GANPATBHAI MAYAJIBHAI BARIA,GODHRA vs. ITO, WARD 1, GODHRA, GODHRA

Brief facts of the case are that the assessee is an individual and co-owner of agricultural land situated at Village Vavdi Bujarg, Taluka Halol. During the year under consideration, the assessee along with other co-owners had executed a notarized agreement to sell dated 16.03.2018 in favour of Shri Jigneshkumar Ashwinbhai Shah for total consideration of Rs.6,91,18,150/-. The Assessing Officer, based on information available, reopened the assessment u/s 147 of the Act. During reassessment, the Assessing Officer, on the basis of the Banakhat, the subsequent registered Samjuti Karar and the sale deed executed on 21.10.2020, inferred that a part of the sale consideration had been received in cash by the co-owners. Accordingly, the assessee's alleged share of Rs.56,98,305/- was treated as undisclosed capital gain and added to his income. Asst. Year : 2018-19 - 3–

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Ld. CIT(A) who confirmed the action of the Assessing Officer.

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before us.

On merits, the Ld. AR submitted that there was no transfer of capital asset during A.Y. 2018-19. The Ld. AR contended that the banakhat dated 16.03.2018 did not confer possession or ownership rights and hence does not fall within section 2(47) of the Act. The Ld. AR further submitted that the actual transfer occurred only on 21.10.2020 when sale deed was executed and possession was handed over. Therefore, capital gains, if any, cannot be taxed in A.Y. 2018-19. The assessee also relied on the case of co-owner wherein similar addition was not sustained on identical facts.

The Ld. DR, on the other hand, supported the orders of lower authorities and submitted that agreement value clearly indicates higher consideration and subsequent documents show suppression of consideration. Since the assessee failed to produce complete evidence including bank statements, the addition was rightly made.

We have heard the rival contentions and perused material available on record. We find that mere execution of Banakhat does not constitute transfer u/s 2(47) of the Act unless conditions of section 53A of Transfer of Property Act are satisfied. In the present case, the banakhat dated 16.03.2018 is only an agreement to sell. It does not establish transfer of ownership or possession during A.Y. 2018-19. The subsequent Samjuti Karar and registered sale deed were executed on 21.10.2020, which clearly indicates that the transaction was modified and ultimately culminated in 2020. Thus, the transfer, if any, took place only in A.Y. 2021-22 and not in A.Y. 2018-19. Further, the addition is based on presumption of cash consideration without any corroborative evidence of actual receipt during the year. In absence of evidence of transfer or receipt, the addition cannot be sustained. The principle of consistency is also relevant, as in the case of similarly placed co-owner, the transaction has been treated as not taxable in A.Y. Asst. Year : 2018-19 - 4–

Since we have deleted the addition on merits and granted substantive relief to the assessee, adjudication of the legal grounds challenging the validity of the reassessment proceedings u/s 147/148 of the Act has become merely academic and, therefore, does not call for separate adjudication.

In the result, the appeal of the assessee is allowed.