ACIT, CENTRAL CIRCLE-1, NASHIK, NASHIK V. RAJENDRA RASIKLAL SHAH, NASHIK

ITA 1015/PUN/2024

AI Insights

The case involves the Income Tax Department appealing against the decision of the CIT(A) which had deleted an addition made by the Assessing Officer regarding the income from the sale of immovable property. The property in question had multiple transactions involving different parties over several years, with each party declaring the income from their respective transactions in their income tax returns. The Assessing Officer initially added the income to the assessee's account, arguing that the final sale deed was not registered until a later date, thus not recognizing the earlier transactions. However, the CIT(A) found that the income had already been taxed in the hands of the previous sellers, and thus, adding it again in the hands of the assessee would lead to double taxation. The Tribunal agreed with the CIT(A)'s reasoning and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474146 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: CIT vs. Balbir Singh Maini, Smt.Sapnaben Dipakbhai Patel vs. ITO, K. R. Shrinath Vs. ACIT, Circle-1(1), Salem, Anita D. Kanjani Vs. ACIT, DCIT Vs. Shri Narayan Mandyam Veerabhudhi, Sanjeev Lal Etc Vs Commissioner of Income Tax, Chandigarh, M/s. K.B. Saha and Sons Private Limited v. Development Consultant Limited
• Laws Referred To: Income Tax Act, 1961, Transfer of Property Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR KESHARI
• Assessee Lawyers: SANKET JOSHI
• Keywords: Capital asset; Reassessment proceedings; Cost of acquisition; Gift
• Section: 54; 2(14)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1015/PUN/2024 Assessment Year : 2013-14 ACIT, Central Circle-1, Nashik Vs. Rajendra Rasiklal Shah, Viraj Builder and Developer, Abhayankar Towers, M.G. Road, Opp. Bata Shop, Nashik – 422 001 Maharashtra PAN : ADBPS2863H Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of Revenue is directed 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 Assessee by : Shri Sanket Joshi Revenue by : Shri Ajay Kumar Keshari Date of hearing : 11.02.2025 Date of pronouncement : 20.03.2025 ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 2 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 the land in question was purchased by him on 14.05.1992 and was sold to Mr. Vasanti Shankar who further sold to Rathi Estates who further sold to Yogeshwar Packaging Industries and it was further sold to Paresh N Bhagat and finally Paresh N Bhagat sold to Bhavin Enterprises. Now the transaction of capital gain/ profits earned by each of the person referred above have been disclosed in their regular income-tax returns for the year during which the transactions took place and duly offered to tax. However, since the final sale deed was not registered by any of the buyers, finally it was the assessee who was asked to complete the registration of sale deed in favour of Bhavin Enterprises and the assessee only received Rs.18.00 lakhs and the balance of Rs.15.12 lakhs was received by Paresh N Bhagat which has been offered to tax in the return for A.Y.2013-14 by Paresh N Bhagat. Inspite of all these details provided to the AO, ld. AO taking recourse to section 53 of Transfer of Property Act r.w.s 2(47)(v)of the Act and section 54-55 of the Transfer of Property Act observed that the agreement for sale between the assessee and the confirming parties cannot be considered as legal and valid transaction and such sale transaction can be recognized as valid and legal only by registered sale deed. Ld. AO thus concluded the reassessment proceedings by computing the income from sale of immovable property at ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 3 Rs.15,13,95,000/- by reducing the cost of acquisition of Rs.16,05,000/- incurred in the year 1992-93 from the sale transaction of Rs.15.30 crore. Income assessed at Rs.15,32,59,330/-. 3. Aggrieved assessee preferred appeal before the CIT(A) and placed complete details of the income offered by various sellers of the very same property at different point of time and ld. CIT(A) dealing with the contentions of the AO as well as rebuttal of the assessee held that since it is evident that each of the party which is involved in the purchase/sale of the property in question during the period 1996-97 till Financial Year 2012-13 have disclosed the transaction including the sale consideration received by them separately and offered the same in their income- tax returns and financial statements, therefore, taxing the said profit again in the hands of assessee shall tantamount to double taxation of the same income. 4. Aggrieved Revenue is now in appeal before this Tribunal by raising 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. ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 4 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 immovable property involved two Survey Nos. at 156/2 and 156/2B Nashik admeasuring 24000 Sq. mts. and and 11600 Sq mts respectively and that the Survey No. at 156/2 admeasuring 24000 Sq. mts was sold by the assessee to Smt. Vasanti Shankar and Survey No. 156/2B Nashik admeasuring 11600 Sq mts. was sold by Viraj Estates Pvt. Ltd wherein the assessee is a director. 4. 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/- not appreciating the fact that as per the final Sale Deed no.3412 of 2013 dated 30.03.2013 the assessee was recorded as the Seller and M/s. Bhavin Enterprises as purchaser for the Survey No. at 156/2B admeasuring 11600 Sq. mts. 5. 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/- not appreciating the fact that the transfers were made through Agreement to Sale and MoUs to various intermediary parties and both the Survey Nos. were not brought to finality by signing of Sale Deeds in terms of Section 54 and Section 55 of Transfer Property Act, 1882 and cannot be treated as valid transactions as per the provisions of the Income Tax Act, 1961. 6. 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 Agreement to Sale and MoUs entered by various parties were not final documents and to allow relief of Rs. 15,13,95,000/- to the assessee is bad in law. 7. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) while deleting the addition of Rs.15,13,95,000/- has erred in treating the intermediary transactions through agreement to sale/MoU between various parties as valid transactions and accepting claim of the assessee on double taxation when no such benefit is enshrined in the Income Tax Act, 1961 read with Transfer Property Act, 1882. 8. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.” 5. Ld. Departmental Representative firstly referred to the detailed finding of ld. AO and stated that the story narrated by the assessee about the transaction of sale of the very same property to different persons at different point of time seems to be a colourable device just to avoid the taxation and even it is not ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 5 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 of the paper book can briefly describe the documents placed by the assessee to prove that the alleged sum has already suffered tax in various hands during preceding years and the same is as follows : “(1) Facts of the case are that your assessee has purchased land for total cost of Rs. 21,98,235/- which is supported by purchase deed dated 14/05/1992 as chief promotor of proposed co-operative housing society. (2nd submission-Anne-4). The copy of purchase deed is attached herewith as Annexure-4. (2) The notarized agreement to sale the impugned land was entered into with Vasanti Shankar on 30/04/1996 for consideration of Rs. 45,00,000/- [Annexure-A(i)]. The copy of notarized agreement between Viraj Estate (Mahavir Land Developers) & Vasanti Shankar is attached herewith as Annexure-5. The profit of Rs. 23,01,765/- was shown in ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 6 audited P&L a/c by Viraj Estate which was filed as Annexure-A(ii). Copy of audited profit & loss account of Viraj Estate is attached herewith as Annexure-6. (3) Vasanti Shankar had entered into notarized agreement to sale with Rathi Estates on 27/01/2001 for consideration of Rs. 1,35,00,000/- (Annexure-B) and had earned gross profit of Rs.90,00,000/-. Copy of notarized agreement between Vasanti Shankar & Rathi Estates is attached herewith as Annexure-7. (4) Rathi Estates had entered into notarized agreement (MOU) to sale with Yogeshwar Packaging Pvt. Ltd. for consideration of Rs.2,80,80,000/-[Annexure-C(i)] and earned gross income of Rs. 1,45,80,000/- and shown the same in return of income/P&L a/c/computation of income [Annexure-C(ii)]. Copy of notarized agreement (MOU) between Rathi Estates and Yogeshwar Packaging Pvt. Ltd. is attached herewith as Annexure-8. The copy of P&L a/c & computation of income of Rathi estates is attached herewith as Annexure-9. (5) Yogeshwar Packaging Pvt. Ltd had entered into notarized agreement (MOU) to sale with Paresh Navnitlal Bhagat for consideration of Rs.3,24,00,000/- [Annexure-D(i)] and has earned gross profit of Rs.43,20,000/- and shown the same in return of income/P&L a/c/computation of income[Annexure-D(ii)]. Copy of notarized agreement to sale (MOU) between Yogeshwar Packaging Ltd. and Paresh Navnitlal Bhagat is attached herewith as Annexure-10. The copy of acknowledgement of return, computation of income and P&L A/c of Yogeshwar Packaging Ltd. are attached herewith as Annexure-11. (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 attached herewith as Annexure-16. ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 7 The above facts can be summarized in tabular chart on next page and real income earned by assessee is to be assessed to tax. The amount of Rs. 18,00,000/- was payable by Viraj Estates to Smt. Mustari Begam Pirjade as per agreement with her dated 31/12/2012(Anne-G) and hence in last transaction the amount was paid to Viraj Estate Pvt. Ltd. The copy of agreement between Viraj Estate & Smt. Mustari Begam Pirjade is attached herewith as Annexure- 17. Thereafter, due to encroachment and area dispute the payment was delayed and ultimately paid through banking channel. Copies of relevant ledger accounts were filed to the AO. CHART 7. So far as the judgment of the Hon’ble Supreme Court in the case of Balbir Singh Maini (supra) referred by ld. DR, ld. Counsel 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 ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 8 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 the AO towards profit from sale of immovable property. We observe that the assessee who is an individual purchased a piece of land on 14.05.1992 in capacity of Chief Promoter of Niyojit Lord & Lord Cooperative Housing Society. During the year under consideration, a sale deed was registered which was signed by the assessee and it was executed in favour of Bhavin Enterprises. When this information was received by the AO, he carried out the reassessment proceedings which culminated into the impugned addition. Now the facts narrated by the ld. Counsel for the appeal indicate that the assessee purchased land during F.Y. 1992-93 and sold it in F.Y. 1996-97 for a consideration of Rs.45.00 lakhs and the assessee after claiming the cost of acquisition at Rs.21,98,230/- offered the remaining profit of Rs.23,01,765/- in its income-tax return for A.Y.1997-98. Now the story of selling and purchasing of the very same land continued further and the same is narrated by ld. Counsel for the assessee in the following manner : “1] Vide unregistered agreement to sale dated 30.04.1996, the assessee had already agreed to sell the impugned land to one, Mrs. Vasanti Shankar and he had also received entire consideration of Rs.45 lakhs thereof. ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 9 2] On the basis of the said agreement, Mrs. Vasanti Shankar had also entered into an agreement to sale dated 27.01.2001 for transfer of the property to M/s. Rathi Estates and the entire consideration of Rs.1.35 Crs. through banking channel vide the said agreement. The assessee was also a party to this agreement in capacity of Consenting Party' who had accepted the terms of transfer of land between Mrs. Shankar and M/s. Rathi Estates. 3] Both these unregistered agreements were entered prior to the amendment made to section 17 of the Registration Act, 1908 w.e.f. 24.09.2001 vide Registration and Other Related Laws (Amendment) Act, 2001 which mandated that the title of an immovable property could be transferred only by way of a registered document. Prior to the said amendment, the title in immovable property could also be transferred by way of an unregistered agreement to sale/ contract. [Refer CIT v. Balbir Singh Maini & Others [398 ITR 531 (SC): Para 19: \"An agreement of sale which fulfilled the ingredients of s. 53A was not required to be executed through a registered instrument. This position was changed by the Registration and Other 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 applicability of the impugned Act very soon. Vide the unregistered agreements to sale entered by the respective parties, it was agreed that the final registered sale deed shall be entered only after the impugned permission u/s 26(1) of the ULCR Act, 1976 was obtained. However, subsequently, the Maharashtra State Legislature adopted the ULCR Repeal Act vide Resolution dated 29.11.2007 and thus, the said provisions were done away with even in the State of Maharashtra. Therefore, upon insistence of Advocate of Buyer M/s. Bhavin Enterprises who purchased the impugned land for consideration of Rs.15.30 Crs. vide Sale Deed dated 29.12.2012, a registered deed was entered for first time in respect of the impugned property, after the year 1992. The registered deed dated 29.12.2012 was entered in name of the assessee (Chief Promoter of NLLHCS) since the assessee, in capacity of Chief Promoter of M/s. Niyojit Lord and Lord Hsg. Co-op. Society had purchased the property as per the preceding ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 10 registered deed dated 14.05.1992 entered in respect of the impugned property. 6] As clarified above, the assessee was legally bound by the agreement to sale dated 30.04.1996 and subsequent agreement to sale dated 27.01.2001 and hence, he did not have any legal/ real right to receive any consideration on sale of the impugned property vide registered deed dated 29.12.2012. The right to receive the said consideration was with Shri Paresh N. Bhagat in whose favour the preceding Agreement to Sale dated 30.03.2012 was executed by M/s. Shree Yogeshwar Packaging Industries. Even if the assessee would have attempted to claim any right on such sale consideration, then the other parties (subsequent purchasers) would have sought refuge to Right To Specific Performance as per the Agreement to Sale dated 30.04.1996 and subsequent Agreements and therefore, the assessee would not have been legally entitled to receive any part of the sale consideration arising vide regt. deed dated 29.12.2012. The Id. CIT(A) has relied upon various judicial decisions on this aspect. In view of these facts, the assessee did not actually receive any consideration on sale of property vide regt. deed dated 29.12.2012 and the consideration of Rs.15.12 Crs. was received by Shri Paresh N. Bhagat. The nominal amount of Rs.18 lakhs was received by the assessee only to settle the litigation/ dispute with Mrs. Mustari Begam Peerzade 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 law. 8] It is well settled law that under the provisions of Income Tax Act, 1961, only the real income is taxable and not any hypothetical income. In this respect, the appellant places reliance on the ratio laid down in the following decisions - 1. Dinesh Vazirani v. PCIT & Others [(2022) 445 ITR 110 (Bom HC)] 2. Smt. Shivani Madan v. PCIT [ITA No. 573/2023 (Delhi HC) dated 08.01.2025 ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 11 3. Sapnaben Dipakbhai Patel v. ITO [ITA No. 2414/Ahd/2013] dated 13.01.2016 [Hon'ble AM is party to this Decision relied upon by CIT(A)] 9] In view of the above facts and judicial decisions cited, it is submitted that the relief provided by the Id. CIT(A) by way of detailed and reasoned order is justified on facts and in law and hence, the appeal filed by the Dept. may please be dismissed.” 9. Now the above details provide the clear picture of the transactions entered into at various points of time and which have been offered to tax by the respective sellers in their income- tax returns. Admittedly, the final registered sale deed has been entered into between the assessee and the final buyer namely Paresh N Bhagat but the fact remains that the gain of Rs.14,90,01,765/- has been offered to tax by different assessees. Before us, ld. Departmental Representative has referred to the judgment of Hon’ble Apex Court in the case of Balbir Singh Maini (supra) stating that in absence of registered sale deed, the transaction of transfer of property cannot be recognized and is not valid. We however observe that in the instant case the transfer of property from one person to another has been carried out through unregistered document but along with that possession of the land has been given and the consideration has been passed on to the seller through account payee cheque and duly disclosed in the income-tax return of the respective sellers. The Coordinate Bench, Ahmedabad in the case of Smt.Sapnaben Dipakbhai Patel vs. ITO (supra) considering similar set of facts where transfer took place through unregistered document but considering that a suit for specific performance is available based upon unregistered contact of agreement to sale containing a clause regarding part performance of contract by delivery of possession. Placing reliance on the finding of Coordinate bench, ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 12 Ahmedabad in the case Smt.Sapnaben Dipakbhai Patel vs. ITO (supra), we fail to find any merit in the contentions 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 support of this contention, the AO has relied on the decision of Honorable Supreme Court, in the case of Suraj Lamp Industries Ltd. Vs State of Haryana (2011) 202 Taxman 607(SC). 6.5 On perusal of the above decision, it is noticed that, this decision is in respect of legal transfer of immovable property and not in respect of provisions of income tax act laying down any proposition about capital asset defined u/s 2(14) or transfer of capital asset u/s 2(47) of the Income tax Act. The appellant has submitted that by entering into agreement to purchase, the proposed purchaser acquires right of specific performance to purchase the property which is a valuable right and clearly fall within the definition of capital asset u/s 2(14) of the Act. Therefore, on transferring/ relinquishing the said right, the proposed purchaser, mentioned in agreement to sale, can earn income, which is taxable in his hands. This proposition of law is supported by the decision of Madras High Court, in the case of K. R. Shrinath Vs. ACIT, Circle-1(1), Salem, T.C. (A) No. 59 of 2002, order dated 20/04/2004. In this case, the Honorable Madras High Court has held in para 11, Page No.7 of the decision as under: \"11. As seen already, the assessee had a right to insist for specific performance gave up the right readily and received a sum referred supra. There can be no doubt that by termination of earlier agreement and by allowing the vendor to sell the said property to any person at any price, the assessee had given up or ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 13 relinquished his right of specific performance and as consideration of relinquishing that right, the assessee was paid a sum of Rs. 6,00,000/-. The right, title and interest acquired under the agreement of sale clearly fall within the definition of capital asset (Section 2(14)). Instead of assigning the right to third party/parties, the assessee relinquished those rights. We have already seen that the definition of transfer in Section 2(47) is wide enough to include relinquishment of an assel.\" 6.6 The contention of the appellant that, the decision of Honorable Supreme Court, in the case of Suraj Lamp Industries Ltd. Vs State of Haryana (2011) 202 Taxman 607(SC), is, in respect of legal transfer of immovable property and not in respect of provisions of income tax act laying down any proposition about capital asset defined u/s 2(14) or transfer of capital asset u/s 2(47) of 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 provisions of Transfer of Property Act which needs to be read with provisions of section 2(47) of Income-lax Act, 1961 for the purpose of computing tax liability arising on account of sale /purchase of immovable properties under Income-tax Act. But the issue here before us is different. As discussed earlier, the holding period is to be delermined in terms of section 2(424) of the Act which has been reproduced and discussed above. The issue of transfer of ownership is not the issue to be decided here for computing the holding period. Therefore, we find that application of the ratio of aforesaid judgment would not be appropriate here.” 6.7 It is pertinent to note here that, the Honorable Supreme Court, in the recent decision of 10th April, 2023, in the case of R. Hemlatha v Kasthuri, has held that, an unregistered agreement to sale can still be admitted as evidence where, the suit is for relief to be granted by court against a person to fulfill his/her contractual obligation of specific performance. The Supreme Court's decision is in line with the principles ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 14 of equity and ensures that registration alone would not be an insurmountable barrier for those seeking specific performance. 6.8 Recently in the case of M/s. K.B. Saha and Sons Private Limited v. Development Consultant Limited, (2008) 8 SCC 564, dated 12th May- 2008 the Honorable Supreme Court noticed the following statement of Mulla in his Indian Registration Act, 7th Edition, at page 189:- \"The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir, the former Chief Court of Oudh; the Judicial Commissioner's Court at Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17 and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it\" This Court then culled out the following principles: - 1. A document required to be registered, if unregistered is not admissible into evidence under Section 49 of the Registration Act. 2. Such unregistered document can however be used as evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act. 3 A collateral transaction must be 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 on 27th December, 2002 can be considered as a date on which the property ie. the ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 15 residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immoveable property, a right in personam is created in favour of the transferee/vondee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed Thus, by virtue of the agreement to sell some right is given by the vendor to the vendee.\" The Honorable Supreme Court, after observing as above, has laid down that, for the purpose of section 54, the date of transfer shall be considered as the date of agreement to sale and decided the issue in favour of the assessee. 6.10 The Honorable ITAT Bengaluru, in the case of Shri Chandrashekar Naganagouda Patil Vs. DCIT, ITA No. 1984/Bang/2017, A.Y. 2012-13 order dated 29.06.2020, has laid down that the right to obtain conveyance acquired by the assessee under the unregistered agreement to sale is capital asset u/s 2(14) of the Income Tax Act, the surplus on transfer/ relinquishment of such right shall result into \"Capital Gain\" and not \"Income from Other Sources as held by the AO. 6.11 The above contention of the appellant is also supported by the ratio laid down in the following decisions. 1) Smt. Sapnaben Dipakbhai Patel Vs. ITO, ITA No. 2414/Ahd/2013, order dated 13/01/2016 (Ahd. Trib.) 2) The ACIT Vs. Ashwin S. Bhalekar, ITA No. 6822/Mum/2016, order dated 21/05/2019. 3) DCIT Vs. Shri Narayan Mandyam Veerabhudhi, ITA No. 1248/Bang/2016, order dated 29/01/2020. It is seen that, the facts of the Sapnaben Patel are similar to the facts of the case of the appellant. In fact, the facts of the case of the appellant are on a stronger footing. In the case of Smt Sapnaben Patel, the agreement to sale was entered into with Shri Sanjeev D Shah, for consideration of Rs.76.75 lakhs and profit of Rs.17.92 Lakhs was shown by Sapnaben Patel. Thereafter, the registered sale deed was entered into with Gatil Properties P. Ltd. for a consideration of Rs.1064 lakhs, between Sapnaben and GPPL and the substantial consideration above 10 Crores was received by Shri Sanjeev 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. ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 16 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/- (4) Yogeshwar Packaging Pvt. Ltd. [PAN : AASFS5130K] 43,20,000/- (5) Paresh Navnitlal Bhagat PAN : AABPB1037B] 11,88,00,000/- Total 14,90,01,765/- From the facts of the case, it is evident that, each of the above parties including the appellant have received sale consideration separately and have earned profit of Rs.14,90,01,765/- and also offered the same in their computation of income. Therefore, taxing the said profit again in the hands of the appellant shall result into double taxation of the same income. 6.13 In view of the above facts and discussion and considering the ratio laid down in the various decisions of Courts and Tribunals, I am of the considered view that, the AO is not justified in making addition of Rs. 15,13,95,000/- in the hands of the appellant and hence the same is deleted. Grounds No.1 & 2 are, therefore, ALLOWED.” 10. The above finding of the ld. CIT(A) remains uncontroverted by the ld. DR by placing any other contrary material and therefore since the alleged sum has already been offered to tax, sustaining of the impugned addition in the hands of assessee will only tantamount to double addition and that too when the alleged sum has not been received by the assessee in his bank account and ITA No.1015/PUN/2024 Rajendra Rasiklal Shah 17 complete details have been filed before us to prove that the alleged sum has been offered to tax by different assessees in their income-tax returns at different point of time when they sold the property to other person. We thus fail to find any infirmity in the finding of the ld. CIT(A) deleting the impugned addition. Therefore, all the grounds of appeal raised by the Revenue are dismissed. 11. In the result, the appeal of the Revenue is dismissed. Order pronounced on this 20th day of March, 2025. Sd/- Sd/- (ASTHA CHANDRA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 20th March, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “B” ब\u0014च, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "