VIJAY MOHANDAS MAHTANEY,CHENNAI vs. ITO, CORPORATE WARD-2(2), CHENNAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the AO erred in not considering the full sale consideration of Rs. 8,50,00,000. Circumstantial evidence supported the assessee's claim of receiving the balance amount in cash as part of the sale transaction.
What were the facts?
The assessee sold land and offered long-term capital gains based on a sale consideration of Rs. 8,50,00,000. The Assessing Officer (AO) considered only Rs. 6,50,00,000 as per the sale deed and added the balance Rs. 2,00,00,000 as 'Income from Other Sources'. The CIT(A) upheld the AO's order.
What were the issues?
Whether the cash component of sale consideration, not reflected in the sale deed, should be treated as income from other sources or part of the sale consideration for capital gains computation.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA
आयकर अपीलीय अधिकरण, ‘ए ’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री मनु कुमार गिरर, न्याययक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3441 /Chny/2025 ननिाारण वर्ा / Assessment Year: 2010-11 Vijay Mohandas Mahtaney The Income Tax Officer New No.6, Adyar Club gate Road vs. Corporate Ward – 2(2) Raja Annamalaipuram Chennai. Chennai – 600 028. (प्रत्यथी/Respondent) [PAN: AADPM1626R] (अपीलाथी/Appellant)
अपीलाथी की ओर से/Appellant by : Shri. Yashwanth Kumar, CA प्रत्यथी की ओर से/Respondent by : Shri. R.Raghupathy, Addl.CIT सुनवाई की तारीख/Date of Hearing : 18.03.2026 घोर्णा की तारीख/Date of Pronouncement : 06.05.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal by the assessee is filed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [‘ld. CIT(A)’] dated 19.09.2025 and pertains to assessment year 2010-11 against the order of the Assistant Commissioner of Income Tax, Business Circle - XIV (AO) passed u/s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 22.03.2013.
:-2-: ITA. No.3441/Chny/2025.
The assessee assailing the action of the ld.CIT(A) in confirming the addition of Rs.2,00,00,000/- as ‘Income from Other Sources’ by the AO, raised the following grounds of appeal:
For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case to the extent prejudicial to the interests of the assessee and at any rate is opposed to the principles of natural justice, equity and fair play. Addition of Rs.2,00,00,000/- treated as income from other sources
For that the Commissioner of Income Tax (Appeals) erred in upholding the order of the Assessing Officer by adopting the sale consideration as Rs.6,50,00,000/- instead of Rs.8,50,00,000/-. 3. For that the Commissioner of Income Tax (Appeals) erred in upholding the order of the Assessing Officer in adopting the sum of Rs.2,00,00,000/- as “income from other sources”. 4. For that the Commissioner of Income Tax (Appeals) failed to appreciate the fact that the amount of Rs.2,00,00,000/- received as cash by the assessee, forms part of the sale consideration. 5. For that the Commissioner of Income Tax (Appeals) admitted the additional evidence ought to have called for the remand report and consider the same before passing the order. 6. For that the remand report by the Assessing Officer was not furnished to the assessee.
The brief facts of the case emanating from the records are that the assessee has filed his return u/s.139(1) of the Act on 01.10.2010 declaring a total income of Rs.8,29,89,568/-. The return of income of the assessee was processed u/s.143(1) of the Act, accepting the returned income. Subsequently, the case of the assessee was selected for scrutiny through CASS. During the course of assessment proceedings, the AO observed that the assessee has sold lands at Neelangarai Village and offered a sum of Rs.7,72,36,883/- as Long term Capital gain. The assessee has adopted the sale consideration of Rs.8,50,00,000/-. As per the sale deed, the AO noted that the consideration passed on to the assessee was only Rs.6,50,00,000/- and the same should be taken as sale consideration instead of Rs.8,50,00,000/-. The AO then
:-3-: ITA. No.3441/Chny/2025. concluded that the balance sum of Rs.2,00,00,000/- was received by the assessee by way of cash and hence was not towards the sale of land but for other purposes. Thereafter, the AO completed the assessment vide order dated 22.03.2013 by considering the sum of Rs.2,00,00,000/- as ‘Income from Other Sources’ instead of ‘Long Term Capital Gains’ as admitted by the assessee.
Being aggrieved by the assessment order dated 22.03.2013 passed u/s.143(3) of the Act, the assessee carried the matter in appeal before the ld.CIT(A). The assessee challenged the action of the AO in treating the sale consideration as income from other sources. During the course of first appellate proceedings, the assessee submitted copy of letter of understanding dated 27.04.2009, copy of sale deed executed on 26.08.2009, copy of Agreement of sale dated 26.08.2009 and copy of sale deed dated 30.04.2010. After perusing the submissions furnished by the assessee, the ld.CIT(A) confirmed the addition made by the AO by holding as under:
“5.4 It is an undisputed fact that as per the sale deed dated 26.08.2009 the total sale consideration received by the assessee is at Rs.6,50,00,000/- only and therefore the amount received by the assessee of Rs.2,00,00,000/- over and above the agreement value cannot be considered as part of sale consideration received by the assessee towards transfer of land since not forming the part of sale deed dated 26.08.2009. Even for the sake of consideration it is presumed though not accepted that cash of Rs.2,00,00,000/- is received by the assessee is related to transfer of land, as per assessee’s submission this amount of Rs.2,00,00,000/- related to transfer of whole land for total sale consideration of Rs.24,00,00,000/- and hence cash proportion to the sale consideration of Rs.6,50,00,000/- can only be attributable, which the assessee has not done. 5.5 In the light of the above facts of the case and in law, since the nature of cash of Rs.2,00,00,000/- received by the assessee is not supported by any authentic documentary evidences, I concur with the view of the AO that the same is required to be brought to tax as income from other source. Therefore, the action of AO in bringing to tax cash of Rs.2,00,00,000/- received by the assessee during the relevant previous year as income from other sources is confirmed. All the grounds of appeal raised by the assessee therefore stand dismissed”.
Aggrieved by the impugned order of the ld.CIT(A), the assessee preferred an appeal before us.
:-4-: ITA. No.3441/Chny/2025. 6. Before us, when the appeal was taken up for hearing, the ld.AR for the assessee assailed that the ld.CIT(A) has erred in considering the sale consideration as Rs.6,50,00,000/- as done by the AO instead of Rs.8,50,00,000/- as admitted by the assessee. The ld.AR in this regard submitted that the assessee during the previous year 2009-10 relevant to the assessment year 2010-11, had sold land to the extent of 10 grounds out of 27 grounds 540 sq.ft that he owned at Neelangarai Village for a sale consideration of Rs.8,50,00,000/- and had offered the long term capital gain that had arisen on transfer of the said land. It was submitted that out of the said consideration, a sum of Rs.6,50,00,000/- was recorded in the sale deed and the same was received by the assessee by way of demand draft, as regards the balance consideration of Rs.2,00,00,000/-, the same was received by the assessee by way of cash. It was further submitted that the assessee agreed to sell the said land and building admeasuring to 27 grounds 540 sq.ft of land and a building measuring 6,730 sq.ft. to Mrs.Reeta Lankalingam, the buyer, for a total consideration of Rs.24,00,00,000/- vide letter of understanding dated 27.04.2009 placed in pages 2 to 5 of paper book. 7. Further the ld.AR submitted that the buyer had paid a sum of Rs.1,00,00,000/- by cash at the time of signing the said letter of understanding dated 27.04.2009 and agreed to purchase the said property by paying the balance consideration of Rs.23,00,00,000/- not later than 01.09.2009, which has been clearly spelt out in the said letter of understanding dated 27.04.2009. It was submitted by the ld.AR that the buyer could not arrange funds for the purchase of land and building from the assessee within the agreed time, i.e., on or before 01.09.2009 and thus the buyer proposed that the sale may be undertaken in two parts in favour of her husband Mr.Lankalingam as detailed below: 1. Sale of 10 grounds of land before 01.09.2009. 2. Sale of balance 17 grounds 540 sq.ft along with building before 30.04.2010.
:-5-: ITA. No.3441/Chny/2025.
The ld.AR submitted that the total agreed sale consideration of Rs.24,00,00,000/- was fixed by the buyer and seller during the course of initial rounds of discussing the deal in the following manner: - Reference is drawn to page 56 of the Paper Book – Statement showing flow of consideration
Land - Rs.23.14 crores (27 grounds & 540 Sq ft @ Rs.85 Lakhs per ground) Building - Rs.0.84 crores (6,730 Sq ft @ Rs.1,245 per Sq ft) Total consideration - Rs.23.98 crores ~ Rs.24.00 crores 9. The ld.AR further submitted that even going by the modified terms, the assessee did not lose out on the agreed consideration of Rs.24,00,00,000/- and thus the assessee agreed with the above proposal put forth by the buyer. Thereby, land admeasuring 10 grounds (8 grounds and the passage measuring 2 grounds) was transferred to Mr.Lankalingam (the buyer) vide sale deed dated 26.08.2009 for a recorded consideration of Rs.6,50,00,000/- and consideration of Rs.2,00,00,000/- paid by way of cash - drawing reference to the Copy of sale deed dated 26.08.2009 placed in pages 6 to 18 of the paper book
On 26.08.2009, it was submitted by the ld.AR that a fresh agreement of sale was entered into between the assessee and the buyer in respect of the balance land admeasuring 17 grounds 540 sq.ft. along with the building measuring 6,730 sq ft. It was mutually agreed by the parties to complete the sale on or before 30.04.2010. It was also agreed that in the event the buyer was unable to complete the sale for any reason attributable to him, then the 10 grounds of land already sold to him was agreed to be resold to the assessee - drawing reference to the Copy of Agreement of sale dated 26.08.2009 placed in pages 19 to 28 of the paper book.
:-6-: ITA. No.3441/Chny/2025. 11. The ld.AR also submitted that the balance land admeasuring 17 grounds 540 sq.ft. along with the building measuring 6,730 sq.ft. was transferred to Mr.Lankalingam for a consideration of Rs.15,50,00,000/- vide sale deed dated 12.04.2010 at the agreed rate of Rs.85,00,000/- per ground of land - drawing reference to the Copy of sale deed dated 12.04.2010 placed in pages 29 to 55 of the paper book.
The ld.AR submitted that assessee has for the AY 2011-12 offered the sale consideration of Rs.15,50,00,000/- in respect of the sale of the balance land admeasuring 17 grounds & 540 sq ft @ Rs.85,00,000/- per ground, which has been accepted by the AO. It may be noted that the rate of sale is Rs.85,00,000/- per ground of land.
The ld.AR lastly submitted that from the combined reading of the letter of understanding dated 27.04.2009, sale deed executed on 26.08.2009, agreement of sale dated 26.08.2009 and sale deed dated 30.04.2010, it was clear that the rate of sale was only Rs.85,00,000/- per ground of land.
The ld. DR on the other hand, strongly relied on the impugned order of the ld.CIT(A) and that of the AO and prayed for confirming the addition by dismissing the appeal of the assessee.
We have heard the rival submissions and perused the material available on record, including the orders of the lower authorities and the paper book filed by the assessee. At the outset, it is an admitted position that the assessee had sold a land located at Neelangarai Village during the year under consideration. Therefore, to decide the issue of whether the cash component of the sale consideration claimed to have been received for transfer of property or income from other sources, one has to keep in mind and consider the evidences filed by the assessee including the return of income for the subsequent AY’s. Admittedly, it is a matter of fact that the assessee itself has considered
:-7-: ITA. No.3441/Chny/2025. Rs.8,50,00,000/- as the sale consideration for the purposes of computation of capital gains. The AO rejected the arguments of the assessee that he has received a sum of Rs.2,00,00,000/- as consideration in cash. The reason given by the AO to reject the arguments of the assessee is that in the sale deed executed by the assessee for transfer of property, the consideration was shown at Rs.6,50,00,000/-. and the same has been paid by way of Cheque & Demand Draft. Therefore, the AO on this basis arrived to the conclusion that the cash component of the consideration of Rs.2,00,00,000/- claimed by the assessee is not the actual sale consideration but in the form of Income from other sources not pertaining to the sale transaction. It is pertinent to note that in the subsequent AY 2011-12, the AO has accepted the cost per ground of land sold by the assessee to be Rs.85,00,000/- and consequent computation of capital gains. In this scenario, we find no reason as to why the assessee would choose to get a lower consideration in respect of a part of the same land, the sale of which was executed on the same day when an agreement of sale was executed for the balance part of the land for a higher consideration i.e., Rs.85,00,000/- per ground of land.
We have given our thoughtful consideration to the reasoning of the AO in light of arguments advanced by the assessee and we ourselves do not subscribe to the reason given by the AO. No doubt, when the assessee claims something, it is the duty of the assessee to justify its claim with necessary evidence. Unless assessee substantiated its claim with necessary evidences, then, the AO can infer otherwise but such inference should be based on circumstantial evidences. In this case, the assessee claims that it has received sale consideration in cash amounting to Rs.2,00,00,000/- from transfer of property which is although not supported by documentary evidences, but circumstantial evidences clearly show that the income was generated from the sale of said land. Therefore, when the assessee has claimed that it has received sale consideration in cash for transfer of property with supporting evidences, it is for the AO to disprove the claim of the assessee with cogent reason and
:-8-: ITA. No.3441/Chny/2025. sufficient evidences to say otherwise. In this case, the AO has simply gone on the basis of Sale Deed executed by the assessee without considering the substantial evidence filed by the assessee. Thus, we find merit in the arguments advanced by the assessee and are inclined to accept the same in so far as to say that he has received the sale consideration of Rs.8,50,00,000/- for sale of property, even though, the Sale Deed shown only Rs.6,50,00,000/-. In other words, we are of the view that the assessee has indeed received a sum of Rs.2,00,00,000/- as part of the very same transaction, though by way of cash and thus the assessee is right in adopting the sale consideration at Rs.8,50,00,000/- for the purposes of computation of capital gains from this transaction. Accordingly, we are inclined to set aside the finding of the ld.CIT(A) and direct the AO to consider the sale consideration as Rs.8,50,00,000/- as against Rs. 6,50,00,000/-. Thus, the grounds of appeal of the assessee are allowed.
In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 06th May, 2026 at Chennai.
Sd/- Sd/- (मनु कुमार गिरर) (एस. आर. रघुनाथा) (MANU KUMAR GIRI) (S. R. RAGHUNATHA) न्याययक सदस्य/Judicial Member लेखासदस्य/Accountant Member
चेन्नई/Chennai, ददनांक/Dated, the 06th May, 2026 *Devadas
:-9-: ITA. No.3441/Chny/2025. आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF
DEVADAS Digitally signed by DEVADAS GOPALA GOPALANACHARY Date: 2026.05.11 NACHARY 15:24:32 +05'30'
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