Section 50C valuation date and cash-deposit verification: earlier agreement rejected as colourable, remand ordered for further scrutiny.

An earlier sale agreement will not shift the valuation date under section 50C where surrounding circumstances indicate a colourable arrangement; the registered sale deed date remains operative and the stamp valuation on that date applies. Cash deposits claimed to be explained by loans, cash book entries and redeposits require factual verification when supported by additional material, and the matter may be remanded for fresh examination if not properly scrutinised below. The article therefore notes confirmation of the section 50C addition and remand of the section 68 issue for reconsideration.

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Issues: (i) Whether the addition made by invoking section 50C could be sustained by treating the sale deed date as the relevant date of transfer instead of the earlier sale agreement date. (ii) Whether the addition made under section 68 in respect of cash deposits required to be sustained or remanded for re-examination.

Issue (i): Whether the addition made by invoking section 50C could be sustained by treating the sale deed date as the relevant date of transfer instead of the earlier sale agreement date.

Analysis: The assessee relied on the earlier agreement for sale and on the first proviso to section 50C, contending that the valuation should be taken as on the agreement date. The Tribunal examined the agreement and found that it was executed on a nominal stamp paper with only a small cash advance reflected, and treated the arrangement as a colourable device not entitled to the benefit of the proviso. The Tribunal held that the transfer was effected through the registered sale deed and that the stamp valuation on the sale deed date was correctly applied.

Conclusion: The addition under section 50C was upheld against the assessee.

Issue (ii): Whether the addition made under section 68 in respect of cash deposits required to be sustained or remanded for re-examination.

Analysis: The assessee produced material relating to loans, cash book entries, and redeposits to explain the cash deposits during the relevant period. The Tribunal treated these materials as additional evidence requiring verification by the Assessing Officer and found that the issue had not been properly examined at the lower levels. The matter was therefore sent back for fresh consideration in accordance with law.

Conclusion: The addition under section 68 was not finally sustained and the issue was remanded to the Assessing Officer.

Final Conclusion: The appeal succeeded only in part, with one addition confirmed and the cash-deposit issue restored for fresh adjudication.

Ratio Decidendi: A claimed earlier agreement cannot be used to shift the operative date for section 50C relief where the surrounding circumstances show a colourable device, and unexplained cash-deposit claims supported by additional evidence require factual verification before a final tax determination.

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