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Facts
A search and seizure operation was conducted, and a notice under section 153A was issued. The assessee had not filed an original return. The Assessing Officer made an addition of Rs. 13,56,250/- based on a notarized agreement for an alternate accommodation provided by a developer. The assessee claimed it was not a transfer of ownership but merely a temporary arrangement.
Held
The Tribunal held that the assessee occupied the flat as an alternate accommodation provided by the developer under a joint development agreement, not as an owner. The developer's confirmation letter and property documents supported this, showing ownership remained with the developer.
Key Issues
Whether the addition of Rs. 13,56,250/- made by the Assessing Officer on account of an alternate accommodation provided by a developer, treating it as a transfer of ownership and thus income, was justified.
Sections Cited
143(3), 153A, 139(1), 2(47), 132
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Income Tax Appellate Tribunal, “G” BENCH MUMBAI
Before: SMT BEENA PILLAI & SHRI GIRISH AGRAWAL
Present for: Assessee : Shri Amit Jhaveri and Shri Dharmil Jhaveri, CAs Revenue : Shri Arun Kanti Datta, CIT DR Date of Hearing : 01.12.2025 Date of Pronouncement : 17.02.2026 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of CIT(A) Pune - 11, vide order no. ITBA/APL/S/250/2023-24/1057012775(1), dated 12.10.2023, passed against the assessment order by ACIT, Central Circle 2, Thane, u/s. 143(3) r.w.s. 153A of the Income-tax Act (hereinafter referred to as the “Act”), dated 28.12.2019 for Assessment Year 2012-13.
Grounds taken by assessee are reproduced as under: “1..The Hon CIT(A) erred in the addition of Rs.13,56,250/- made by the Id AO by holding notarised agreement which has been provided by the developer on temporarily basis no registered agreement has been executed and allotted against the development agreement duly executed as dt. on 13/11/2007.
Shatrughan K. Patil AY 2012-13 i) The development agreement executed with Minaxi developers dt. on 13/11/2007 ii) Further that there were no "transfer" as postulated u/s 2(47)(v) of IT Act 1961, and therefore no income arose in the hands of the Appellant in the year under appeal on execution of development agreement dt. on 13/11/2007. iii) The Appellant has jointly owned the ancestor's property with another family members. The addition of Rs. 13,56,250/- may kindly be deleted.”
It is noted that there is a delay of 227 days in filing the present appeal before the Tribunal for which petition for condonation of delay along with affidavit is placed on record. From the perusal of the same, it is noted that the reasons explained by the assessee for this delay are on account of his ill health as well as because of his son who met with a major road accident and was hospitalized. These medical exigencies prevented the assessee from filing the appeal within the prescribed limitation. Assessee has placed on record corroborative documentary evidences in support of his submissions. Considering these on record, we find it appropriate to condone the delay and take up the matter for adjudication.
Facts emanating from the material on record are that a search and seizure operation u/s.132 was carried out on the business as well as residential premises of Mangesh D Gaikar and Umesh D Tanna Group including the assessee on 25.10.2017. Assessee had not filed his original return of income u/s. 139(1) for the year under consideration. Owing to search and seizure action, notice u/s.153A was issued on 27.11.2018, in response to which assessee filed his return of income on 02.12.2019, reporting total income at Rs.2,30,810/-.
Case of the ld. AO is that during the search action at the residence of the assessee, page No.1 to 8 of Bundle No. 3AB-9 were found and Shatrughan K. Patil AY 2012-13 seized. These documents relate to copy of agreement, dated 26.12.2011 between the assessee and the developer named as M/s. Minaxi Developers for acquisition of one flat bearing No.202 measuring 775 sq. ft. in the building named as ‘Vastu Heritage’. Assessee was required to explain the source of investment made in this property and how it was accounted in his books of accounts.
5.1. In response to which it was submitted that this agreement is a notarized document through which assessee was given an assurance by way of a promise from Minaxi Developers to receive flat No.202 in Vastu Heritage building, as an alternate accommodation until the construction of phase-I by the developer gets completed. This agreement is not a registered document entailing transfer of ownership to the assessee in the said flat. Ld. Assessing Officer, after considering the submissions so made, confirmed on the view that the said property was receivable by the assessee and therefore, concluded that amount of Rs.13,56,250/- being the value of the flat is to be added to the total income of the assessee as consideration against sale of plot of land.
Assessee reiterated his submissions along with documentary evidences at the first appellate stage. However, ld. CIT(A) observed that assessee did not come out clean as he has not filed complete details of the transactions and therefore, sustained the addition so made by the ld. Assessing Officer. He also further noted that since assessee has not furnished details in respect of cost of acquisition of the said land, no benefit regarding the cost of acquisition can be given. Hence, assessee is in appeal before the Tribunal.
Before us, ld. Counsel for the assessee elaborated the correct factual position in respect of the transaction undertaken by the Shatrughan K. Patil AY 2012-13 assessee with Minaxi Developers. In this respect, assessee has placed a compilation containing 12 pages forming part of the record. From the perusal of the same, it is noted that assessee is one of the beneficiaries of two plots of land in the capacity of one of the legal heirs of his deceased grandfather namely, late Hari Balu Patil. In this respect, assessee has furnished a family tree to demonstrate how the share of assessee as a legal heir in the two plots of land, devolved on him. It was pointed out that assessee’s grandfather, i.e., Hari Balu Patil was owner of two different plots bearing Survey No.24/3 (old Survey No.144) having area of 3840 sq. metres. The other plot has Survey No.69/1/A.
7.1. Plot of land bearing Survey No.24/3 was assigned to M/s. Minaxi Developers for joint development vide agreement dated 13.11.2007. This plot of land was in the name of late Mukund Nago Patil in the records of the property card where assessee along with his family stayed and occupied a part of the same. In view of the joint development agreement, Minaxi Developers proceeded to develop the land in two phases, dividing the land equally into two parts, admeasuring 1920 sq. metres each. One building was constructed by the developer on one part of the land as “phase-2” wherein assessee and his family were provided an alternate accommodation in flat No.202 by way of arrangement made under a notarized agreement dated 26.11.2011. It was this notarized agreement which the ld. AO referred to, for the purpose of making addition in the hands of the assessee. This alternate accommodation was provided by the developer in flat no.202 of phase-2, so that assessee shifts temporarily to phase-2, with a condition to vacate the said flat as and when the construction of phase-1 gets completed. However, construction of phase -1 could not start and is pending, leaving the remaining part of the land vacant.
Shatrughan K. Patil AY 2012-13 8. On these set of facts, assessee claims that he is occupying the said flat only as an alternate accommodation provided by the developer in view of the joint development agreement and does not have ownership, title, rights in the said flat, so provided by the developer. There is no transfer of ownership in the name of the assessee in respect of this flat taking into account the definition of “Transfer” as postulated u/s. 2(47). In this respect, assessee placed on record a confirmation letter from Minaxi Developers which very categorically states the correct status of ownership which lies with the developer and not the assessee. This confirmation letter also explains the nature of transaction undertaken with the developer by the assessee. Contents of this letter are extracted below for ready reference: “This is to certify that MR. SHATRUGHAN KAPSHA PATIL and his family members having jointly owned 3,840 sq.mtr bearing s.no.24/3 (old s.no.144) out of which 1920 są mtr development right taken from legal heirs Mr. Prakash mukund patil & other members. The development agreement executed on dt. 13-11-2007 duly registered with sub registrar kalyan.3, Vide R.No.6302. MR SHATRUGHAN KAPSHA PATIL having 50% share of land area 1920sq.mt which has been taken by me under mutual consent for development and notarized supplementary agreement has been executed on 09/05/2008. As per supplementary agreement I have provided alternate temporary accommodation to you in flat no 202, Area 775 sq. ft phase 2 on 26/11/2011. I have not transferred any ownership, title, rights in favour of MR SHATRUGHAN KAPSHA PATIL I further state that the said flat is the name of MINAXI DEVELOPERS. the municipal tax and electricity meter also in the name of MINAXI DEVELOPERS. The flat 202 situated at Vastu heritage building provided to you only on temporary basis till the completion of construction work on phase 1.” 8.1. To further corroborate this factual position, assessee has placed on record copies of latest electricity bill for the concerned flat which is in the name of Minaxi Developers. Also, assessee has placed on record copies of latest property tax bill which also is in the name of the developer.
Shatrughan K. Patil AY 2012-13 9. Considering the above factual matrix, verifiable from the documentary evidence placed on record and nothing brought to controvert the same, we find that stand taken by the ld. Assessing Officer that assessee is the owner of the said flat, is not tenable. It is evidently demonstrated by the assessee, as confirmed by the developer that the said flat is owned by Minaxi Developer and not by the assessee. Thus, the concerned flat is occupied by the assessee and his family merely as alternate arrangement of accommodation until completion of construction work on phase-1 on the remaining part of plot of land. Considering this factual position, addition made by the ld. Assessing Officer is deleted. Grounds raised by the assessee in this regard, are allowed.
In the result, appeal of the assessee is allowed.
Order is pronounced in the open court on 17 February, 2026 Sd/- Sd/- (Beena Pillai) (Girish Agrawal) Judicial Member Accountant Member Dated: 17 February, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai