Unregistered sale agreement did not trigger capital gains; registered conveyance and disputed stamp valuation required fresh valuation.

An unregistered agreement to sell executed after the 2001 registration changes did not itself amount to a transfer of immovable property for capital gains purposes; the transfer occurred only on the registered sale deed, and the assessee was treated as a co-owner rather than a mere consenting party. The Tehsildar and Agricultural Lands Tribunal order was not finally determinative on taxability and required fresh examination at the assessment stage. Where the assessee disputed the stamp valuation, the Assessing Officer was required to refer the matter to the Valuation Officer under section 50C(2) before substituting stamp value as full consideration. The computation based only on stamp value could not stand and the matter was restored for fresh decision.

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Issues: (i) Whether the assessee was a co-owner of the property transferred or only a consenting party. (ii) Whether the transfer of the property took place on the unregistered agreement to sell in 2001 or on the registered sale deed in 2010. (iii) Whether the Tehsildar and Agricultural Lands Tribunal order affected the taxability of the transfer. (iv) Whether the Assessing Officer was required to refer the valuation to the DVO under section 50C(2).

Issue (i): Whether the assessee was a co-owner of the property transferred or only a consenting party.

Analysis: Immovable property rights cannot be transferred by mere affidavits or informal arrangements when the law requires compulsory registration. No registered document or court decree was produced to show that the assessee had relinquished his share in exchange for other properties. The registered sale deed of 2010 described the assessee as one of the co-owners, and the contemporaneous record also reflected his status as an owner transferring the land.

Conclusion: The assessee was a co-owner and not merely a consenting party; this contention was rejected.

Issue (ii): Whether the transfer of the property took place on the unregistered agreement to sell in 2001 or on the registered sale deed in 2010.

Analysis: After the 2001 amendments to the Registration Act and the Transfer of Property Act, part performance without registration no longer operates as a transfer for the purpose of capital gains. Since the agreement to sell was unregistered and the possession was recorded as having been handed over under the registered sale deed, the statutory transfer occurred only on registration in 2010 and not on the earlier agreement.

Conclusion: The transfer took place on the registered sale deed in 2010, not on the unregistered agreement to sell in 2001.

Issue (iii): Whether the Tehsildar and Agricultural Lands Tribunal order affected the taxability of the transfer.

Analysis: The order declared the transfer legally invalid and directed consequential action, but the effect of that order, any appeal against it, and the eventual vesting of the property were not established before the lower authorities. The assessee raised this plea for the first time before the Tribunal, and the factual and legal consequences required examination at the assessment stage.

Conclusion: The issue was not finally adjudicated and was left to be examined afresh by the Assessing Officer.

Issue (iv): Whether the Assessing Officer was required to refer the valuation to the DVO under section 50C(2).

Analysis: The assessee had specifically disputed the stamp valuation. In such a situation, the Assessing Officer was required to obtain a valuation from the Valuation Officer before substituting the stamp value as the full value of consideration for capital gains computation.

Conclusion: The valuation should have been referred to the DVO; the computation based only on stamp value could not stand.

Final Conclusion: The additions were not sustained in their present form and the matter was restored to the Assessing Officer for fresh decision in accordance with law, with the assessee's capital-gains liability to be re-examined after proper valuation.

Ratio Decidendi: After the 2001 amendments, an unregistered agreement to sell does not by itself effect a transfer of immovable property for capital-gains purposes, and where stamp valuation is disputed under section 50C(2), the Assessing Officer must obtain a valuation before finalising the computation.

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