The Income Tax Appellate Tribunal (ITAT), Amritsar Bench, has recently, in two appeals filed before it by the assessee, held that no addition can be made on account of the amount against bearer cheque having forged signatures of the assessee.
The aforesaid observation was made by the Amritsar ITAT, when appeals were filed before it by the assessee, as against the order of the Commissioner of Income Tax (Appeals), Ludhiana, even dated 21.01.2022, in respect of the Assessment Years 2010-11 & 2012-13.
The grounds of the assessee’s appeal being that the CIT(A), while confirming the disputed addition, erred to infer that the assessee’s signatures were appearing on the backside of this cheque, though denied by assessee, which fact was also endorsed by the AO in her remand report, and further that the CIT(A) ought to have sought a report of the forensic expert, rather than himself holding that the signatures on the cheque were not fake but of this assessee, it was argued by Sh. J. S. Bhasin, Adv , the counsel for the assessee that the CIT(A) while confirming the aforesaid addition of Rs.41 lacs, erred to infer that the assessee’s signatures were appearing on the backside of this alleged cheque, in spite being denied by assessee, and that the said denial by the assessee, is an admitted fact on record as evident from the endorsement by the AO in her remand report.
The Counsel for the assessee further contended that the CIT(A), ought to have sought a report of the forensic expert, to corroborate the fact of fake/authenticity of the signatures rather than himself holding that the signatures on the cheque were not fake but of this assessee, while Sh. Hitendra Bhauraoji Ninawe, the CIT DR, strongly supported the stand of the authorities below.
Hearing the opposing contentions of either sides and thereby perusing the materials available on record, the ITAT observed:
“It is seen from the impugned order that the submissions along with application for admission of additional evidence were sent to the AO and report submitted by the AO is reproduced at para 3.2 of the impugned order. The AO has reported that from the facts, it can be concluded that the assessee Sh. Jagdish Kumar has not withdrawn the payment of Rs. 2.7 crore with regard to five cheques which were bearer cheques in the name of Sh. Yog Raj Puri. Further it is mentioned that the sixth cheques of Rs. 41 lacs which was in the name of Sh. Jagdish Kumar seems to have forged signature. Therefore, in the light of the report submitted by the AO during the appellate proceedings, the arguments of the AR on this issue are found acceptable to the extent of payment of Rs. 2.7 crore as the cheques were passed by the bank authorities in the name of Sh. Yog Raj Puri and the payment was also made to Sh. Yog Raj Puri. Further, the cheque of Rs. 41 lacs, it was in the name of Sh. Jagdish Kumar and at the back, only the name of Sh. Jagdish Kumar is appearing (and there is no name/signature of Sh. Yog Raj Puri on the back of the cheque amounting to Rs. 41,00,000/-). Merely the ld. CIT(A) stated that the AO is not an expert in the matter of identification of signature, so his comments about forging or otherwise of the signature on this cheque cannot be ignored.”
“In our view, the Ld. CIT(A)’s observation on this issue is self-contradictory by accepting the remand report of the AO partially. Firstly, He accepted the arguments of the AR on this issue to the extent of payment of Rs. 2.7 crore as the cheques were passed by the bank authorities in the name of Sh. Yog Raj Puri and the payment was also made to Sh. Yog Raj Puri and secondly, the cheque of Rs. 41 lacs, at the back, only the name of Sh. Jagdish Kumar was appearing (and there is no name/signature of Sh. Yog Raj Puri on the back of this cheque amounting to Rs. 41,00,000/-) where the signature of Jagdish Kumar explained by the AO as fake was rejected by holding that the AO is not an expert in the matter of identification of signature. Therefore, the AO’s comments about forging or fake of the signature on this cheque ought to have not been ignored, and it was required to be corroborated with forensic expert report and that realization of cheque amount thereof”, the ITAT added.
Further observing, the ITAT coram comprising of Anikesh Banerjee, the Judicial Member, along with Dr. M. L. Meena, the Accountant Member, noted:
“Thus, the Ld. CIT(A) failed to establish or prove in the light of the remand report of the AO and any other material evidence such as, report of the forensic expert, to corroborate the fact of fake/authenticity of the signatures on the back side of the disputed bearer cheque and its encashment by the assessee at a later date. In view of the matter, we hold that the order of the Ld. CIT(A) has infirmity and perversity to the facts on record on the issue of addition on account of amount against bearer cheque having fake/forged signatures of the appellant assesse.”
Thus, allowing the assessee’s appeal, the Amritsar ITAT held:
“In view of the above, we accept the grievance of assessee as genuine and hold that the Id. CIT(A) was not justified confirming the aforesaid addition of Rs.41 lacs. Accordingly, addition of Rs.41 lacs is deleted. In the result, appeal of the assessee is allowed.”
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