Reopening us 147 on the basis of photocopy document bad as it has been judicially held that photo copies have very little or no evidentiary value – ITAT
ABCAUS Case Law Citation:
ABCAUS 1255 (2017) (05) ITAT
The Grievance:
The appellant assessee was aggrieved by the order passed by the CIT(A) confirming the reopening made u/s 148 of the Income Tax Act, 1961 (‘the Act’), merely on the basis of photocopy of a document.
Assessment Year : 2005-06
Date/Month of Pronouncement: May, 2017
Important Case Laws Cited/relied upon:
Arati Bhargava vs. Kavi Kumar Bhargava
Moosa S Madha & Azam S. Madha vs. CIT
CIT vs. Smt. K.C. Agnes
CIT vs. S. Goyanka Lime and Chemicals Ltd.
Surjit Rai vs. Prem Kr. Khera & Other
Pr. CIT vs. M/s. N.C. Cables Ltd.
Brief Facts of the Case:
The return of the income of the assessee was reopened by the AO u/s 148 of the Act. During the year, the assessee had claimed to have sold a plot for a total consideration of Rs. 6 lacs. The said plot was purchased in the year 1991 and after indexation NIL capital gain was declared on the said transaction.
The AO had received information that the said plot was actually sold for Rs. 40 lacs whereas assessee had declared sale consideration of Rs. 6 lacs only. Though the Income Tax Department was having only photocopy of the bayana receipt, the AO did not accept the explanation of assessee because signatures of the assessee were similar on the bayana receipt and sale deed. The transaction was of the same date and signature of one of the witness was same on the bayana receipt and the sale deed.
The AO also made local inquiries by the inspector which also revealed that the consideration in the transaction was around Rs. 40 lacs. The AO therefore took the sale consideration of the property as Rs. 40 lacs for the purpose of capital gain and accordingly made the addition.
The assessee challenged the reopening of the assessment before CIT(A) as well as addition on merit. CIT(A) however dismissed the appeal of assessee.
Observations made by the Tribunal:
The ITAT observed that it is well settled law that validity of the reassessment u/s 147/148 to be considered with reference to the reasons recorded by the AO.
It was observed that The AO in the reasons had merely mentioned that information had been received that assessee entered into an agreement to sale of property in question for a consideration of Rs. 40 lacs whereas in the sale deed Rs. 6 lacs have been mentioned . The approval of the Adl. CIT was obtained only mentioned that “ I am satisfied”. The AO had not mentioned any source of information in the reasons recorded. However in the assessment order, AO had mentioned that department was having only photocopy of the “ bayana receipt”.
Evidentiary Value of Photocopies
On the issue of Evidentiary Value of Photocopies, the Tribunal observed as under:
Punjab & Haryana High Court
It was held that signature cannot be compared from the photocopy of the agreement.
Delhi High Court
It was held that “further documents sought to be produced was photo copy of original document and same cannot be admitted in evidence ”.
Supreme Court
It was held that photo copies have very little evidentiary value.
Kerela High Court
It was held that “unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for the sale, one can not come to the conclusion that the price mentioned in the sale deed is not correct.”
The Tribunal noted that the Revenue department was having only one photo copy of the “bayana receipt” and on that basis the reassessment of the assessee had been made. However in the reasons recorded, the AO had not explained the source of the information received for entering into an agreement to sell for a sum of Rs. 40 lacs and the AO had not verified the photo copy of the receipt before recording reasons and it was not clarified as to where is the original receipt and no persons mentioned in the photocopy receipt had been examined. Thus before recording the reasons for the reassessment, the AO did not verify the information so received for the purpose of reopening of the assessment.
The ITAT opined that in absence of existence of any primary evidence, there wa no question of considering the photo copy as secondary evidence. Thus the AO had not applied his mind to the photo copy of the receipt which has little evidentiary value. The AO therefore acted in haste and in mechanical manner to reopen the assessment. The reasons should have live link between the material placed on record and conclusion drawn by the AO before issuing the notice u/s 148 of the Act. The AO was not competent person to compare the signature from the photocopy copy with the original signature on the sale deed. Thus it was a mere suspicion on the part of the AO that assessee received higher sale consideration. Therefore there could not be a reason to believe with the AO to reopen assessment in the matter on vague information considering inadmissible document for forming the belief to reopen the assessment.
Apart from the above, the Tribunal also observed that Adl. CIT should had verified the facts and applied his mind before granting approval to the reopening of the assessment which was based on only a photo copy receipt having no evidentiary value. The Adl. CIT had merely quoted “I am satisfied”. It showed that the Adl. CIT had accorded his satisfaction in a mechanical way and as such the reopening of the assessment was wholly unjustified.
Held:
The ITAT set aside the orders of authorities below and quashed the reopening of assessment.
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