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Facts
A search operation under section 132 of the Income Tax Act led to the seizure of material pertaining to the assessee. The AO initiated proceedings under section 153C based on this seized material, which indicated a property sale for Rs. 27,08,26,446/- instead of the Rs. 4,00,00,000/- recorded in the sale deed, suggesting cash on-money of Rs. 23,08,26,446/-. The CIT(A) deleted the addition, treating the seized material as a 'dumb document'.
Held
The Tribunal held that the seized agreement to sell, even if from a third party and unsigned, could not be automatically dismissed as a 'dumb document' without further inquiry. The Tribunal found the matter fit for remand to the CIT(A) to decide afresh after considering the implications of the seized agreement.
Key Issues
Whether the seized 'agreement to sell' is a 'dumb document' and not incriminating material, and if proceedings under Section 153C are valid in its absence.
Sections Cited
132, 153C, 69A, 292C
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
This appeal for the Assessment Year (hereinafter, the ‘AY’) 2017-18 filed by the Revenue is directed against the order dated 02.08.2023 passed by the Commissioner of Income Tax (Appeals)-28, New Delhi [hereinafter, the ‘CIT(A)’].
The Revenue has raised following grounds of appeal: -
“1. Whether on facts of the case and in law, the Ld. CIT(A) has erred in holding that the AO has failed to establish the provisions of section 69A of the Act, whereas the assessee has failed to explain the genuineness of the transactions?
Vinod Kumar Suri 2. Whether on facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.8,65,59,917/- as the cash was received by the assessee outside the books of account for the sale of property? 3. Whether on facts of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.8,65,59,917/- while ignoring the incriminating documents found in the seized data in which a total consideration of Rs.27,08,26,440/- has been mentioned? 4. Whether on facts of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that value of the total sales consideration for the cheque component of Rs.4,00,00,000/- is verified, hence, the cash component of Rs.23,08,26,446/- is also true and correct as both these are found in the seized data? 5. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the AO may be restored to the above extent. 6. (a) The order of the Ld. CIT(A) is erroneous and not tenable in law and on facts.
7. The appellant craves leave to add, alter or amend any/all of the grounds of appeal
before or during the course of the hearing of the appeal.”
3. The relevant facts giving rise to this appeal are that the search & seizure operation under section 132 of the Income Tax Act, 1961 (hereinafter the ‘Act’) was carried out in the case of Rakesh Jain Group of cases on 02.11.2017. During the search proceedings, various incriminating material including digital data were seized. The Assessing Officer (AO) of searched person noticed that certain information in the seized material of the searched persons pertained to the assessee. The AO of the searched person therefore, passed on the said information and material to the AO of the assessee, who duly initiated proceedings under section 153C of the Act. The original Income 3.1 The searched material handed over by the AO of the searched person (Rakesh Jain Group of Searched Cases) to the AO of the assessee contained an annexure i.e. Annexure A-5; a single page document, seized from the premises; U-7, Green Park Extension. This annexure was print out of the seized soft data found at the following path c:\backup-UP 08.11.16/MOU/ Agreement (Amit) 05.04.16-27.07.16 - Copy in soft format, an agreement to sell a property for Rs.27,08,26,446/- (Rs.4,00,00,000/- cheque). In the same annexure i.e. Annexure A-5, complete agreement to sell in soft format was found path c:\backup-UP 08.11.16/MOU/Agreement (Amit)05.04.16- 27.07.16. As per this Agreement to sell dated 05.04.2016 executed between Sh. Amit Vaid son of Shri Charanjeet Vaid resident of 352, Village Chhattarpur, New Delhi (First Party or the Vendor) and Sh. Rakesh Jain (Vendee), it was for the sale/purchase of land at khasra No.104/2 min (31- 17), Mustatil No.22, KillaNo.18 (4-16), 23 (2-14), situated in revenue state of village Mehrauli Tehsil Hauz Khas (Mehrauli), New Delhi.
3.2 Admittedly, this property belonged to two brothers; namely, the assessee (3/8th) and Sh. Bharat Bhushan Suri (3/8th). As per the registered sale deed this property was sold to Sh. Rakesh Jain by the assessee and Sh. Bharat Bhushan Suri for sale consideration of Rs.4,00,00,000/-. The payment made through cheque; i.e. the banking channel as mentioned in the Vinod Kumar Suri agreement to sell of the said property duly found mentioned in the registered sale deed of the said property. The AO, demonstrating the prevailing market rate of properties in the said locality with the details mentioned on online site of various property brokers; Portal Name: Magicbricks, Portal Name: 99acres.com and analyzing the RBI’s House Price Index (HPI) data, held that the assessee along with his brother has sold the said property for Rs.27,08,26,446/- instead of Rs.4,00,00,000/- mentioned in the registered sale deed and as well as in the agreement to sell as consideration received through the banking channel. The AO, placing reliance on the decisions of the Hon’ble Supreme Court in the cases of Durga Prasad More 82 ITR 540 and Sumati Dayal 214 ITR 801 to emphasize on the circumstantial evidence and human probability. Accordingly, the AO held that the assessee along with his brother has received Rs.23,08,26,446/- (Rs.27,08,26,446/- minus Rs.4,00,00,000/-) in cash as on-money over and above the registered sale consideration and taxed the proportionate on-money receipt in the hands of the sellers under section 69A of the Act. Aggrieved, the assessee filed appeal before the CIT(A) and succeeded. The Ld. CIT(A) deleted the said addition holding the seized material as dumb document.
At the outset, the Ld. Sr. DR submitted that the Ld. CIT(A) had erred in holding the seized material as dumb document when the person from whose possession the same was seized had not admitted it as dumb document during search. The Ld. Sr. DR further contended that narration Vinod Kumar Suri mentioned in the seized document; viz, property details and sale consideration in cheque/banking channel mentioned in the registered sale deed and the complete agreement to sell are same. It was submitted that the agreement to sell document was seized in soft data. The document, first prepared on computer and scanned thereafter, stored in soft data could not be held as dumb document routinely. He further contended that the AO had also compared the sale consideration of the said property mentioned in the seized material with the prevailing market price and found the same in tune/harmony. It was further argued that the payment of on-money in real estate was an open secret. None of the parties to the real estate transaction will admit the receipt & payment of the on-money for the obvious reasons. Hence, the circumstantial evidence and test of human probability have to be taken into account for wholistic approach.
The Ld. Counsel submitted that the assessee had not received any sum over and above the sum mentioned in the registered sale deed. He contended that the assessee had submitted the comparable sale deeds before the Ld. CIT(A), who analyzed the same and decided the appeal considering facts in totality. He further argued that the agreement to sell seized from a third person did not mention the name of the assessee nor the property details; hence, such seized material could not be used against the assessee as incriminating material. Such document was claimed as nothing but dumb document. The agreement to sell mentioned the name of Sh. Amit Vaid as Vinod Kumar Suri vendor and not the assessee. The said agreement to sell was not signed; hence, it was argued that the same could not be relied upon. The Ld. Counsel placed reliance on following decisions:
i. Vinita Chaurasia [2018] 98 Taxmann.com 468 (SC), ii. Andman Timber Industries 281 CTR 241 (SC)’ iii. Laxmi Raj Shetty [1998] 3 SCC 319, iv. V C Shukla 1998 Taxmann.com 2155 (SC), v. Umesh Ishrani [2019] 108 Taxmann.com 437, vi. D K Gupta [2008] 174 Taxmann 476 (Del) vii. Mayfair resorts India Ltd.
(ITAT Del.) viii. Anil Bala Goyal & Others (ITAT Del.) ix. Jai Pal Agarwal ITA No.226/2010 (Del. High Court) 5.1 The Ld. Counsel supported the impugned order. However, he admitted that the AO had not enquired about the link of Sh. Amit Vaid whose name had been found mentioned in the said seized agreement to sell. It was further contended that the said agreement to sell could not be treated as duly executed as the same had not been signed by any party to the said agreement. The Ld. Counsel further contended that the said seized agreement to sell, being unsigned and uncorroborated by any other evidence, could not tantamount to be an incriminating material. Hence, the assessee’s assessment under section 153C of the Act should be held as null and void in absence of any seized incriminating material. reliance was place on the Vinod Kumar Suri decision of the Hon’ble Supreme Court in the case of Abhisar Buildwell 152 Taxmann.com 26. The Ld. Counsel also contended that the provisions of section 292C of the Act would apply in the case of searched person and not in the case of third person/assessee as the same was not seized from the possession of the assessee.
We have heard both parties and perused the material available on the record. We have also perused the above cited case laws. Keeping in view the facts in totality, material available on the record and in the interest of justice, we are of the considered opinion that this case is fit to be remand back to the file of the Ld. CIT(A), after setting aside the impugned order, to decide the case a fresh in view of the finding of the Revenue on the above-mentioned seized agreement to sell in the case of Sh. Rakesh Jain, buyer of the said property. In view thereof, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. CIT(A) to decide the case in view of the above.
In the result, the appeal of Revenue is allowed for statistical purposes. Order pronounced in open Court on 21st May, 2025.