Compulsory acquisition and contingent sale agreement do not trigger capital gains; unexplained cash deposits remain taxable without evidence.

Where land had already been compulsorily acquired and possession remained with the acquiring authority, an agreement to sell contingent on future de-notification did not amount to a transfer for capital gains purposes under section 2(47), and no deemed transfer arose under section 53A of the Transfer of Property Act. On those facts, the capital-gains addition was deleted. In contrast, cash deposits in the assessee's bank account were not fully supported by corroborative evidence: alleged family contributions and earlier withdrawals were not linked to the deposits. Only the amount attributable to current income was accepted as explained, and the balance was treated as unexplained income.

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Issues: (i) Whether capital gains were chargeable on the amount received under an agreement to sell where the land had already been compulsorily acquired and possession remained with the acquiring authority, and (ii) whether the cash deposits in the assessee's bank account were fully explained.

Issue (i): Whether capital gains were chargeable on the amount received under an agreement to sell where the land had already been compulsorily acquired and possession remained with the acquiring authority.

Analysis: The land had been compulsorily acquired and possession had already been taken by the development authority. No compensation had been received because the acquisition proceedings were still pending before the High Court. In these circumstances, the transfer contemplated by clause (iii) of section 2(47) and the deeming transfer under clause (v) were not attracted. The agreement with the builder was contingent on future de-notification of the land and did not result in possession being handed over in part performance under section 53A of the Transfer of Property Act, 1882. The alternate claim for exemption was also supported by the valuation report showing investment in agricultural land and a residential house.

Conclusion: No capital gains were chargeable on the facts, and the deletion of the addition on this ground was upheld.

Issue (ii): Whether the cash deposits in the assessee's bank account were fully explained.

Analysis: The assessee's explanation based on alleged contributions from brothers and opening cash-in-hand was not supported by corroborative evidence. The withdrawals claimed from earlier dates were also not shown to have any nexus with the later cash deposit. Only the amount relatable to current income was accepted as explained.

Conclusion: The addition was sustained to the extent of Rs. 7,58,500, with relief confined to Rs. 25,500.

Final Conclusion: The capital-gains addition was deleted, but the unexplained-deposit addition was substantially sustained, leaving the Revenue with only partial success overall.

Ratio Decidendi: Where land has already been compulsorily acquired and possession is not and cannot be transferred to a builder under a contingent arrangement, no transfer for capital-gains purposes arises under section 2(47), and in the absence of supporting evidence, cash deposits remain taxable as unexplained income except to the extent satisfactorily explained.

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