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Income Tax Appellate Tribunal, CHANDIGARH
Before: SMT. DIVA SINGH, JM
Hearing conducted via Webex आदेश/ORDER
The present appeal has been filed by the assessee assailing the correctness of the order dated 04.07.2019 of CIT(A) Patiala pertaining to 2010-11 assessment year on the following ground :
1. That the impugned order of the Ld. CIT (Appeals) Patiala and order of ITO Ward-Sunam is bad in law and against the facts of the case.
2. That Ld. CIT (A) erred in upholding the order of A.O. without application of judicious mind and without appreciating the material on record. The order passed is in violation of the principles of natural justice and in particular principles of income tax laws.
3. That the Ld. CIT(A) erred in upholding the assessment of A.O. made on the basis of fake agreement to sell and manipulated statement of witness and arbitrarily making addition of Rs. 25,00,000/- on account of alleged payment of advance made to the seller of land.
ITA 1277 /CHD/2019 A.Y. 2010-11 Page 2 of 7 4. That the reliance placed on the decision of Hon'ble ITAT Chandigarh Bench Chandigarh in the case of Mohinder Singh and Malkiat Singh is misplaced, as the facts of the case of Appellant are distinguishable from the facts of that case.
The ld. AR reading from the submissions before the AO and the arguments advanced before him as well as before the CIT(A) recorded in the order itself submitted that the orders passed by the tax authorities are bad in law for want of jurisdiction. It was his submission that the so called information relied upon is the statement of Shri Bhagwant Singh stated to be witness to the Agreement to Sell which is a photo copy and that too not very legible.
Inviting attention to the impugned order page 4-5 it was his submission that Shri Bhagwant Singh had written to the Pr. CIT, Patiala stating that his signatures had been taken on a blank page by some official and the assessee has been requesting for information as to who has recorded the state ment and under what authority. Despite these efforts, the tax authorities have remained silent. Inviting attention to the impugned order page 5, it was his submission that the assessee has argued before the CIT(A) that infact the ordersheet of the AO reveals that no notice u/s 131 was issued to Shri Bhagwant Singh. Despite this clear submission referring to records, the ld. CIT(A) fails to address it. Reliance on Bhagwant Singh’s statement on ITA 1277 /CHD/2019 A.Y. 2010-11 Page 3 of 7 which the entire action is based makes the whole edifice fundamentally we ak and thus, deserves to be quashed.
The so called theory that money was deposited by Shri Ajmer Singh on a specific date, it was argued, was from the sources of the assessee is pure conjecture. The position taken by the tax authorities that there was an advance payment of Rs. 25 lacs by the assessee rests on e vidence which is not reliable namely, firstly it is a photo copy, secondly the signatures of the assessee thereon are denied and moreover, the specific statement given by Shri Bhagwant Singh denied by him is even otherwise lacking as the ingredients as to under what authority and by whom it was recorded remain missing. The fact that the signatures of Shri Bhagwant Singh were given on blank paper and have clearly been addressed is further to be discarded on the ground that no opportunity was made available to the assessee by way of enabling the assessee to cross-examine Shri Bhagwant Singh. Such opportunity has been denied which is a clear and gross violation of the principles of natural justice. The order, it was said is full of legal loopholes and may not be sustained.
The ld. Sr.DR Mr. A.Sudershan relies upon the impugned order. However, he was unable to address how the specific allegation of the assessee namely that no ITA 1277 /CHD/2019 A.Y. 2010-11 Page 4 of 7 notice u/s 131 has been issued by the AO stated to be evident from the ordersheets and Shri Bhagwant Singh’s letter to the Pr. CIT Patiala stating that his signatures were taken by some official on blank paper since these have not been addressed by the CIT(A) made a prayer that the order may not be quashed and the issues may be restored and the records may be seen. The ld. AR in the circumstances agreed that the matter may be remanded back for verification on the specific points. The parties agreed that the re mand may be made to the AO.
I have heard the submissions and perused the material on record. Admittedly the seller of the land Shri Ajmer Singh deposited specific amount in his bank account and the tax authorities relying upon the Agreement to Sell which is stated to be a photo copy have formed the belief that Rs. 25 lacs were advance payment by the assessee paid in cash for purchase of the specific property which ultimately was purchased in the following year. The assessee has denied the payment of Rs. 25 lacs in cash.
The assessee denies his signatures on the photo copy of the agree ment to sell. Since none of us are handwriting experts if the evidence is considered to be relevant and crucial, it should be subjected to forensic examination.
Even otherwise, it is seen that Shri Bhagwant Singh,
ITA 1277 /CHD/2019 A.Y. 2010-11 Page 5 of 7 witness to the agreement whose statement is being relied upon by the tax authorities apparently has stated that his signatures were given on blank paper and it was not his statement. For ready reference, relevant extract from page 4-5 of the impugned order is reproduced hereunder for the sake of completeness :
The Ld.AO has made the addition of Rs. 25,00,000/- on the basis of fake agreement and statement of Sh. Bhagwant Singh, a witness to the agreement whose statement was illegally recorded by the official, getting his signatures on plain paper. This fact was reported by Sh. Bhagwant Singh to the Pr. CTT, Patiala and request the Pr. CTT, Patiala to take action against the official. Copy of his application to Pr. CIT, Patiala is placed at page of the Paper Book. The ld. AO arbitrarily disbelieved the statement of the applicant denying to have made any agreement on 02.09.2009 and denial of the payment of Rs. 25,00,000/- to Sri. Ajmer Singh……………..”.
The assessee also assails the order on the grounds that the statement relied upon has been recorded at his back without affording any opportunity of cross- examination which again is a violation of the principles of natural justice because if the evidence is relevant and crucial, the assessee should be given an opportunity to cross-examine Shri Bhagwant Singh who anyway denies that any such statement was give n. The assessee infact goes on to support the fact that the record does not refer to any statement of Shri Bhagwant Singh being recorded.
The relevant statement is extracted at page 5 of the impugned order wherein ld. CIT(A) has extracted the ITA 1277 /CHD/2019 A.Y. 2010-11 Page 6 of 7 written submissions of the assessee. For the sake of completeness, it is reproduced hereunder : “………………….Even the fact of recording his statement is not appearing on the assessment record. Copy of order sheet written during the course of assessment proceedings is placed at page of the paper book. "The perusal of the order sheet reveals that no notice u/s 131 was issued to Sh. Bhagwant Singh for his appearance in the office of the AO and there is no mention that his statement was recorded on 26.12.2017. This fact clearly shows that the recording of statement is not genuine one but it was written to serve the purpose of the AO for the completion of assessment by hook or crook………..”
Accordingly, in the peculiar factual background as set out herein above, in order to arrive at a conclusion whether the action is bad in law on jurisdiction or merits, it is necessary to first address the facts. Accordingly, in the light of the submissions of the parties before the Bench, the impugned order for the reasons set out herein above is set aside back to the file of the AO with a dire ction to seek forensic examination from handwriting expert and verify the correctness of the assessee’s position denying his signatures on the agree ment to sell. The manner in which the statement of Shri Bhagwant Singh was recorded is assailed by way of specific letter to Pr.
CIT, Patiala needs to be address in accordance with law. It is further directed that in the eventuality, the evidence is considered to be relevant and reliable, then the assessee may be permitted to cross examine Shri Bhagwant Singh whose statement is being relied upon by the department.
ITA 1277 /CHD/2019 A.Y. 2010-11 Page 7 of 7 In terms of the above directions, the impugned order is set aside back to the file of the AO. Said order was pronounced at the time of virtual hearing via Webex.
In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 14/12/2020.