Transfer by part performance under tax law and unsupported source of funds justification can sustain an addition.

An agreement for sale accompanied by delivery of possession may constitute a transfer under section 2(47)(v) of the Income-tax Act when the arrangement satisfies the part-performance requirements of section 53A of the Transfer of Property Act; on the stated facts, the transfer was treated as falling within that provision. An addition was also sustained because the assessee failed to substantiate the claimed source of funds with books or supporting documents, and the loss position of the stated concern undermined the explanation. The assessment and Tribunal findings were therefore left undisturbed.

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Issues: (i) Whether the agreement for sale and delivery of possession amounted to a transfer attracting section 2(47)(v) of the Income-tax Act, 1961. (ii) Whether the addition of Rs. 3,24,165 was justified when the assessee failed to substantiate the claimed source of funds.

Issue (i): Whether the agreement for sale and delivery of possession amounted to a transfer attracting section 2(47)(v) of the Income-tax Act, 1961.

Analysis: The transaction was found to have resulted in possession being handed over to the transferee, who continued the business thereafter. A transaction falling within section 53A of the Transfer of Property Act is treated as a transfer under section 2(47)(v) of the Income-tax Act, 1961. On those facts, the appellants could not contend that the provision was inapplicable.

Conclusion: The issue was answered against the assessee and the transfer was held to fall within section 2(47)(v).

Issue (ii): Whether the addition of Rs. 3,24,165 was justified when the assessee failed to substantiate the claimed source of funds.

Analysis: The claimed business source was unsupported by books of account or other documents. The returns of the stated concern had shown losses for the relevant years, which undermined the explanation for the cash balance relied upon by the assessee.

Conclusion: The addition was upheld against the assessee.

Final Conclusion: The appeals failed on both the transfer issue and the addition issue, leaving the assessment and the Tribunal's findings intact.

Ratio Decidendi: A transaction accompanied by delivery of possession under an agreement for sale can constitute a transfer for capital gains purposes where it satisfies the statutory conditions of part performance, and an unsupported explanation for the source of an addition may be rejected.

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