Ashok Kumar Vs ITO (ITAT Chandigarh)
The Income Tax Appellate Tribunal (ITAT), Chandigarh, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2013-14 arising from reassessment under Sections 147 read with 144 and 144B of the Income-tax Act. The Tribunal first condoned a delay of 30 days in filing the appeal after considering the application for condonation and medical records.
The dispute concerned an addition of ₹78,00,000 made by the Assessing Officer as long-term capital gain on the sale of House No. 804, Phase-3B1, Mohali. The reassessment was initiated after the Department received information that the assessee had sold the property for ₹1,41,00,000 without disclosing any capital gains. The Assessing Officer treated the difference between the purchase consideration of ₹63,00,000 and the sale consideration as taxable capital gains and the CIT(A) sustained the addition.
The assessee contended that the property transaction did not belong to him and that the capital gain had already been disclosed by his cousin, Shri Ravinder Goyal. According to the assessee, Shri Ravinder Goyal had advanced funds to Shri Rajwant Singh, and when repayment failed, an Agreement to Sell and a registered General Power of Attorney were executed in Shri Ravinder Goyal’s favour. Subsequently, the property was registered in the assessee’s name only to secure Shri Ravinder Goyal’s financial interest. The assessee further submitted that civil litigation between the parties ended in a settlement recognising Shri Ravinder Goyal’s rights in the property, and that the entire sale consideration of ₹1,41,00,000 was transferred through banking channels to Shri Ravinder Goyal on the same day. The assessee also asserted that the transaction had already been examined in Shri Ravinder Goyal’s assessment.
The Revenue maintained that the assessee was the legal owner because the property stood registered and was sold through registered sale deeds in his name.
The Tribunal examined the documentary evidence, including the agreement, civil proceedings, pleadings, settlement, and flow of funds. It found that the property had been transferred in the assessee’s name only to protect Shri Ravinder Goyal’s financial interest and that the Revenue had not disputed that the entire sale consideration was transferred to Shri Ravinder Goyal. The Tribunal also noted that no material had been produced to show that the assessee retained any part of the sale proceeds or derived any personal benefit. It further observed that the settlement and surrounding circumstances supported the assessee’s contention that Shri Ravinder Goyal held the beneficial interest in the property and that the assessee merely acted as a nominee or conduit. The Tribunal also noted the Revenue had not controverted the assertion that the transaction had been disclosed and examined in Shri Ravinder Goyal’s case.
Holding that the assessee neither enjoyed beneficial ownership nor derived real income from the transaction, the Tribunal concluded that the addition of ₹78,00,000 was unsustainable. It directed the Assessing Officer to delete the addition and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This appeal has been preferred by the assessee against the order dated 03.03.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2013-14, arising out of the assessment order passed u/s 147 r.w.s. 144 and 144B of the Income Tax Act, 1961.
2. There is a delay of 30 days in filing the appeal for which application for condonation of delay and medical record has been filed. We have considered the application and medical record. The ld. DR did not object to the condonation of delay. Accordingly, delay in filing the appeal is hereby condoned and the appeal is admitted for adjudication on merits.
2.1 The assessee has raised various grounds challenging the addition of Rs.78,00,000/- made by the Assessing Officer on account of alleged capital gain arising from sale of House No.804, Phase-3B1, Mohali.
3. The assessee filed his original return of income for Assessment Year 2013-14 on 20.11.2013, declaring income of Rs. 10,53,530/-, which was processed under section 143(1) of the Income-tax Act, 1961. Subsequently, information was received by the Department that during the Financial Year 2012-13, relevant to Assessment Year 2013-14, the assessee had entered into a transaction involving the sale of an immovable property for a consideration of Rs. 1,41,00,000/-. Since the transaction had not been subjected to assessment and no capital gain had been disclosed in the return of income, proceedings under section 147 of the Act were initiated.
4. The Assessing Officer observed that the assessee was engaged in the business of real estate brokerage and commission activities. During the reassessment proceedings, notices under sections 148 and 142(1) were issued calling upon the assessee to explain the source and nature of the transaction and furnish details relating to the sale of the property, computation of capital gain and supporting documents.
5. In response, the assessee submitted that the transaction pertained to sale of House No. 804, Phase-3B1, Mohali vide registered sale deed bearing Vasika No. 4053 dated 30.01.2013 executed in favour of Shri Ishwar Grewal for a consideration of Rs.1,41,00,000/-. The assessee, however, contended that the transaction did not belong to him and that the capital gain arising therefrom had already been disclosed by his cousin brother Shri Ravinder Goyal in his return of income for Assessment Year 2013-14.
6. The assessee explained that Shri Ravinder Goyal had advanced an amount of Rs.1.40 crore to Shri Rajwant Singh and others in the year 2006. Since the amount was not repaid and the cheques issued towards repayment were dishonoured, Shri Rajwant Singh entered into an Agreement to Sell dated 19.08.2008 in favour of Shri Ravinder Goyal in respect of House No.804, Phase-3B1, Mohali for a consideration of Rs.63,00,000/-, which was agreed to be adjusted against the outstanding loan. Pursuant thereto, a registered General Power of Attorney dated 19.08.2008 was also executed by Shri Rajwant Singh in favour of Shri Ravinder Goyal.
7. The assessee further submitted that since Shri Rajwant Singh subsequently attempted to revoke the arrangement and jeopardize the financial interest of Shri Ravinder Goyal, the property was got registered in the name of the assessee through Registered Sale Deed dated 05.05.2009 bearing Vasika No.997 merely to secure and protect the interest of Shri Ravinder Goyal. It was specifically contended that the assessee was only a nominee and was never the beneficial owner of the property.
8. The assessee further brought on record that civil litigation had arisen between the parties. Shri Rajwant Singh and his wife had instituted a civil suit challenging the Agreement to Sell and GPA, wherein even the factum of loan advanced by Shri Ravinder Goyal was admitted. Thereafter, Shri Ravinder Goyal also instituted recovery proceedings against Shri Rajwant Singh. Ultimately, the disputes were settled and compromised between Shri Ravinder Goyal and Shri Rajwant Singh on 13.10.2011. According to the assessee, the settlement recognized the rights of Shri Ravinder Goyal in respect of the property and the entire transaction was effectively between Shri Rajwant Singh and Shri Ravinder Goyal.
9.The assessee further submitted that the entire sale consideration received on sale of the property was transferred by him to Shri Ravinder Goyal through banking channels on the very same day. It was also pointed out that the assessment of Shri Ravinder Goyal for Assessment Year 201314 had been completed under scrutiny by the DCIT, Circle-6(1), Mohali and all facts relating to the property transaction and civil litigation had been disclosed therein, without any adverse inference being drawn by the Revenue authorities. Therefore, according to the assessee, no capital gain accrued to him and the same transaction could not be taxed again in his hands.
10. The Assessing Officer, however, was not convinced with the explanation furnished by the assessee. According to the Assessing Officer, the property had been purchased by the assessee through registered Sale Deed dated 04.05.2009 for a consideration of Rs.63,00,000/- and had subsequently been sold by him through registered Sale Deed dated 30.01.2013 for Rs.1,41,00,000/-. The Assessing Officer held that the documentary evidence clearly established ownership and transfer by the assessee and consequently computed long-term capital gain at Rs.78,00,000/- being the difference between the sale consideration of Rs.1,41,00,000/- and the purchase consideration of Rs.63,00,000/-. The said amount was accordingly added to the income of the assessee.
11. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The assessee contended that although the property was registered in his name, he was not the beneficial owner thereof. It was submitted that Shri Rajwant Singh had borrowed a sum of Rs.63,00,000/-from the assessee’s cousin brother Shri Ravinder Goyal. To secure the said financial transaction, Shri Rajwant Singh had executed a General Power of Attorney in favour of Shri Ravinder Goyal. Subsequently, apprehending that Shri Rajwant Singh might revoke the arrangement and jeopardise the financial interest of Shri Ravinder Goyal, the property was transferred in the name of the assessee only as a protective measure.
12. The assessee further submitted before the Ld. CIT(A) that upon sale of the property for Rs.1,41,00,000/-, the entire sale consideration was transferred through banking channels to Shri Ravinder Goyal and that the assessee did not retain any portion of the consideration. It was also submitted that the transaction had already been considered in the assessment proceedings of Shri Ravinder Goyal, who had disclosed the transaction in his return of income.
13. The Ld. CIT(A), however, was not convinced by the explanation furnished by the assessee. The Ld. CIT(A) observed that the property stood registered in the name of the assessee by virtue of a registered sale deed executed on 04.05.2009 for a consideration of Rs. 63,00,000/- and was subsequently sold by the assessee through a registered deed for Rs. 1,41,00,000/-. The Ld. CIT(A) held that the assessee had acquired legal ownership over the property and, therefore, the gain arising on the sale thereof was rightly taxable in his hands. Accordingly, the addition of Rs.78,00,000/- was sustained and the appeal was dismissed.
14. During the course of the hearing before us, the Ld. The Authorised Representative reiterated the submissions made before the lower authorities and drew our attention to various documents placed in the paper book.
15. The Ld. AR submitted that the authorities below failed to appreciate the true nature of the transaction. He invited our attention to the original agreement executed between Shri Rajwant Singh and Shri Ravinder Goyal whereby the property was agreed to be transferred in favour of Shri Ravinder Goyal in lieu of amounts advanced by him to Shri Rajwant Singh.
16. The Ld. AR further drew our attention to the civil suit instituted by Shri Rajwant Singh and the written statement/reply filed therein. It was submitted that the pleadings on record clearly establish that the property was transferred in the name of the assessee merely to protect the financial interest of Shri Ravinder Goyal. It was argued that the assessee was merely a nominee and never acquired beneficial ownership of the property.
17. The Ld. AR further submitted that a settlement was ultimately arrived at between Shri Rajwant Singh and Shri Ravinder Goyal. Pursuant to the said settlement, the rights and title in the property stood recognised and vested in favour of Shri Ravinder Goyal, and the agreed consideration had already been received by Shri Rajwant Singh. It was submitted that the entire arrangement was between Shri Rajwant Singh and Shri Ravinder Goyal and that the assessee had no independent beneficial interest in the property.
18. The Ld. AR further submitted that immediately after receipt of sale consideration, the entire amount of Rs.1,41,00,000/- was transferred through banking channels to Shri Ravinder Goyal. There is no allegation by the Revenue that any part of the consideration was retained by the assessee. It was therefore argued that no real income accrued to the assessee.
19. The Ld. AR also submitted that the same transaction had already been considered in the case of Shri Ravinder Goyal, and the Revenue cannot be permitted to tax the very same transaction in two different hands. It was argued that once the transaction has been examined and assessed in the hands of the beneficial owner, namely Shri Ravinder Goyal, the same income cannot simultaneously be assessed in the hands of the assessee. Accordingly, it was prayed that the addition be deleted.
20. Per contra, the Ld. Departmental Representative strongly relied upon the orders of the Assessing Officer and the Ld. CIT(A). It was submitted that the property stood registered in the name of the assessee and was sold by him through a registered sale deed. Therefore, the legal ownership vested in the assessee and the authorities below were justified in bringing the resultant gain to tax in his hands.
21. We have heard the rival submissions and perused the material available on record.
24. The short issue for our consideration is whether the addition of Rs. 78,00,000/- on account of alleged gain arising from the sale of House No.804, Phase-3B1, Mohali can be sustained in the hands of the assessee.
25. From the documentary evidence placed before us, we find that Shri Rajwant Singh had entered into an arrangement with Shri Ravinder Goyal in respect of the property in question against the amounts advanced by Shri Ravinder Goyal. We further find that the documents relied upon by the assessee, including the civil proceedings and pleadings filed therein, support the contention that the property came to be transferred in the name of the assessee only with a view to securing and protecting the financial interest of Shri Ravinder Goyal.
26. We further note that the Revenue has not disputed the fact that the entire sale consideration of Rs.1,41,00,000/- received upon transfer of the property was transferred by the assessee to Shri Ravinder Goyal through banking channels. No material has been brought on record by the Revenue to establish that the assessee retained any portion of the sale proceeds or derived any personal benefit from the transaction.
25. The settlement arrived at between Shri Rajwant Singh and Shri Ravinder Goyal further corroborates the stand of the assessee that the beneficial interest in the property vested with Shri Ravinder Goyal. The surrounding circumstances, conduct of the parties and flow of funds clearly indicate that Shri Ravinder Goyal was the real beneficiary of the transaction and the assessee merely acted as a nominee or conduit.
26. We also find substantial force in the contention of the assessee that the same transaction cannot be subjected to tax in two different hands. The Revenue has not controverted the assertion that the transaction stood disclosed and examined in the case of Shri Ravinder Goyal. Once the beneficial ownership and economic benefit arising from the transaction are attributable to Shri Ravinder Goyal, taxation of the same transaction again in the hands of the assessee would result in impermissible double taxation of the same income.
27. It is a settled principle that the Income-tax Act seeks to tax real income and not hypothetical income. Taxability must be determined with regard to the substance of the transaction, not merely its legal form. In the present case, the material available on record overwhelmingly demonstrates that the assessee neither enjoyed the beneficial ownership of the property nor derived any real income from the transaction.
28. In view of the foregoing discussion and considering the entirety of facts and circumstances of the case, we are of the considered view that the addition of Rs.78,00,000/- sustained by the Ld. CIT(A) is unsustainable in law. The Assessing Officer is directed to delete the addition.
29. In the result, the appeal of the assessee is allowed.
Order pronounced on 1st July,2026.
