Capital gains addition on a void land sale fails where no evidence shows receipt of consideration.

Protective addition of capital gains on sale of land was held unsustainable where the registered sale deed had already been declared void by the civil court for fraud, forged power of attorney and absence of consideration. The revenue was required to establish actual receipt of sale consideration before taxing the assessee, but it made no inquiry from the buyers and brought no cogent evidence of receipt. Mere pendency of the buyers' appeal did not justify a protective addition when the transaction itself stood judicially invalidated. The addition was also defective on merits because the alleged sale consideration was treated as capital gain without examining cost of acquisition. The addition was deleted.

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Issues: Whether the protective addition of capital gains on sale of land was sustainable when the registered sale deed had been declared void and no evidence of receipt of sale consideration by the assessee was brought on record.

Analysis: The sale deed forming the basis of the addition had already been declared void by the civil court on the ground of fraud, forged power of attorney and absence of payment of consideration. In such circumstances, the revenue authority was required to verify whether any sale consideration had in fact been received by the assessee before taxing capital gains. No inquiry was made from the buyers and no material was brought to show receipt of consideration by the assessee. The mere pendency of the buyers' appeal did not justify taxing the assessee on a protective basis, especially when the transaction itself stood judicially declared void. The addition was also unsustainable on merits because the entire alleged sale consideration was treated as capital gain without examining cost of acquisition.

Conclusion: The protective addition of Rs. 3,41,26,500 was not sustainable and was deleted.

Ratio Decidendi: A capital gains addition cannot be sustained on a protective basis where the underlying sale transaction has been declared void and the revenue has not established receipt of consideration by the assessee through cogent evidence or inquiry.

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