Loading judgment…
Facts
The assessee appealed against an addition of Rs. 63.27 Lacs related to the purchase of land, where the AO alleged additional cash consideration based on an unregistered agreement. The assessee denied this, stating payment was made via cheques as per the registered sale deed, supported by seller affidavits. Another addition of Rs. 2.47 Lacs was made on account of unexplained cash credits.
Held
The tribunal held that the unregistered agreement, a photocopy without buyer signatures, could not be relied upon for addition, especially since the assessee discharged the onus of proving the transaction as per the registered deed. For the second issue, the tribunal concurred with the CIT(A)'s order which restricted the addition by applying a business profit rate.
Key Issues
Whether addition based on an unregistered sale agreement and alleged cash payment is sustainable without corroborative evidence? Whether unexplained cash credits can be taxed at a business profit rate?
Sections Cited
143(3), 69, 132(4A), 292C, 80IC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2014-15) M/s Amico Textiles DCIT Village Bir Plassi, Ropar Road, Central Circle-1 बनाम/ Vs. Nalagarh, Solan Chandigarh Himachal Pradesh 176077 �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAQFA-9823-K (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Sh. Neeraj Jain (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Sh. Manav Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 23-06-2025 घोषणाकीतारीख /Date of Pronouncement : 16-07-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of an order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] dated 31-03-2022 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 30-12-2016. The substantial grievance of the assessee is confirmation of addition of Rs.63.27 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed off as under.
It emerges that the impugned addition stem from search action at the residential premises of two of the partners of the assessee-firm wherein incriminating documents were found and seized. The Pages 9- 12 and Pages 50-53 of Annexure-6 were purchase / sale agreement dated 30-11-2013 between various persons and the assessee regarding land measuring 8 Bigha 11 Biswa at Village Bir Palasi, Nalagarh, Solan (HP). One agreement was registered whereas another agreement was unregistered one which contained signature of the sellers only. The sale consideration in the registered agreement was mentioned as Rs.4 Lacs per Bigha as against Rs.11.40 Lacs per Bigha as mentioned in unregistered agreement and accordingly, Ld. AO alleged that the assessee paid additional consideration of Rs.63.27 Lacs in cash to the sellers. The land was purchased by the assessee as per registered agreement and the assessee maintained that the payment was made in cheques as per registered sale deed only and no additional consideration was paid. In support, the affidavits from the sellers were filed. It was submitted that the unregistered agreement was only a photocopy and without signature of the buyers and therefore, no cognizance of the said agreement could be taken into consideration. The assessee pointed to various discrepancies in the said unregistered agreement to assail the allegation of Ld. AO. It was also stated that photocopies of the documents could not be relied upon as evidence unless these are confirmed by verification of original documents. However, rejecting assessee’s explanation, Ld. AO made impugned addition of Rs.63.27 Lacs u/s 69 and framed rhe assessment.
The Ld. CIT(A) observed that both agreements contained same particulars except for the fact that the unregistered agreement contained clause mentioning cash payment to sellers by the assessee. The Ld. AO observed that the stamp papers were purchased from same vendor on same date bearing serial wise pages numbers. The assessee denied having made any cash payments. Both the documents were found from the possession of the partners of the assessee. It was evident that the agreements were prepared by the sellers after accepting the cash payment. The onus was on assessee to explain the nature and source of cash payments which assessee failed to discharge and accordingly, the addition was confirmed against which the assessee is in further appeal before us.
It is quite clear that the alleged document was not found from the possession of the assessee-firm but it was found during search on two of the partners of the firm. It is also clear that the unregistered document does not bear any signature or acknowledgement of the assessee. The assessee has denied having paid any cash payments to the sellers of the land and also furnished affidavits from the sellers in this regard during the course of assessment proceedings in support of the fact that only the consideration as mentioned in the registered sale deed happened between the parties. The assessee, in our considered opinion, had discharged the onus of proving its stand. The Ld. AO has not made any enquiries from the sellers of the land but acted only upon photocopy of the document to make the impugned addition. There is no other corroborative evidence on record to support the allegation of cash payment by the assessee. The legal presumption of Sec. 132(4A) / 292C would not apply to assessee-firm since the document was not found during search on assessee. On these facts, the impugned addition is liable to be deleted. We order so.
The assessee has assailed another addition of Rs.2.47 Lacs as confirmed by Ld. CIT(A). The Ld. AO made addition of unexplained cash credits for Rs.21.89 Lacs on the basis of Annexure-2 as seized during search on partners. The same allegedly contained unaccounted receipts of the assessee which assessee denied. However, Ld. AO added the same to the income of the assessee. During first appeal, the assessee, alternatively, contended that the receipts should be taxed at business profit rate basis. Concurring with the same, Ld. CIT(A) applied profit rate of 11.3% and restricted the impugned addition to the extent of Rs.2.47 Lacs. The deduction u/s 80IC against the same was not allowed since the profit did not relate to the manufacturing activities. Aggrieved, the assessee is in further appeal before us.
We are of the considered opinion that this issue has been clinched in correct perspective by Ld. CIT(A) which do not require any interference on our part, in any manner. The corresponding grounds stand dismissed.
The appeal stand partly allowed. Order pronounced on 16-07-2025 Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 16-07-2025. आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF ASSISTANT REGISTRAR
ITAT CHANDIGARH