Unregistered banachitthi and banking proof defeated colourable device allegation; addition was held unsustainable.

An unregistered banachitthi was not treated as unenforceable merely because it affected immovable property; under section 49 of the Registration Act, it could still operate as evidence of a contract and for collateral purposes. The Tribunal found the sale consideration paid to the confirming party was routed through banking channels and confirmed in a section 131 statement, and the record did not show the arrangement to be sham or a colourable device. On that factual basis, the addition was held unsustainable and the deletion by the first appellate authority was upheld.

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Issues: Whether the addition made by treating the sale consideration paid to the confirming party under the banachitthi as a colourable device was sustainable, and whether an unregistered banachitthi could be treated as an unenforceable document for denying the assessee's claim.

Analysis: The payment to the confirming party was found to have been made through banking channel and was confirmed in the statement recorded under section 131. The non-registration of the banachitthi did not by itself render the transaction invalid. Relying on section 49 of the Indian Registration Act, the Tribunal held that an unregistered document affecting immovable property can still operate as evidence of a contract and for collateral purposes, and that such agreements may be enforceable. The Tribunal also noted that the transaction was supported by record and was not shown to be a sham or a colourable device.

Conclusion: The addition was not sustainable and the Revenue's challenge failed; the deletion made by the first appellate authority was upheld.

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