Investment Cannot Be Added in Year of Registration if Paid in Earlier Year: ITAT Patna

Suman Devi Vs ITO (ITAT Patna)

Investment Year Matters- Registration Date Irrelevant for Source of Funds- Property Investment Taxable in Year of Payment, Not Year of Registration- ITAT Patna

Assessee along with five co-purchasers acquired an immovable property for a total consideration of ₹2.10 crore. Stamp duty of ₹18.33 lakh & registration charges of ₹4.61 lakh were also paid. Assessee made full payments during FY 2012-13 (AY 2013-14), with the last payment being on 10.03.2013. However, registration of the property was completed on 04.04.2013, which fell in AY 2014-15.

AO, during AY 2014-15 assessment, treated Assessee’s share of ₹35 lakh & ₹38.82 lakh as unexplained investment, along with a difference between stamp duty valuation & actual payment of ₹3.17 lakh. CIT(A) upheld the addition on the basis that the transaction was completed only in AY 2014-15 upon registration.

Before Tribunal, Assessee argued that source of purchase consideration was duly explained & payments were made in AY 2013-14. Merely because registration happened in April 2013, no addition could be made in AY 2014-15. It was further contended that Sec.2(47) relied upon by Revenue deals with transfer for capital gains computation & had no application in a case of purchase.

Department contended that Assessee failed to substantiate the source before AO & CIT(A).

Tribunal, after examining facts, held that this was a case of purchase & not transfer. Section 2(47) could not be applied. Since entire consideration was paid in AY 2013-14, it could not be questioned in AY 2014-15. Additions made by AO & sustained by CIT(A) were therefore deleted. Appeal of Assessee allowed. Additions towards unexplained investment deleted, as the investment was made in AY 2013-14 & not in AY 2014-15.

FULL TEXT OF THE ORDER OF ITAT PATNA

This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre [hereinafter referred to as the ‘CIT(A)’] in appeal no.NFAC/2013-14/10285454 dated 31.01.2025.

2. Shri Sudeep Sinha, Advocate represented on behalf of the assessee and Shri Ashwani Kr. Singal, JCIT represented on behalf of the revenue.

3. It was the submission of the ld. AR that the assessee along with five others had purchased an immovable property for a total consideration of Rs.2,10,00,000/-. Stamp duty and registration charges paid at Rs.18.33 lakhs and Rs.4.61 lakhs respectively. It was the submission that the assessee had made full payment in respect of purchase of the property during the assessment year 2013-14. It was the submission that the payments as has been mentioned in pages 23-24 of the paper-book which reads as follows:

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3.1 It was the submission that the registration of the property was done on 04.04.2013 relevant to assessment year 2014-15. It was the submission that the Assessing Officer in the course of the assessment held that the assessee has not explained the source of the share in the investment of Rs.35 lakh and Rs.38,82,559/- as also the difference between stamp duty value and actual amount paid of Rs.3,17,333/- and treated the same as the unexplained investment of the assessee. It was the submission that the ld. CIT(A) confirmed the assessment. It was the submission that the payments have been made during the assessment year 2013-14 and the addition could not be made in the assessment year 2014-15 just because the registration has been done during the assessment year 2014-15. It was the prayer that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) may be deleted.

4. In reply, the ld. Sr. DR submitted that the transaction for the purchase of the property was completed during the assessment year 2014-15 and it was for the assessee to explain the investment. It was the submission that the assessee has not provided supporting documents before the Assessing Officer or before the ld. CIT(A). The ld. Sr. DR relied upon the decision of the ld. CIT(A) in paras 5.3.1 to 5.3.2.

5. We have considered the rival submissions. A perusal of the fact in the present case clearly shows that the assessee and five others purchased an immovable property for a consideration of Rs.2,10,00,000/- and the last payment has been made on 10.03.2013.

Admittedly, the registration has been done only on 04.04.2013. A perusal of the provisions of section 2(47) of the Act which is relied on by the Assessing Officer and ld. CIT(A) and also the assessee, is in relation to transfer of immovable property. The said section is in relation to the computation of capital gains. The provisions of section 2(47) of the Act does not apply to the facts of the present case. This is not a case of sale of immovable property but is a case of purchase. Regarding the source of the purchase consideration, the purchase consideration has been paid during the assessment year 2013-14 and that cannot be questioned during the assessment year 2014-15. That being so, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) in respect of purchase consideration paid by the assessee during the assessment year 2013-14 but added in the assessment year 2014-15 stands deleted.

6. In the result, the appeal of the assessee is allowed.

Kolkata, the 4^thSeptember, 2025.