Mahadevbhai K. Bharwad Vs ITO (ITAT Ahmedabad)
Confirming Party Cannot Be Taxed on Entire Sale Consideration-ITAT Deletes ₹3.27 Crore Addition
The Ahmedabad ITAT deleted an addition of ₹3.27 crore made on account of an immovable property transaction, holding that the assessee could not be taxed on the entire sale consideration merely because the transaction appeared in the Department’s information system. The Tribunal found that the assessee was only a confirming party to the registered sale deed and not the owner or co-owner of the property.
The Assessing Officer had reopened the assessment based on information received through the Non-Filer Monitoring System (NMS), which reflected a property transaction of ₹3.47 crore. Since the assessee had disclosed only ₹20.20 lakh as his share of the transaction and had not responded during assessment proceedings, the Assessing Officer treated the balance ₹3.27 crore as taxable in his hands. The CIT(A) also dismissed the appeal ex parte and confirmed the addition.
Before the Tribunal, the assessee produced the registered sale deed, which showed that several persons were the actual owners and transferors, while the assessee was merely a confirming party. The Tribunal noted that Form 26AS reflected receipt of only ₹20.20 lakh by the assessee and that this amount had already been offered to tax in the return filed in response to the notice under section 148. Importantly, the Revenue failed to produce any evidence showing that the assessee had received the entire sale consideration or that he was the owner of the property.
Holding that an addition cannot be sustained solely on the basis of transaction value appearing in the Insight Portal without evidence of actual ownership or receipt, the Tribunal deleted the entire addition of ₹3.27 crore. Since the assessee had already offered the amount actually received by him to tax, no further addition was warranted.
Mere appearance of a property transaction in departmental databases does not justify taxing the entire consideration in a person’s hands. The Revenue must establish ownership and actual receipt of consideration before making such an addition.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “CIT(A)” for short) dated 15.07.2025, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2018-19.
