VANDANA SHARMA vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-20 & ANR.

PDF · subscribers
ITA/579/2026HC DelhiDLHC01032382202624 July 2026Author: HON'BLE MR. JUSTICE DINESH MEHTA,HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appellant's contention that the sale deed was executed under misconception, while attractive, lacked substance. The sale deed was executed on 03.04.2017, showing a cash consideration of Rs. 27,25,000/-, and this transaction was not disclosed to the Income Tax Department. The possibility that consideration was paid as part of a family settlement could not be ruled out. The Court found it intriguing that the civil suit for cancellation was filed as late as 2026, suggesting it was an afterthought, especially since it was filed after the Tribunal's disposal of the appeal. The High Court found no substantial question of law arising and dismissed the appeal. However, acknowledging the possibility of the appellant acting bona fide or under misconception and the subsequent cancellation of the sale deed by the Civil Court, the High Court observed that the Department should not impose a penalty. It directed that if the assessee produces the Civil Court's decree during penalty proceedings or appeals, the effect of the decree should be given in accordance with law.

What were the facts?

The appellant, Vandana Sharma, acquired a house property from her father-in-law's sons via a Sale Deed dated 03.04.2017. The deed showed a cash consideration of Rs. 27,25,000/-, which the appellant claimed was for stamp duty purposes as no actual consideration was paid, and it was part of a family settlement. The appellant did not file a return for this transaction. The Assessing Officer initiated proceedings under Section 148, leading to an assessment order dated 29.03.2023, assessing income at Rs. 28,46,120/-. The CIT(A) partly allowed the appeal on 03.09.2025. The ITAT, by order dated 28.01.2026, restricted the addition to Rs. 19,25,000/-, granting a relief of Rs. 8,00,000/-. Subsequently, a civil suit filed by the sellers for cancellation of the sale deed was decreed on 12.02.2026.

What were the issues?

1. Whether the sale deed executed on 03.04.2017, showing a cash consideration of Rs. 27,25,000/-, was a genuine transaction or a family settlement without actual consideration, turning on the interpretation of the transaction and the validity of the subsequent cancellation by a civil court. Assessee's contentions: - The sale deed was executed under a misconception as part of a family arrangement/settlement, with no actual consideration paid. The cash consideration was shown only due to the registration authorities' insistence on stamp duty based on circle rates. - A civil suit was filed for cancellation of the sale deed due to misconception, and it has been cancelled by a judgment and decree dated 12.02.2026. The foundation of the addition is gone, and the assessment order should be quashed. - The pendency of the civil suit was brought to the Tribunal's notice, yet it proceeded to decide the appeal. Revenue's contentions: - No arguments were recorded for the revenue in this High Court appeal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 148,Section 147,Section 144B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITA 579/2026 Page 1 of 5 $~21 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 579/2026, CM APPL. 47106/2026 & CM APPL. 47107/2026 VANDANA SHARMA .....Appellant Through: Mr. Rajesh Mohan Sinha, Sr. Adv. with Mr. Prateek Mohan Sinha, Mr.Syam Sundar, Mr. Dishant Sethi, Ms. Namita Sinha, Ms. Nandini Harsh & Mr. Krishnendu Das, Advs. versus THE PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-20 & ANR. .....Respondents Through: Mr. Shlok Chandra, SSC with Ms.Naincy Jain, Ms. Madhavi Shukla, JSCs and Mr. Udit Dad, Adv CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA

O R D E R %

24.07.

2026

1.

By way of the present appeal preferred under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), the appellant has challenged the order dated 28.01.2026 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘SMC’, New Delhi (hereinafter referred to as ‘Tribunal’) in ITA No.8360/Del/2025, whereby the appeal preferred by the assessee against the order dated 03.09.2025 passed by the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’) was partly allowed.

2.

The brief facts of the present case are that as a part of family settlement, a house property belonging to Mr. Pitamber Sharma, father-in-law of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:55:26

ITA 579/2026 appellant came to the appellant’s family through his three sons namely (i) Mr. Amit Sharma, (ii) Mr. Sumit Sharma, and (iii) Mr. Sonu Sharma by way of a Sale Deed.

3.

A sale deed dated 03.04.2017 was executed in favour of the appellant and was got registered with the registration authorities, which according to the appellant, was without consideration. However, a cash consideration of Rs.27,25,000/- was shown therein because the registration authorities insisted upon payment of applicable stamp duty based on the circle rate.

4.

The appellant did not file any return of income in relation to this transaction and when the factum of this transaction came to the notice of the Assessing Officer, proceedings under Section 148 of the Act of 1961 were initiated. A notice under Section 148 of the Act of 1961 was issued in response whereof the appellant filed a reply and stated that it was not a sale but a part of family settlement and consideration was shown only for the purpose of stamp duty valuation. The Assessing Officer did not accept the appellant’s explanation and an assessment order under Section 147 read with Section 144B of the Act of 1961 came to be passed against the assessee on 29.03.2023, assessing the appellant’s income as Rs.28,46,120/-.

5.

Against the assessment order dated 29.03.2023, the appellant preferred an appeal before the CIT(A) which was rejected by the Appellate Authority vide its order dated 03.09.2025. 6. Against the said order of the Appellate Authority, the appellant preferred an appeal before the Tribunal, which was partly allowed by order dated 28.01.2026. By the said order, the Tribunal restricted the addition to Rs.19,25,000/-, giving a lump sum relief of Rs.8,00,000/- to the assessee.

7.

Learned senior counsel for the appellant argued that as a matter of fact, This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:55:26

ITA 579/2026 the sale deed in question was executed under misconception. He added that factually, it was only a family arrangement/settlement amongst the family members, in which the property of Mr. Pitamber Sharma was agreed to be transferred to the appellant. And because of lack of legal knowledge, three sons of Mr. Pitamber Sharma executed a sale deed in appellant’s favour showing a consideration of Rs.27,25,000/-, though no amount was paid. He contended that since registering authority insisted that stamp duty would have to be paid on the circle value of the property, they innocently or unknowingly reflected cash consideration in the sale deed.

8.

Learned senior counsel for the appellant further invited Court’s attention towards the fact that a civil suit was filed by the sellers for cancellation of said sale deed having been executed under misconception and underscored that the said sale deed has been cancelled by way of judgment and decree dated 12.02.2026 passed by District Judge-04, Shahdara District, Karkardooma Courts, Delhi in Civil Suit No.57/2026 titled Vandana So far as the appellant’s contention that the sale deed was executed under misconception is concerned, the same appears to be attractive but lacks substance. It is to be noted that the sale deed came to be executed in favour of the assessee on 03.04.2017, showing a sale consideration of Rs.27,25,000/- in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:55:26

ITA 579/2026 cash. Such fact or transaction was not reported/disclosed to the Income Tax Department nor was any return filed even by the seller. So far as appellant’s contention that no consideration was paid may or may not be correct. The possibility that as a matter of fact such consideration was paid by the appellant or her husband to the remaining two brothers cannot be ruled out as a part of family settlement.

12.

It is intriguing that the civil suit came to be filed by the parties to the sale deed as late as in 2026. If the facts stated by the appellant were correct then the suit ought to have been filed immediately, at least when the assessee came to receive the first notice by the Income Tax Department (in the year 2022). The suit was filed as late as in 2026 – the suit is clearly an afterthought - until the disposal of appeal by the Tribunal, the suit was not filed.

13.

All the authorities have concurrently held against the appellant. No question of law, much less, substantial question of law arises for our consideration.

14.

The appeal stands dismissed accordingly. Pending applications are also disposed of.

15.

Though we have dismissed the appeal, but we still feel that there is a possibility that the appellant might have bonafidely or under misconception executed a document in the form of sale deed as contended and reflected an amount of Rs.27,25,000/- equal to the circle rate. We, therefore, hasten to observe that it is not a case, where the Department should impose penalty upon the appellant. More particularly, when the sale deed itself has been cancelled by the Civil Court.

16.

In case the assessee produces the decree of the Civil Court before the competent authority during the penalty proceedings (if pending) or before the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:55:26

ITA 579/2026 Appellate Authority in the pending appeal against penalty so levied, the effect of the decree of Civil Court, in accordance with law, be given.

DINESH MEHTA, J

RAJNEESH KUMAR GUPTA, J JULY 24, 2026/kk This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 30/07/2026 at 14:55:26

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →