TaxTMI 
TaxTMI 
2026 (1) TMI 1469
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....ce the assessee had not furnished return of income the assessee was required to file the return of income by disclosing the transactions recorded therein which relates to the sale of land situated within 8 kilometers from the end of the Municipal limits of Jalna city and therefore is a capital asset within the meaning of provisions of section 2(14)(iii)(a) of the Act. Since the assessee did not furnish his return of income for the year under consideration as required u/s 139(1) of the Act the Assessing Officer, after recording reasons, reopened the assessment and notice u/s 148 of the Act was issued and served on the assessee. The assessee in response to the said notice filed his return of income on 21.08.2018 declaring Nil income. Subsequently the Assessing Officer issued notice u/s 142(1) of the Act to the assessee calling for certain details. 3. During the course of assessment proceedings, on being confronted by the Assessing Officer, it was submitted that a registered sale deed is not followed by the unregistered agreement for sale and no possession of the said property is given to the prospective purchaser by the assessee till date. The assessee submitted that the land is s....
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....he definition of section 2(47)(v) of the Act. Since the assessee in the instant case has virtually handed over the property to Shri Karwa vide Essar Pavti dated 18.02.2011 and received an amount of Rs. 2 crores and has not refunded the same to the assessee till date, therefore, the Assessing Officer rejecting the various explanations given by the assessee, made addition of Rs. 1 crore on protective basis in the hands of the assessee by observing as under: 3.7 In view of the foregoing paragraphs and keeping in view of the fact that the assessee has virtually handed over the property to Shri Karwa vide issar pavti dtd. 18/02/2011 and received an amount of Rs. 2,00,00,000/ Further, it is also clear from the terms and conditions oof Essar pavti that whenever the sale of plots takes palce, the purchaser Mr. Santosh_Karwa is a consenting party in those sale deeds, which means that the transactions have been executed as per the Issar Pavti only. Hence, it is established beyond doubt that the transaction is clearly attracting the provisions of section 2(47)(v) and therefore the consideration received is taxable u/s 45 of the Act, as the property is situated within 8 kms. of the li....
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....ctive purchaser. Referring to the provisions of section 2(47)(v) of the Act r.w.s. 53A of the Transfer of Property Act, 1882 it was argued that the agreement to sell effected on a stamp paper of Rs. 100/- and notarized is not enough and the agreement is required to be registered before the State Government authorities. Since this has not been done, the question of treating the amount of Rs. 2 crore by the assessee and his wife as a part of transfer of the land does not arise. It was reiterated that the possession of the land in question has not been handed over and remains in the name of the assessee and his spouse in the government records. It was argued that since no transfer has taken place and the entire amount received is only an advance against the proposed sale of the property, therefore, nothing is chargeable to tax. Referring to the decision of Hon'ble Supreme Court in the case of CIT vs. Balbirsing Maini vide Civil Appeal No.15619 of 2017 it was argued that any document which needs registration but has not been registered will not have any value other than filing a case for specific performance of the contract. It was accordingly argued that the addition made by the Asses....
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....riminal proceedings against appellant side. The civil suit filed by Shri Santosh Karwa is seen rejected vide order of the Joint Civil Judge, Senior Division, Jalna vide order dated 29th Mar 2017 and the matter is further claimed to be sub-judice. Criminal proceeding filed by Shri Santosh Karwa are also seen rejected by lower Court. Appellant has also submitted that the review petition filed by Shri Santosh before Hon'ble Sessions Judge has also been rejected and the matter is pending before the Hon'ble High Court. This appeal has considered the above submission of the appellant and the copy of suits discussed above which substantiates the appellant's contention. Nevertheless, if the said agreement stand cancelled without transfer of capital assets, there is an amount of Rs. 2,00,00,000/-, which has been forfeited by the appellant and other sellers. A substantial period (14 years at this time of deciding the appeal) has lapsed since the initiation of the transactions and no material is present on record which suggest any return of the realized amount. The appellant hasn't provided any material evidence to demonstrate that the said amount has been returned ba....
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..../ NFAC in sustaining the addition of Rs. 25 lakhs being the forfeiture of the amount to be considered as 'Income from other sources'. He submitted that the Ld. CIT(A) / NFAC without bringing any evidence that the assessee has forfeited the amount has held that the assessee has forfeited the amount. Referring to pages 92 and 93 of the paper book he drew the attention of the Bench to the affidavit filed before the Ld. CIT(A) / NFAC according to which the amount was shown to have been received as advance. Further, the matter is under litigation and still sub- judice, therefore the provisions of section 56 of the Act are not applicable. 10. Referring to the provisions of section 51 of the Act, he submitted that the said section deals with advances received in the course of negotiation of transfer of an immovable property which shall be deducted from the cost for which the asset was acquired or WDV or the fair market value, as the case may be, in computing the cost of acquisition when the same is ultimately sold. He submitted that the impounded document found during the course of survey in the case of Shri Santosh Karwa was an agreement to develop and not an agreement to sell the pro....
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....er and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs. 1 crore being the amount received by the assessee as his 50% share out of the amount of Rs. 2 crore received by him on account of agreement to sell the property, copy of which was impounded during the course of survey u/s 133A of the Act on 13.03.2015 in the case of Shri Santosh Karwa. According to the Assessing Officer the assessee has virtually handed over the property to Shri Santosh Karwa vide Essar Pavti dated 18.02.2011 and received the amount of Rs. 2 crore. He, therefore, invoking the provisions of section 2(47)(v) of the Act held that the consideration received is taxable u/s 45 of the Act since the property in question was situated within 8 kilometers of the municipal limits of Jalna city. We find the Ld. CIT(A) / NFAC held that since the substantial period of 14 years has elapsed while deciding the appeal and there is no evidence on record to suggest that the assessee has returned back the amount or efforts have been made to return it back, therefore, the assessee....
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....ossession neither total or partial of the said property has not been handed over the question of taxing the advance receipts does not arise. b) Secondly the prospective purchaser namely Sri. Santosh Pannalal Karwa has filed a civil suit bearing No. 105/2014 against the owners of the land for specific performance of the contract mentioned in the said agreement for sale which has been adjudicated in our favor vide order dated 29/03/2017. c) Against the said order Sri Santosh Pannalal Karwa has preferred an appeal before the Hon'ble Aurangabad bench of the Bombay High Court bearing No. 1894/2017 which is pending adjudication as on date. d) Apart from the civil suits stated above Sri Santosh Pannalal Karwa has also filed a criminal suit before the Hon'ble Judicial Magistrate First Class Jalna bearing No. 94/2014 dated 28/11/2014 which was dismissed against which a revision petition was file bearing No. 18/2016 dated 18/03/2017 before the Secession's Judge, Jalana which was rejected against which an appeal was preferred before the Hon'ble Aurangabad bench of the Bombay High Court which was also dismissed. e) An affidavit executed by th....