Mere signing of 'Sauda Chitthi' wouldn't prove that assessee had received consideration from sale of land: HC

Facts:

a) Assessee received re-assessment notice on the ground that a document was seized from the residence of Mr. RV, one of the partners of the firm in which assessee was also a partner.

b) This was a copy of 'Sauda Chitthi' entered into between the assessee and Mr. V on one hand as seller and Mr. PK and Mr. RV on other side of the deal as buyers for purchase of land.

c) According to the Assessing Officer (AO), the total sale consideration for above land, according to 'Sauda Chitthi', came to Rs. 18.80 crores and subsequently a sale deed was executed for a consideration of Rs. 56.39 lakhs and balance amount of Rs. 18.23 crores was received by assessee in cash as on-money. He held that the differential amount must be added to income of assessee.

d) Assessee filed writ petition before High Court against such re-assessment notice. High Court held in favour of assessee as under:-

1) It was an admitted position that the assessee had never executed any sale deeds. Merely on the basis of the 'Sauda Chitthi' signed by the assessee (signed and executed though, admittedly they were not owners of land for which the 'Sauda Chitthi' was executed/signed), it couldn’t be said that any amount was received by him.

2) Considering the statement of Mr. RV, he had categorically stated that the ‘Sauda Chitthi’ dated 12-03-2008 was subsequently had cancelled. It also didn’t appear that Mr. RV had stated that he had paid any amount to the assessee.

3) There was no other tangible material available with the AO other than ‘Sauda Chitthi’ to form a reasonable belief that the amount of Rs. 18.23 crores had been received by the assessee in cash.

4) Thus, formation of opinion by the AO seemed to be on surmises and conjectures, which couldn’t be the basis for reopening the assessment, in exercise of powers under section 147. [2017] 79 taxmann.com 237 (Gujarat)