Rana Iqbal Singh Vs ITO (ITAT Amritsar)
Conclusion: Where the only piece of evidence, AO possessed was the ‘Iqrarnama’, which was not found in the assessee’s possession, was not in their handwriting, and did not bear their genuine signatures, no addition could be made to the assessee’s income, treating it as unexplained money and interest.
Held: During a survey conducted at the premises of a third party, AO found a document, an ‘Iqrarnama’ (a form of agreement or declaration). This document alleged that the assessee had advanced a loan of ₹53 lakhs to a person named VK and had earned ₹9.54 lakhs in interest on it. Based solely on this piece of paper, AO made an addition of ₹62.54 lakhs to the assessee’s income, treating it as unexplained money and interest. Assessee strongly contested this on the following: a complete denial of the transaction; an assertion that their alleged signatures on the document were forged; pointing out that the document contained incorrect details, such as the wrong name for their father; Submission of a fingerprint expert’s report which opined that the signatures on the document did not match their own. AO ignored all of the assessee’s submissions and evidence and confirmed the addition. It was held that the only piece of evidence the AO possessed was the ‘Iqrarnama’, which was not found in the assessee’s possession, was not in their handwriting, and did not bear their genuine signatures. The court laid down the principle that a taxpayer could not be held liable based on a document written by and found with a third person, particularly when the taxpayer had completely disowned the document and provided strong evidence challenging its authenticity. Since there was no other corroborative evidence, the addition was held to be unsustainable.
