Addition on account of alleged unexplained investment in properties

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH
(VIRTUAL COURT)

BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM

ITA NO. 454 & 455/Chd/2014

Assessment Year : 2011-12 & 2007-08

The DCIT
Central Circle-III, Ludhiana

vs

Shri Inderjit Singh Brar
1040, Secrtor 71, Mohali

PAN NO: AFBPB3598J

ITA NO. 461/Chd/2014

Assessment Year : 2011-12

Shri Inderjit Singh Brar
# 163, Model Town
Phase-2, Bathinda

vs

The DCIT
Central Circle-III, Ludhiana

Assessee by : Shri Sudhir Sehgal, Advocate

Revenue by : Smt. C. Chandrakanta, CIT,DR

Date of Hearing : 10/08/2021

Date of Pronouncement : 21/10/2021

Order

The Cross appeals by the Department and the Assessee for the A.Y. 2011- 12 and the appeal by the Department for the A.Y. 2007-08 are directed against the separate order each dated 24/02/2014 of the Ld. CIT(A)-1, Ludhiana.

2. That the Ld. CIT(A) has erred in law and on facts in not appreciating the facts that the assessee failed to disclose the source of the amounts mentioned on seized documents and also failed to prove the nature of the documents seized. The seized documents were also confronted to the assessee while recording his statement for which the assessee gave vague replies to the queries raised as under and his attitude was not cooperative during the course of assessment.

3. The facts related to the issues under consideration, in brief are that a search under section 132 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) was conducted at the residential premises of the assessee and his family members on 18/02/2011. Accordingly a notice under section 153A of the Act was issued to the assessee. In response to the said notice, the assessee filed his return of income on 11/09/2012 declaring the same income of Rs. 28,74,080/- which was declared in the original return of income.

4. The Ld. CIT(A) also observed that the working on page no. 29 was therefore carried to page no. 27. He also pointed out that the working at page no. 30 with respect to profit was the sale of land at Bir Talab to the tune of Rs. 9.37 lacs & Rs. 9.10 lacs had been recorded which was carried on to page no. 27 and the recording on the lower half portion of page no. 29 in respect of Multania road (Aulakh) had been done wherein investment of Rs. 1,79,53,000/- had been worked out which gets reflected at page no. 27 on the lower half portion, further the sale of Hans Nagar on upper portion of page no. 27 to to the tune of Rs. 1.66 Crore had been recorded which finds mentioned at page no. 25 as well as sale of Hansnagar at the same figure of Rs. 1.66 Crores. Similarly, recording of Rs. 4 Crores on page no. 27 with reference to Hans Nagar on lower portion could also be seen at page no. 26 which shows that the A.O. had been wrong in taking each documents by itself and making addition thereof time and again pertaining to the same transactions. At the same time, the claim of the assessee that the transactions recorded on these papers were mere estimates was also not acceptable because of clear interconnection between recording on the different papers and the specific amounts recorded time and again. According to the Ld. CIT(A) it was quite difficult to reconcile with the claim of the assessee that all the recordings pertaining to different transactions / locations were summarized at one point of time for some financial workings and the same did not represent the record of events actually happened. He therefore held that the similar record at page no. 27 represent the actual state of affairs on the given date which in the absence of anything to the contrary could be taken as the year under consideration. Therefore the amount of Rs. 6,51,97,000/- recorded at page no. 27 could be treated as unaccounted investment of the assessee which takes care of the investment in Hans Nagar
and Jai Singh Wala as this level of availability of funds could be said to be enough to take care of the transactions recorded on these seized documents.

5. “It appears that the, entire additions have been made on the presumption that provisions of s. 292C clearly apply on the facts of the case. The additions made merely on presumption under s. 132(4A)/292C cannot be sustained as the presumption has to be backed by direct and corroborative evidence that the notings have materialized into income or unexplained income/unexplained expenditure. A perusal of the assessment order and that of the first appellate authority clearly shows that there is no corroborative / demonstrative evidence to justify the additions so made.”

6. In the result, appeals of the Department are dismissed and the appeal of the assessee is allowed. (Order pronounced in the open Court on 21/10/2021)

Please find attached the enclosed file for the full judgement.