Unsigned document has no validity or veracity in law and cannot be a basis for levying penalty u/s 271DA – ITAT
In a recent judgment, ITAT has held that an unsigned document has no validity or veracity in law and Department cannot assume assessee to have made any transaction as stated therein
ABCAUS Case Law Citation:
5227 (2026) (09) abacus.in ITAT
A search action u/s 132 of the Act was conducted on a group of cases. The case of the appellant assessee was also covered for action u/s 132 of the Act. During the search, an agreement was retrieved from the seized mobile phone.
The said document was unsigned and unstamped agreement for sale dated between the assessee seller and the Purchaser. As per the agreement for sale, the assessee had received Rs. 25,00,000/- in cash as advance, which is in contravention of the provisions of section 269ST of the Income Tax Act, 1961 (the Act) attracting u/s 271D of the Act.
Finally, the AO levied the penalty vide order passed u/s 271DA of the Act. The CIT(A) confirmed the penalty initiated by the AO.
The Tribunal observed that undisputedly, the agreement found during the course of search action though contained the details of payment of cash, however, the same was unsigned and unstamped and also the deal was never materialized.
The Tribunal concurred with the contention of the assessee that unsigned document has no validity or veracity in law and Department cannot impute the assessee to have any transaction is stated in the agreement to sell.
The Tribunal observed that the AO failed to substantiate with evidence that the assessee had in fact sold the property during the year under consideration. The Tribunal opined that the said document had no legal sanctity and cannot be relied.
Accordingly, the Tribunal held that the unsigned document cannot be a basis for levying the penalty on the assessee u/s 271DA. Consequently, the order of the CIT(A) was set aside with direction to AO to delete the penalty.
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