While quashing a re-assessment order passed against the assessee, the Income Tax Appellate Tribunal (ITAT), Chandigarh bench held that an unsigned agreement is not a valid evidence and therefore, the assessment made solely based on the same is not sustainable. Earlier, both the lower authorities were of the view that re-assessment based on the evidence of unsigned agreement was a valid prof to fix tax liability.
Through the second appeal, the assessee challenged the re-assessment order passed against him on the basis of photo copy of unsigned agreement found during the course of search proceedings.Though the assessee challenged the additions made under the said order, the CIT(A) sustained the same by relying upon the decision in Rajesh Jhaveri Stock Brokers Pvt. Ltd. The first appellate authority also noted that the assessee has not made submissions for reopening of the assessment , confirmed re-opening of the assessment under section 147/148 of the Income Tax Act.
As observed by the Tribunal, it is well settled law that validity of the re-opening of assessment shall have to be decided on the basis of the reasons recorded by the Assessing Officer for reopening of the assessment.
“The authorities below have been holding that the agreement in quest ion is admissible against the assessee because two of the cheque amounts mentioned in the agreement tally with the sale consideration mentioned in the sale deed of Shri Bhagveer Singh dated 21.05.2008. The date of sale deed i .e. 21.05.2008 would not fall in assessment year under appeal i .e. 2008-09 and there is no evidence or material available on record to prove genuineness of the photo copy of the unsigned copy of the agreement .Therefore, merely because some cheque amount is same in both these documents, would not prove that addition could be made against the assessee on the basis of photo copy of unsigned agreement . Therefore, there was no reason for the authorities below to hold that the contents given in the photo copy of unsigned agreement are correct. Since on the basis of unsigned agreement , no liability could be attached to the assessee and it is not admissible in evidence against the assessee, therefore, there is no
valid reason recorded by the Assessing Officer for the purpose of re-opening of the assessment in the matter .There is also no basis for making any addition on merit on the basis of photo copy of unsigned agreement.”Based on these findings, the Tribunal quashed the re-assessment proceedings.
Read the full text of the order below.
