THE COMMISSIONER OF INCOME TAX CENTRAL - II vs. AKME PRJECTS LTD.

ITA - 485 / 2013HC Delhi06 November 20131 pages

For Petitioner: SANJEEV SABHARWAL

AI SummaryDismissed

What did the High Court hold?

The High Court held that the findings of the ITAT were factual and that the Assessing Officer's investigation was insufficient. The AO relied on an unsigned draft agreement without further examination of its signatories or witnesses. The first appellate authority and the ITAT had considered various factors, including separate transactions with third parties and the limited extent of land involved in the actual transaction (5.431 acres) compared to the draft agreement (75 acres), to conclude that the draft agreement was not executed or implemented. The AO also made an addition of Rs. 1.15 crores, not the Rs. 3 crores mentioned in the draft agreement. In the absence of sufficient investigation and evidence by the AO, the High Court found no perversity in the orders of the lower authorities. The appeal filed by the revenue was accordingly dismissed.

What were the facts?

The Assessing Officer (AO) relied on an unsigned draft agreement to sell found during a survey to make an addition of Rs. 1.15 crores. The AO did not examine the drafter or witnesses of the agreement. The assessee, Akme Projects Ltd., contended that the draft agreement was not executed or implemented. The first appellate authority and the Income Tax Appellate Tribunal (ITAT) agreed with the assessee, relying on several factors including separate transactions with third parties and the fact that the transaction with United Special Ispat Limited pertained to only 5.431 acres of land, not the 75 acres mentioned in the draft agreement. The AO's addition was also not for the Rs. 3 crores mentioned in the draft agreement. The High Court noted that the AO's investigation was insufficient.

What were the issues?

1. Whether the High Court should interfere with the findings of the ITAT, which are stated to be factual, when the AO's investigation was found to be inadequate? Assessee's Contention: The assessee argued that the draft agreement was not executed or implemented, and relied on several factors to support this, including separate transactions with third parties and the limited acreage involved in the actual transaction. The assessee's stand has been consistent. Revenue's Contention: The revenue, represented by the Commissioner of Income Tax Central - II, relied on the unsigned draft agreement found during the survey as the basis for the addition. The revenue's argument implicitly suggests that the draft agreement indicated a taxable transaction.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 485/2013 . THE COMMISSIONER OF INCOME TAX CENTRAL - II . ..... Appellant . Through Mr. Sanjeev Sabharwal, Sr. Standing Counsel. . . . versus . . . AKME PRJECTS LTD. . ..... Respondent . Through Mr. Piyush Kaushik, Advocate. . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . . . O R D E R . 06.11.2013 . . . The findings of the tribunal are factual. The Assessing Officer had relied upon an unsigned agreement, which was found during the course of survey and did not proceed further by examining the person, who had drafted the agreement or the witnesses. The first appellate authority and the tribunal, on the other hand, have relied upon several factors to hold that the draft agreement was not executed/signed and implemented. There were separate transactions with third parties and the transaction between the assessee and United Special Ispat Limited was only in respect of 5.431 acres of land and not for 75 acres of land subject matter of the draft agreement. We also notice that the Assessing Officer did not make addition of Rs.3 crores, the amount mentioned in the ?draft agreement to sell? but addition of Rs.1.15 crores was made. The draft agreement to sell could have been the starting point of investigation and further detailed verification, which has not been carried out. In the absence of . the said investigation and evidence, it is not possible to hold that the orders passed by the first appellate authority and the tribunal are perverse. We also note that the stand of the respondent-assessee has been consistent. The appeal is accordingly dismissed. . . . . . SANJIV KHANNA, J. . . . . . . . SANJEEV SACHDEVA, J. . NOVEMBER 06, 2013 . VKR . $ 23 to 25. .

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