A simple addition under Section 69A based on an unsigned agreement is not viable
Fact and isuue of the case
The grounds of appeals raised by assessee are identical read as under:-
1) a) Because upon due consideration of facts and in the circumstances of the case, the authorities below are highly unjustified in making and sustaining addition of Rs. 1,50,23,692 on account of wrong allegation of payment of on money for Purchase of Shop No. 387 in Habitat Centre Indirapuram, Ghaziabad. The addition made is arbitrary and is against the facts and circumstances.
b) Because in spite of these being no material to suggest that such payment has been made, such addition of Rs. 1,50,23,692 has been made and sustained arbitrarily presuming that such payment has been made.
c) Because the assesse had never got the possession of the property and had not even claimed such amount as refund before the IRP. The addition has been made and sustained without consideration of overall facts and circumstances.
2) Because in any view of the matter the authorities below have erred in levying and sustaining tax us 115 BBE. Such levy is highly excessive and unreasonable.
3) Because while making the assessment the AO and while sustaining the addition the Id. CIT(A) made various observations / conclusion, which are contrary to facts.
4) Because the appellant denies liability of interest under the act.
5) Because the order appealed against in contrary to facts, law and principles of natural justice and in any view of matter deserves to be quashed.
6) Because the assessee craves leave to add, amend, modify or cancel all or any grounds of appeal.
The Ld. Representative both the sides agreed that in these two appeals sole ground of assessee has been based on identical facts and circumstances therefore we are taking up ITA No. 1 553/Del/202 1 Smt. Anil Bala Goyal case as a lead case.
The learned assessee representative (AR) submitted that the issue is squarely covered in favour of the assessee by the order of the Tribunal dated 10.10.2022 passed by ITAT Delhi Bench in the case of Smt. Shashi Yadav & Poonam Yadav vs. DCIT Central Circle Ghaziabad, in ITA No. 1123 & 1121/Del/2021 respectively for A.Y. 2018-19 arising out of the order of Ld. CIT(A) Kanpur-4 dated 12.08.2021. The Ld. AR explained that the additions in the present case as well as in the case of Smt. Shashi Yadav & Smt. Poonam Yadav has been based on so called incriminating material LP-70 & 71 found at the place of the assessee for the similar kind of shops. The Ld. AR drawing our attention towards para 90 to 95 of the Tribunal order (supra) submitted that the Tribunal categorically held that there was no corroborated evidence, no cross examination of assessee’s statement and no evidence that fair market value is higher than that recorded in the sale deed. The Ld. AR also pointed out that in the absence of such findings with supportive evidences, any addition made on the basis of presuming that the figures written on a loose sheet of paperbook is the fair market value of the property, would not be justified and against the law laid down by the various judgment of Hon’ble Supreme Court and High Court and order of the Tribunal including judgment of Hon’ble Supreme Court in the case CBI vs V C Shukla reported as (1998) 3 SCC 410.
Replying to the above the Ld. DR place strong reliance on the order of the A.O. as well as the Ld. CIT(A) and submitted that the incriminating material clearly revealed that the assessee has made payment of own money for purchase of shop no. 385 in the Habitat Centre Indirapuram, Ghaziabad therefore the addition may kindly be sustained. However he did not controvert that on the identical facts and circumstances the ITAT Delhi Bench in the cases of Smt. Shashi Yadav & Smt. Poonam Yadav vs. DCIT (supra) has granted relief to the said assessee’s and he could not show us any dissimilar for different facts and circumstances from the present appeals of Smt. Anil Bala Goyal and Maanya Goyal.
The ITAT Delhi Bench after considering the rival submissions of both the sides and factual analyses and also considering the relevant case laws relied by both the sides has categorically held that pages 70 & 71 of annexure LP- 1 was found and seized and the A.O. treated the difference amount found and noted in LP- 1 page 70 & 71 the amount disclosed by the assessee as explained investment towards purchase of shop 384 and made addition u/s. 69 of the Act. The Tribunal after considering the totality of the facts and circumstances and evaluating the rival submissions and case laws held that undisputedly transfer of property would always be between two parties one being seller and other the purchaser. Thereafter it was held that it cannot be assumed that one party disclosed correct figure of consideration and other party concealed the true value of property. It was also observed that there was no mention about the action taken by the Revenue in the case of seller who at sold the shops of the assessee. It was incumbent upon the A.O. to demonstrate the correct figure of market value when he was not accepting the value disclosed by the assessee. The Tribunal finally held that in absence of such findings with supportive evidences additions based on the presumption that the figure noted on a loose sheet of paper is a fair market value of property would not be justified. The Ld. CIT DR could not show us any dissimilar or glaring situation which could lead us to take it different view from the view taken from the conclusion recorded by the coordinate bench of Tribunal in the case of Smt. Shashi Yadav & Smt. Poonam Yadav vs. DCIT (supra). It is also relevant to note that in the present appeals the assessee Smt. Anil Bala Goyal purchase shop no 384 and Smt. Maanya Goyal purchase shop no 385 and the A.O. made addition on the basis of identical material i.e. annexure LP- 1 pages 70 & 71. Therefore respectfully following the order of the coordinate bench of ITAT Delhi in the case of Smt. Shashi Yadav & Smt. Poonam Yadav vs. DCIT (supra). Grounds of assessee are allowed. In the result the appeal of the assessee is allowed.
Observation of the court
On careful perusal of above judgments and other we find that the Hon’ble Bombay High Court in the case of PCIT vs. Nexus Builders and Developers (P.) Ltd. (supra) held that there was no evidence found against the respondent and no enquiry was carried out by the A.O. to find out the more details and when the entire addition has been made on hypothetical basis then the Tribunal was right in deleting the addition. In the case of Monohar Lal Rattan Lal vs. DCIT (supra) coordinate bench of ITAT Amritsar held that wherein addition was made on the basis of unsigned agreement then no addition can be made in the hands of the assessee in this order the coordinate bench of Tribunal held that It is true that the finding of this document from the premises of the assessee had raised doubts in the mind of the AO with regard to the actual sale consideration of the said property. But it is not sufficient and enough to hold and sustain the addition. If the AO was not satisfied with the version of the assessee, it was incumbent upon him to examine the seller of the property, and ascertain the facts regarding the actual sales consideration. In the absence of having carried out any such exercise, we are satisfied that a case has not been made out for making the addition.
In the similar manner coordinate bench of Delhi ITAT in the case of Saamag Developers (P.) Ltd. vs. ACIT held that when the Assessing Officer has not made any independent enquiry from such persons and in the absence thereof no addition can be made. Especially when the Assessing Officer did not bring any adverse material on record or gave a finding with cogent evidence contrary to the explanation of the assessee and has not brought any independent corroborative material suggesting that the assessee has purchased such land/property and has made payment as recorded in the seize paper. In the present case also the Assessing Officer has made addition merely on the basis of so called agreement which has not been signed by the assessee and the A.O. has not brought on record any other positive or corroborative material to show that the assessee has actually purchased property under this agreement and made payment of Rs. 54,00,000/- in cash out of books of accounts from the income earned from undisclosed sources. Therefore, we reach to a logical conclusion that the addition made by the A.O. and confirmed by the Ld. CIT(A) u/s. 69A of the Act, is not sustainable hence we direct the A.O. to delete the same.
Ground no. 2 of assessee is consequential regarding levy of tax u/s. 115BBE of the Act. Since in the earlier part of this order we have allowed ground no. 1 of assessee, deleted the base addition u/s. 69A of the Act. Therefore, ground no. 2 of assessee is not being adjudicated upon being consequential and thus having become academic and infructuous. Other grounds of assessee are general in nature which do not require any adjudication.
It the result, ITA nos. 1533, 1534, 1535 & 1536/Del/2021 of the assessee are allowed and ITA nos. 1807 & 1808/Del/202 1 of the revenue are dismissed.
Read the full order from hereAgreement-1
The tribunal has ruled in favour of the assessee and dismiss the appeal.
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