , conjectures or surmises, since suspicion , however strong, cannot take place of material proof in support of findings of the AO. The AO should act in a judicial manner, proceed with judicial spirit and should come to judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily or capriciously. An assessment made on inadequate material cannot stand on its own leg. No addition can be made on the basis of noting on loose ITA Nos.126-132/BLPR/2011 sheets in the absence of corroborative material if the Revenue has not found any circumstantial evidence in the form of any investment in cash, jewellery etc. Reliance is also placed on the decision of the then Jurisdictional Bench of ITAT Nagpur in Laxmandas Kukreja ITA/SS No.86/ Nag./ 2001. For the reasons extensively enumerated above, the impugned addition is unsustainable on facts and in law. The same is, therefore, deleted. The appellant accordingly gets relief of Rs.2,00,000/-."