Addition based on Fake Sale deed is not sustainable

In this case, appellant had sold a bungalow located at Survey bno.1298, T.P.Scheme 15, Final Plot No. 173. It was having land area of 1130.50 sq.meters and constructed area of 894.90 sq.meters. The appellant sold property for Rs. 3,70,00,000/-. The sale deed was registered vide entry no. 1229. The appellant was having 1/5^th share in the property. Appellant shown sale consideration for Rs. 74,00,000/- (3,70,00,000 * 20%).

During the assessment proceedings under section 143(3), the AO issued a notice to the assessee that another sale deed was also registered for this property for Rs. 1.37 crores vide entry no.1231. It was mentioned in this second deed that it was executed for construction only. Appellant was never aware of this sale deed before this notice. He had neither executed such deed nor received any sale consideration for this deed. Therefore, on coming to know about this deed, he made an affidavit confirming that second sale deed was fake. He also filed civil suit and criminal suits against purchaser of the property, Umang H. Thakkar and Kanaklata Thakkar for committing fraud. Appellants submitted that he has not executed the second sale deed.

Further, in the first sale deed itself it was mentioned that deed was for land and building thereon. There cannot be another sale deed for the same building. In Civil Suit No.18 16 of 2011, which was decided on 4.1.2013, a compromise was entered into by both the parties and it was agreed by both the parties that they are not the executors of documents for Rs. 1,37,00,000/- registered vide serial no.1231 and the said document be declared as invalid, non est, illegal and not binding to the plaintiff.