Smt. Swapna Vs DCIT (Telangana High Court)
Addition under Section 69 Cannot Be Based on Unsigned, Unacted Agreement
The Telangana High Court allowed the assessee’s appeal and deleted the addition of ₹20 lakhs made under Section 69, holding that the same was unsustainable in law. The addition was based solely on a photocopy of an unsigned agreement for sale found during search proceedings, which was admittedly never acted upon and did not culminate in a completed transaction.
The Court held that:
- An unsigned and unexecuted agreement, even if found during a search, does not constitute conclusive evidence of actual payment or investment.
- Mere acknowledgment by vendors in such a document, without independent corroboration, cannot justify an addition.
- The Revenue failed to examine the vendors, verify receipt of cash, or establish any cash trail or source, rendering the addition purely presumptive.
- Additions under Section 69 require positive and reliable evidence, and cannot rest on suspicion, conjecture, or unverified documents.
Relying on settled principles laid down in CIT v. P.K. Noorjahan (SC) and CIT v. R. Nalini Devi (AP HC), the Court emphasized that the discretion under Section 69 must be exercised judiciously and based on concrete facts. Consequently, the findings of the CIT(A) and ITAT were held to be perverse, and the addition was quashed in entirety.
