2026 (4) TMI 186

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....13-14. 2. Facts of the case in brief are that assessee is an individual and not filed her return of income. Based on the information from Investigation Wing, Nagpur, search and seizure action u/s. 132 of the Act was conducted at the residential premises of Mr. Roshan Dhore where certain incriminating documents were found and seized. During the search proceesings, it was revealed that assessee along with other has entered into agreement to sale with M/s. Narayana Educational Society and assessee received 17,00,000/- through cheque and Rs. 77,76,000/- in cash. Further, it was found that vendors have handed over the possession of the property to the buyers and capital gains arose thereon was not offered to tax and has escaped assessment. Ac....

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....y cheque and Rs. 77,76,000/- by cash) which she had not offered for taxation. Hence, the AO treated the income of Rs. 94,76,000/- as income from other sources and added to the total income of the appellant. During the appellate proceedings, as stated above, the appellant did not file a single submission which would support her claim that she was not in receipt of taxable income during the year. The appellant has emphasized on the fact that the final sale deed was not executed and hence, the transfer did not take place and as such she was in receipt of only advance and not any income. However, the appellant did not file any submission or details to show that the amount of Rs. 94,76,000/- received from NES was returned back by her su....

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....eted during the relevant previous year, no income chargeable to tax arose in the hands of the assessee. It was further pleaded that the provisions relating to taxation of capital gains were not attracted in the absence of transfer, and the Assessing Officer was not justified in bringing the said amount to tax under the head "Income from Other Sources" without any legal basis, therefore, she prayed for deletion of the addition of Rs.94,76,000/-. 5. Ld. Departmental Representation (DR) supported the orders of lower authorities and vehemently argued that since there is no evidence of returning back the sum of Rs. 94.76 Lakhs, income has arisen. 6. We have heard both the parties and perused the material available on record. The issue for ....

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....section 2(47), such receipt cannot be taxed under the head "Capital Gains". Further, the Ld. AO has brought the amount to tax under the residuary head "Income from Other Sources", without establishing how such advance assumes the character of income. It is pertinent to note that an advance received in the course of a proposed sale transaction retains the character of a liability unless it is either adjusted against the sale consideration upon completion of transfer or forfeited in terms of the agreement. In the instant case, there is no material on record to demonstrate that the advance received by the assessee was forfeited during the relevant assessment year. In the absence of forfeiture, the amount cannot be treated as income. Even other....