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TMI Blog2025 (3) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... ected against the order framed by ld. Commissioner of Income Tax (Appeals) Pune-12, dated 26.02.2024 passed u/s. 250 of the Income Tax Act, 1961 ( in short 'the Act') which inturn is arising out of the Assessment Order dated 16.09.2021 passed u/s. 147 r.w.s.144 r.w.s.144B of the Act. 2. Brief facts of the case are that the assessee is an individual and Director in M/s.Vijay Estates Pvt. Ltd. The assessee is also doing the business of purchase and sale of land in his individual capacity. Income of Rs. 18,22,066/- declared in the return filed for A.Y.2013-14 which was taken up for regular scrutiny and assessment u/s. 143(3) of the act completed on 11.01.2016 assessing the income at Rs. 18,64,330/-. Subsequently, based on the information received that the assessee sold an immovable property bearing Survey.No.156/2B, Mouje, Nashik, District Nashik admeasuring 3H 2R for a consideration of Rs. 15.30 crore and that the assessee has not shown the income from sale of immovable property in its income- tax return, notice u/s. 148 of the act was issued and reassessment proceedings u/s. 147 were carried out. During the course of assessment proceedings, ld. Assessing Officer (AO) observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ising the following grounds : "1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 15,13,95,000/- without appreciating the fact that there is no clear evidence that the amount of Rs. 15,13,95,000/- was offered to tax by the intermediary parties to various Agreements to Sale and MoUs namely, Viraj Estates Pvt. Ltd, Smt. Vasanti Shankar, M/s.Rathi Enterprises, M/s.Yogeshwar Packaging Pvt. Ltd. and Paresh Navnitlal Bhagat in their respective books of accounts. 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 15,13,95,000/- and granting relief to the assessee and taking the unassessed income of Rs. 15,13,95,000/- out of the tax net citing double taxation in the hands of the assessee when there is no clear evidence as to the fact that the intermediary parties have offered any income to tax in their respective books of accounts. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 15,13,95,000/- ignoring the fact that the entire chain of title of immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just to avoid the taxation and even it is not known whether tax on the total gain has been offered to tax or not and it is also possible that the gain have been set off against the losses and finally no tax has been paid. He further referred to the judgment of Hon'ble Supreme Court in the case of CIT vs. Balbir Singh Maini [2017] 86 taxmann.com 94(SC) where it has been held that there is no contract in the eyes of law in force u/s. 53A after 2001 unless the said contract is registered. He further submitted that the transactions referred by the assessee during the proceedings before the lower authorities of having sold the land during F.Y.1996-97 and thereafter the very same property has been sold by buyers at different point of time but no registered sale agreement has been entered into and it was the assessee who has finally entered into the sale agreement and registered it. Therefore, the transaction has culminated only during the year under consideration and the addition made by the AO deserves to be affirmed. 6. On the other hand, ld. Counsel for the assessee took us through the details of the various buyers and sellers of the land during F.Y.1996-97 to the F.Y.2012-13. Index ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) Paresh Navnitlal Bhagat had entered into registered sale deed with Bhavin Enterprises for consideration of Rs. 15,30,00,000/-(which includes amount paid to Viraj Estates for settlement of litigation with original sellers Rs. 18,00,000/-) [Annexure-E(i)] and has earned gross profit of Rs. 11,88,00,000/- and shown the same in return of income/computation of income [Annexure-E(ii)]. Copy of final registered sale deed between Rajendra Rasiklal Shah and Bhavin Enterprises is attached herewith as Annexure-12. Copy of computation of income of Paresh Navnitlal Bhagat is attached herewith as Annexure-13. In this registered deed the seller was mentioned as Rajendra R. Shah, Chief Promotor of proposed Co-Op. Housing Society as the land was purchased by registered deed in his name on 14/05/1992. The impugned payments by cheques are evident from ledger account of Bhavin Enterprises in the books of Paresh Bhagat is attached herewith as Annexure-14, and also HDFC bank statement of Paresh Bhagat attached herewith as Annexure-15. The above facts can be noted from notarized MOU dated-30/03/2013 which is between the assessee and 5 others who were involved in the transactions pointed out above is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee referred to the decision of the Coordinate Bench, Ahmedabad in the case of Smt.Sapnaben Dipakbhai Patel vs. ITO in ITA No.2414/Ahd/2013, dated 13.01.2016 where it was held that suit for specific performance based upon unregistered contract of an agreement to sale that contains a clause regarding part performance of contract by delivery of possession or has been executed with a person who is already in possession shall not be dismissed for want of the registration of the contract/agreement and the Tribunal further held that the proviso to section 49 of the Indian Registration Act legitimizes such a contract to the extent that even though unregistered it can form the basis of a suit for specific performance and be led into evidence as proof of agreement or part performance of a contract. Further, ld. Counsel for the assessee filed the written submissions providing all necessary details of the alleged transaction as well as its contention to support the finding of the CIT(A). 8. We have heard the rival contentions and perused the record placed before us. Revenue is aggrieved with the finding of the ld. CIT(A) deleting the addition of Rs. 15,13,95,000/- made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Related Laws (Amendment) Act, 2001."] 4] Thus, as far as the assessee was concerned, he had already transferred the rights in the impugned land vide agreement dated 30.04.1996 upon receipt of entire consideration and all rights in the land, were further accepted to be relinquished by the assessee, vide agreement dated 27.01.2001 wherein he unequivocally consented to transfer of the rights in land by Mrs. Shankar to M/s. Rathi Estates. Therefore, the assessee was legally bound by the earlier agreements entered prior to amendment to Registration Act, 1908 made w.e.f. 24.09.2001 and thus, he had no real/ legal right to claim any further consideration on sale of the impugned land made vide Registered Deed dated 29.12.2012. 5] It is submitted that the impugned land adm. around 9 acres fell under the Urban Land (Ceiling and Regulation) Act, 1976 and therefore, the registered agreement in respect of the same could be entered only after obtaining the requisite permission u/s 26(1) of the said Act. This Act had been repealed centrally by way of Urban Land (Ceiling and Regulation) Repeal Act, 1999 and it was anticipated that even the Maharashtra State Govt. would repeal the applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de and the said amount was also not retainable by the assessee who was legally bound to pay the said amount to Mrs. Peerzade as agreed in writing vide Agreement dated 31.12.2012. Thus, it is submitted that the assessee did not have any legal right to claim any consideration arising on sale of the impugned land arising vide Regt. Deed dated 29.12.2012. An agreement to this effect was also entered between the respective purchaser parties on 30.03.2013 [pages 264-275 of P.B.]. 7] It is to be noted that no real income had arose to the assessee merely for being a signatory to the Registered Sale Deed dated 29.12.2012. Even the Dept. has not brought any material on record to show that the amount of Rs. 15.12 Crs. was ever received by the assessee or that the amount of Rs. 18 lakhs was ever retained by the assessee without paying the same to Mrs. Peerzade. Further, the persons who in fact had the right to receive the sale consideration, have offered the same to tax in their ITRs and hence, mechanically taxing the same again in hands of the assessee merely because the assessee was a signatory to the regt. sale deed will amount to double taxation and will be unjustified on facts and in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the ld. departmental Representative. We further notice that the ld. CIT(A) after taking cognizance of the fact that the details filed by the assessee are correct and that the sellers have offered the respective income arising in their hands to tax, deleted the impugned addition by giving a well reasoned finding which reads as follows: "6.4 I have carefully considered the facts of the case, assessment order, arguments and submission of the appellant, during the appellate proceedings. On perusal of the same, it is noticed that, various transactions were entered into as per unregistered agreements to sale between the assessee and Vasanti Shankar, Vasanti Shankar and Rathi Estates, Rathi Estates and Yogeshwar Packaging P. Ltd., Yogeshwar Packaging P. Ltd. and Paresh Navnitlal Bhagat, Paresh Navnillal Bhagat and Bhavin Enterprises during FY 1996-97 to FY 2015-16. The AO has not accepted the impugned transactions entered into between parties through unregistered agreements to sale staling that, the immovable property can be legally transferred only by entering into registered deed of conveyance and hence, the unregistered agreements to sale entered into have no value. In suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income tax Act is supported by ratio laid down in the decision of Honourable Mumbai ITAT, in the case of Anita D. Kanjani Vs. ACIT 23(1), Mumbai, ITA No. 2291/Mum/2015, order dated 13/2/2017. In this case, the AO had relied on the decision of Suraj Lamp Industries Ltd. Vs State of Haryana (2011) 202 Taxman 607(SC) in support of his contention that, unregistered agreement cannot be considered but only registered agreement is to be considered. The Hon'ble ITAT had held that the impugned decision is about legal ownership of an immovable property and not relevant to decide the issues under the provisions of Income Tax Act. It has been laid down in Para-15 of the assessment order as under: 15. In the assessment order, the Ld. AO has placed reliance upon the judgment of Hon'ble Supreme Court in the case of Suraj Lamps & Industries Pvt Ltd (supra) for the proposition that transfer of a property shall be effective only on registration of conveyance deed in view of section 54 of Transfer of Property Act. In our view, it is a settled proposition of law and there is no dispute on that. The absolute legal ownership of an immovable property shall take place in terms of various pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent of, or divisible from, the transaction to effect which the law required registration 4.A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards. 5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose." To the aforesaid principles, one more principle may be added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance." 6.9 In the case of Sanjeev Lal Etc Vs Commissioner of Income Tax, Chandigarh, Civil appeal No. 5899 & 5900 of 2014, dated 01.07.2014. it has been observed by Honorable Supreme Court, while deciding the issue of date of transfer to be considered for allowing deduction u/s 54, as under. "The question to be considered by this Court is whether the agreement to sell which had been executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anjeev D Shah. The profit was shown at Rs. 987 Lakhs in respect of this transaction by Shri Sanjeev D Shah. The AO had assessed the profit in the hands of Sapnaben Patel. The honorable ITAT had deleted the addition made in the hands of Sapnaben Patel. In the case of the appellant under consideration, Shri Paresh Navnitlal Bhagat had offered profit to the extent of Rs. 11.88 crores and earlier parties have offered profit to the extent of Rs. 90 lakhs, Rs 145 8 1 akhs and Ps 412 lakhs. The AO had assessed the impugned profits earned by the above parties in the hands of the appellant. Therefore, in view of the ratio laid down in the above decision of Smt Sapnaben Patel of Ahmedabad ITAT, the addition in the hands of the appellant needs to be deleted. 6.12 In view of the above facts of the case, it is clear that the profit in respect of the impugned land under consideration has been offered to tax by various parties as under : Name of the seller Profit in Rs. (1) Rajendra R. Shah on behalf of Viraj Estates Pvt. Ltd. previously Mahavir Land Developer- Director [PAN : AAACM4414F[ 23,01,765/- (2) Vasant Shankar 90,00,000/- (3) Rathi Estates [PAN : AACFR9412P] 1,45,80,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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