The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench held that the Tax authorities can not evade responsibility to ensure only correct and due taxes are collected and no taxpayer to be burdened with unfair additions.
An addition of Rs.40 lakhs was made in the hands of the assessee, Naresh Sharma on account of deposits found made in the assessee’s bank account. However, the purchaser as per record denied having paid ‘Biyana’ in terms of ‘Ikrarnama’ to the assessee in his statement given to the AO. In view of this statement, addition was made in the hands of the assessee.
The assessee carried the issue in appeal before the CIT(A) and also advanced an alternate argument namely that the deposits made were from his known sources of business. The said submission was dismissed holding that the claim could not be said to be explained by filing of a mere affidavit.
On the first and basic issue, the reliance for the primary explanation offered has been placed on ‘Ikrarnama’ i.e. the Agreement to Sell and that these cash deposits were explainable from the sale proceeds arising from sale of this land. The said document admittedly is a written document allegedly signed by the assessee’s mother and the alleged purchaser Shri Mehar Chand.
The Coarm of Diva Singh noted that no finding is given by the tax authorities on the relevant aspects namely was the assessee/his mother owner at the relevant point of time of that land; secondly, was it ultimately sold to the concerned signatory or any other person at the relevant point, of time or thereafter; and if yes, at what price. These issues in the face of the alleged denial by one of the signatories are crucial and relevant facts on which findings need to be given.
The ITAT held that the tax authorities therefore need to ascertain and verify whether the signatures on the Agreement to Sell ‘Ikrarnama’ has been disowned by the purchaser as a forgery. These are all relevant issues for consideration and the tax authorities cannot evade the responsibility to ensure that only correct and due taxes are collected and no taxpayer lacking in proper legal advice/suffering a handicap on account of proper legal advice is burdened with unfair additions and steam rolled in the haste for collection of taxes. In the facts of the present case, it appears on record that the assessee apparently did not have the benefit of proper advice as perjury and forgery are serious issues which cannot be tolerated and treated lightly by a law abiding economic society.
The ITAT remitted the issue to the file of CIT(A) who is directed to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard after making necessary enquiries etc. for arriving at a conclusion.
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