HARVINDER KAUR H.NO.219, H- BLOCK, BHAI RANDHIR SINGH NAGAR,LUDHIANA V. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, , LUDHIANA

ITA 692/CHANDI/2023

AI Insights

The case involves appeals by Harvinder Kaur against the orders of the CIT(A) for the assessment years 2017-18 and 2018-19, which confirmed additions made by the AO regarding undisclosed investments in a plot purchased jointly with her father, Sh. Manjeet Singh. The additions were based on WhatsApp messages and digital data from a mobile phone, which the AO interpreted as evidence of 'on money' transactions. The Tribunal found that the additions were made without any corroborative evidence and relied heavily on extrapolated figures from the digital data, which were not substantiated by any independent inquiry or verification. The Tribunal also noted that similar proceedings under the Prohibition of Benami Property Transactions Act, 1988, did not yield any adverse findings against the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107680 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: K.P. Varghese Vs ITO, PCIT Vs Umesh Ishrani, ACIT Vs Layer Exports (P) Ltd., ACIT Vs Shanker Nebhumal Uttamchandani, Common Cause Vs. 394 ITR 220
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRAJIT SINGH
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Business income; Salary income; Document seized; Documents seized; Gift; Search and seizure
• Section: 132; 22; 153C

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए”, चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 691 & 692/Chd/ 2023 िनधाŊरण वषŊ / Assessment Year : 2017-18 & 2018-19 Harvinder Kaur H.No. 219, H-Block, Bhai Randhir Singh Nagar, Ludhiana बनाम The Asst. CIT Central Circle-1, Ludhiana ˕ायी लेखा सं./PAN NO: AFBPK5015M अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Shri Chandrajit Singh, CIT DR सुनवाई की तारीख/Date of Hearing : 23/01/2025 उदघोषणा की तारीख/Date of Pronouncement : 01/04/2025 आदेश/Order PER KRINWANT SAHAY, A.M.: Both the above appeals are filed by the Assessee against the respective orders of the Ld. CIT(A)-5, Ludhiana each dt 18/10/2023 pertaining to Assessment Years 2017-18 & 2018-19 respectively. 2. Since the issues involved in both the above appeals are identical and, as such, for the sake of brevity, they are taken together. 3. In ITA No. 691/Chd/2023 for the A.Y. 2017-18, the assessee has raised following grounds: \"1. That the Ld. CIT (A) has erred in confirming the part addition of Rs.78,12,500/-on account of alleged undisclosed investment in the plot jointly purchased by her with her father, Sh. Manjeet Singh. 2. That the confirmation of part addition by the Ld.CIT(A) on the basis of 'What Sapp' Messages, is against the factual facts and circumstances of the case as laid down in various judgments of different Benches of the ITAT/High Courts that no addition could be made on the basis of 'What Sapp' messages only as the same has no evidencery value. 2 3. Notwithstanding the above said ground of appeal, the Ld.CIT(A) has failed to appreciate that the statement of the sellers of the land had been recorded during the benami proceedings, initiated against the assessee and the sellers have confirmed that the plot was sold by them as per amount mentioned in the title deed executed and, as such, that documentary evidence have wrongly been ignored by the Ld. CIT(A). 4. That the Ld. CIT(A) has failed to appreciate the fact that the What Sapp message is not incriminating material found during the course of search and, as such, on the basis of judgment of Hon'ble 'Apex Court' in the case of Abhisar Buildwell Pvt. Ltd., no addition is called in the absence of any incriminating evidence. 5. a). That the Ld. CIT(A) has erred in giving the benefit of Rs. 30 lacs of the income as declared in the return of income as per para 5.2.11 of the order, against the declared income of Rs. 40,10,000/- available with the assesse. b).That the said benefit of Rs. 10 lacs has been denied on surmises and conjectures. 6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.\" 4. In ITA NO. 692/Chd/2023 for the A.Y. 2018-19, the assessee has raised following grounds: \"1. That the Ld. CIT (A) has erred in confirming the part addition of Rs. 25,16,034/-on account of alleged undisclosed investment in the plot jointly purchased with her father, Sh. Manjeet Singh 2. That the confirmation of part addition by the Ld.CIT(A) on the basis of 'What Sapp' Messages, is against the factual facts and circumstances of the case and against the principles as laid down in various judgments of different Benches of the ITAT/High Courts that no addition could be made on the basis of 'What Sapp' messages only, as the same has no evidencery value. 3. Notwithstanding, the above said ground of appeal, the Ld.CIT(A) has failed to appreciate that the statement of the sellers of the land had been recorded during the benami proceedings, initiated against the assessee and the sellers have confirmed that the plot was sold by them as per amount mentioned in the tile deed executed and, as such, that documentary evidence have wrongly been ignored by the Ld. CIT(A). 4. That the Ld. CIT(A) has erred in restricting the addition of cash found during the course of search to the tune of Rs.3 lacs against the addition of cash of Rs. 4,10,000/- found during the course of search and has failed to appreciate that the said amount was negligible, by taking into consideration the size of family and the amount found during the course of search. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.\" 3 5. Briefly the facts of the case are that A search and seizure operation under Section 132 was conducted at the residential premises of Sh. Surinder Singh Bindra in B.R.S. Nagar, Ludhiana, on 01.11.2017, and the proceedings under Section 153C were initiated against the assessee for two years based on certain cloned images found in a mobile phone. These images were reproduced on pages 3, 4, and 5 of the assessment order. During the post-search investigation, a statement from Sh. Surinder Singh Bindra was recorded on 11.12.2017, in which, the said images were confronted to Sh. Surinder Singh Bindra to which, he replied that the said Mobile belongs to his wife, Smt. Harvinder Kaur. He further stated that the said Mobile was gifted to her by her parents on the occasion of their marriage anniversary in 2017 5.1 Further, as it is seen from the assessment order that though Sh. Surinder Singh Bindra filed written submissions that these are rough jottings and the hand writing does not appear to his or his family members still then the AO determined the purchase consideration of the land in question on the basis of cloned images, which was in the name of assessee and her father, Sh. Manjeet Singh. By extrapolating the figures noted in the images of Mobile, purchase consideration to the tune of Rs. 2,28,57,080/- was determined by the AO and after excluding the disclosed consideration of Rs. 11 lacs each by the assessee and her father,. Sh. Manjeet Singh, totaling to Rs. 22 lacs the undisclosed consideration to the tune of Rs. 2,06,57,068/- towards the purchase of plot by the assessee and Sh. Manjeet Singh. It was further stated by the AO that since the payments were made partly in financial year 2016-17 and partly in Asstt. Year 2017-18. He made the addition of Rs. 1,56,25,000/- as undisclosed investment in purchase of plot in the hands of assessee while making such addition, the entire 'on money' paid for the purchase of land was made in the hands of 4 assessee in two assessment years, though, the ½ share was of Sh. Manjeet Singh, as per registered title deed. The AO held it to be as undisclosed investment for purchase of land in Village Aayali. 6. The assessee filed appeals before the Ld. CIT(A). In the order of Ld. CIT(A), from pages 2 to 20, the assessment order has been reproduced and submissions of the assessee in detail have been reproduced. The Ld. CIT(A) has given his decision after considering the submissions of the assessee, the Ld. CIT(A) deleted the addition to the extent of Rs. 78,12,500/- in financial year 2016-17 and Rs. 25,16,034/- in financial year 2017-18 and held that, since 50% share of the land was purchased by Sh. Manjeet Singh, therefore, the undisclosed investment in the purchase of land by the assessee to the extent of 50% of Rs. 78,12,500/- and Rs. 25,16,500/- was confirmed. 7. Against the order of the Ld. CIT(A) the assessee is in appeal before us. 8. During the course of hearing, the Ld. Counsel for the Assessee argued that that there was search in the case of assessee and the proceedings were initiated u/s 153C on the basis of Whatsapp chat of her Mobile. It was stated at the very outset that, no statement of the assessee was recorded either during search or during post search investigation or during the course of assessment proceedings, regarding the 'images' as is evident from the Assessment order. 8.1 It was further submitted that the land was purchased through registered title deed and the payment was made before the Sub Registrar. Rs. 11 lacs was paid by her through banking channel and Rs. 11 lacs was paid by her father, Sh. Manjeet Singh from his regular bank account. The registration was effected as per cercle rate. The Ld. Counsel relied upon the decision of the Hon'ble Apex Court in the case 5 of K.P. Varghese Vs ITO reported in 131 ITR 597, wherein, it has been held that burden of proving is on the revenue, when there is allegation of understatement or concealment in the consideration sought in the registered title deed. 8.2 It was submitted that no independent enquiries/investigations was made by the AO to cross examine the actual sale price either from the seller or from Sh. Manjeet Singh and no material evidence has been brought on record to determine the unrealistic purchase consideration to the tune of 2, 28,00,000/-. 8.3 It was further submitted before us that the whole case has been made out by the AO and confirmed by the Ld. CIT(A) only on the basis of images in the 'Mobile data' without, there being any corroborating evidence in possession of the AO. Further, it was argued that the said images in the Mobile data, which are in two figures have been extrapolated without assigning any reason and without confronting the same to the assessee. It was submitted by the Ld. Counsel for the Assessee that the assessee was staying in the same house, being the wife of Sh. Surinder Singh Bindra and neither during the course of search nor in post search investigation, anything was confronted to the assessee. Further, it was brought to our notice that the case of the assessee was referred to 'Prohibition of Benami Property Transaction Act 1988' Unit and these facts have been mentioned before the Ld. CIT(A). The seller of the property namely, Sh. Harkindar Singh S/o late Sh. Gurcharanjit Singh, residing at House No.1, Village Aayali Khurad, Ludhiana was summoned and his statement was recorded. During the course of such proceedings before the officials of 'PBPT', in which, he confirmed the sale of property measuring 3 Kanals 18 Marias, as per registered title deed. Further, he confirmed in answer to Question that he had not received any amount over and above the amount mentioned in the registered deed. 6 8.4 It was further submitted that even the statement of the assessee was recorded by the 'PBPT', in which, she confirmed the purchase of property measuring 3 Kanals 18 Marias for Rs. 11 lacs of her share. Even, the statement of her father namely, Sh.Manjeet Singh i.e. other co- owner was recorded, in which, he also confirmed that the property measuring 3 kanals 11 Marias was purchased through registered tittle deed and he confirmed having paid Rs. 11 lacs on account of his share. It was also submitted that even the statement of Sh. Neeraj Bakshi, was also recorded, who had appeared on behalf of the assessee before the Sub Registrar for executing the sale deed in favour of assessee and he confirmed the same fact. True copies of statements as recorded during the course of hearing before the officials of 'PBPT were placed on record. 8.5 The Ld. Counsel for the assessee relied on the judgment of Bombay High Court in the case of PCIT Vs Umesh Ishrani, reported in [2019] 108 taxmann.com 437, wherein, it was held that no addition could be made on the basis of loose paper, without any enquiry or verification made from the seller of the shop/developers and the same view has been taken in the case of ACIT Vs Layer Exports (P) Ltd., by the ITAT, Mumbai Bench, reported in 88 taxmann.com 620, in which, it was held that no addition could be made simply on the basis of uncorroborated notings and scribbling on loose sheets of papers. Reliance was also placed on the judgment of ITAT, Surat Bench in the case of ACIT Vs Shanker Nebhumal Uttamchandani, reported in 161 taxmann.com 536 for the preposition that no addition of the unexplained money can be made on the basis of 'images' related from the digital device and without bringing any corroborating evidence on record. 7 8.6 Further it was submitted that the said images are from the digital evidence and relying upon the Income tax Investigation manual on digital evidence (copy placed on record) it submitted before us that no such norms have been followed. The Ld. Counsel relied upon the judgment of Hon'ble Apex Court in the case of Common Cause, 394 ITR 220 that, where the figures in the seized documents have been extrapolated, no addition could be made on such extrapolated figures. Alternatively, by way of ground No.5 (a), it was argued before us that the assessee had accumulated funds as per para 5.2.10 of the order of Ld. CIT(A) to the tune of Rs. 40,10,000/- and the Ld. CIT(A) has given a benefit on adhoc basis of Rs. 30 lacs and, thus, additional benefit of Rs. 10 lacs ought to be given if for the sake of addition, the addition was to be sustained. 9. Per contra, the Ld. DR relied upon the order of the Ld. AO as well as of the Ld. CIT(A) and argued before us that the said images from the Mobile data are clear proof of the fact that the undisclosed consideration has been paid for the purchase of plot and, thus, sought confirmation of addition as made by the Ld. CIT(A). 9.1 Regarding the statements before the 'PBPT, it was argued before us that the said proceeding were independent and have no relevance to the facts of the case. 10. In Rejoinder, the Ld. Counsel of the assessee, submitted that the facts before the 'PBPT' are very much relevant, because in the statement of the seller, Sh. Harkindar Singh, Neeraj Bassi, the assessee and Sh. Manjit Singh, they have all confirmed that no 'on money' was paid and only registered consideration as per registered purchase deed was paid and sought deletion of part addition as confirmed by the Ld. CIT(A) and such statements as such, are very much relevant. 8 11. In ITA No.692/Chd/2023, though, there is independent ground of appeal by way of ground No.4 other than the above ground that cash of Rs. 5,03,000/- was found during search and out of which, cash of Rs. 4,10,000/- was seized during the course of search. 11.1 It was submitted before us that the AO has made the addition of Rs. 4,10,000/- of the cash so seized during search and before the Ld. CIT(A), it was argued that the said cash pertained to family savings of mother in law, brother in law, husband, self and Smt. Gurivnder Kaur, mother of Smt. Jatinder Kaur W/o Sh. Harvinder Singh and all are living in same house and have common kitchen and, as such, the said amount was very much negligible, which could be considered as family savings and the Ld. CIT(A) has restricted the addition to Rs. 3 lacs, against the addition of Rs. 4,10,000/- made by AO. 11.2 It was further submitted before us that all the family members are filing their returns of income having rental income, salary income and the assessee is a qualified Civil Engineer and is having her own business income and, as such, argued that no addition could be made and argued that no case of 115BBE can be made out. 12. The Ld. DR relied upon the order of the Ld. AO as well as of the Ld. CIT(A). 13. We have considered the rival submissions and perused the material available on the record, as well as the case laws relied upon by the Ld. Counsel and arguments of the Ld. DR. The facts are not disputed in, as much as, certain digital data was extrapolated from the 'Mobile data' of the assessee, wherein the purchase consideration of plot, purchased by the assessee and her father, having ½ share each and the total consideration as per 'Mobile Images' were worked out by the AO to the tune of Rs. 2,28,57,080/-. As per Mobile data, the figure 9 was calculated in two different years and the addition in financial year 2016-17 was made at Rs. 1,56,25,000/- and in financial year 2017-18, at Rs. 50,32,068/-, after giving benefit of Rs. 22 lacs, which was registered amount as per the title deed by the AO. The Ld. CIT (A) reduced the addition to ½ , since it was held by him that ½ share belongs to Sh. Manjeet Singh and he confirmed the addition to the extent of Rs. 78,12,500/- as per finding given by the Ld. CIT(A), for financial year 2016-17 Rs. 25,16,034/-. It is a fact that no statement of the assessee had been recorded, either during search or during post search or during the course of assessment proceedings and no independent enquiries or any corroborative evidence is there on record for making the addition of payment of 'on money' by the assessee. It is also a fact that the figures in the 'Mobile images' have been extrapolated, without any reason. No addition could be made on account of such 'Mobile data' or loose paper in the absence of corroborative evidence, for which, the reliance has been placed by the Ld. Counsel of the assessee on Bombay High Court, different Benches of the ITAT and further reliance on the judgment of Hon'ble Apex Court in the case of Common Cause reported in 394 ITR 220 are quite apt. Copy of the statement as recorded of the seller, the assessee and other co-owner, Sh. Manjeet Singh and Sh.Neeraj Bassi have been recorded and they have undisputedly stated before the 'PBPT that no payment of 'on money' have been made and no adverse view have been taken by the department in the hands of seller or in the hand of Sh. Manjeet Singh at all. The said fact has already been stated by the assessee in his argument before the Ld. CIT(A) and, thus, when no adverse conclusion have been drawn in the hands of seller and also that the figures in the 'Mobile data' have been extrapolated and no adverse view has been taken in benami proceedings in the case of the assessee, the addition of Rs. 78,12,500/- as confirmed by the Ld. CIT(A) for Asstt. Year 2017-18 10 and Rs. 25,16,034/- cannot be sustained on the basis of facts and circumstances of the case as mentioned above. 14. The next ground of appeal is on account of confirmed addition of Rs. 3 lacs in Asstt. Year 2018-19. this addition was confirmed by the Ld. CIT(A) on account of cash of Rs. 4,10,000/-, which was seized during the course of search. After considering the facts on records as per para 5.3 of the order of Ld. CIT(A). Arguments of the Ld. Counsel of assessee, has been considered. Since there are six members of the family, who are all filing their returns of income and the assessee himself is an engineer and she is having her own business, there is no justification of sustaining the addition of Rs. 3 lacs as confirmed by the Ld. CIT (A). 15. In the result, assessee’s appeal on different issues raised in ITA Nos. 691 and 692/Chd/2023, are allowed. Order pronounced in the open Court on 01/04/2025. Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "