The evidentiary value of unsigned agreements is insufficient to substantiate tax claims of unexplained investments without corroborating evidence of actual payments.

JUDGMENT :

P. Sam Koshy, J.

Heard Mr. Duvva Pavan Kumar, learned counsel representing Mr. Y.Ratnakar, learned counsel for the appellant / assessee; and Mr. Srinarayan Toshnival, learned counsel representing Mr. N. Praveen Reddy, learned Standing Counsel for the Income Tax Department / Revenue.

2. The instant appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) has been filed by the appellant challenging the order passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad (for short the ‘ ITA T’) in No.1317/Hyd/2010, decided on 04.05.2012.

3. Vide the impugned order; the ITAT affirmed the order passed by the Commissioner of Income Tax (Appeals), dated 28.01.2010, who in turn held the disallowance of Rs.20 lakhs and deleted the balance addition of Rs. 48,85,000/-.

4. The facts of the case in brief are that the inception of the case is from a search and seizure conducted under Section 132 of the Act at the residential premises of the appellant on 19.02.2008. Following this, a notice under Section 153A of the Act, dated 19.02.2008, was issued for assessment year 2002-2003 to 2007- 2008. The appellant filed her return of income for the assessment year 2005-2006 on 29.10.2008 declaring a total income of Rs.7,88,796/-. The assessment proceedings, which were completed on 31.12.2009, the Assessing Officer made several additions to the declared income, viz.,

a) Rs.9,42,050/- as unexplained cash credits under Section 68 of the Act consisting of cash loans of Rs.4,07,050/- and cheque loans of Rs.5,35,000/- from Lahiri Green Park, for which the appellant failed to provide confirmations or establish the identity, capacity, and genuineness of the transaction;

b) Rs.1,12,500/- as disallowance under Section 40A(3) of the Act representing 20% of land cost of Rs.5,62,500/- debited to P&L account for cash payments made for land purchases;

c) Rs.68,85,000/- as unexplained investment under Section 69 for purchase of agricultural land in Bhanur measuring 4 acres 2 guntas (with Rs.20 lakhs paid in cash as per seized material); and d) Rs.6,49,024/- as unexplained investment for purchase of gold and diamonds.

5. The total assessed income was computed at Rs.85,75,170/-, resulting in a tax liability of Rs. 28,51,620/- with interest of Rs.17,00,280/-, leading to a final tax demand of Rs.43,24,900/-after adjusting prepaid taxes of Rs.2,27,000/-.

6. Aggrieved by the said assessment order, the appellant filed an appeal before the Commissioner of Income Tax (Appeals), who passed an order on 28.10.2010. During the appellate proceedings, the appellant did not press the ground relating to disallowance under Section 40A(3) of the Act which was consequently dismissed. The Commissioner of Income Tax (Appeals) directed deletion of the entire addition of Rs.9,42,050/- relating to loans from Lahiri Green Park, following the identical issue decided in favor of the appellant in assessment year 2003-04. Regarding the agricultural land addition of Rs.68,85,000/-, the Commissioner of Income Tax (Appeals) examined the seized material which was an agreement for sale dated 01.01.2005. The Commissioner held that while the vendors had acknowledged receipt of Rs.20 lakhs in cash, the balance amount of Rs.48,85,000/- could not be added as there was no evidence that the sale was actually completed or that the balance payment was made after registration. Therefore, only Rs.20,00,000/- addition was confirmed and Rs.48,85,000/- was deleted. For the gold jewelry addition, the Commissioner found that Rs.4,73,890/- was properly accounted for through a bill from K