Case Law Details
ACIT Vs Sh. Ijyaraj Singh (ITAT Jaipur)
The issue under consideration is whether the AO is correct in chargeing capital gain in the hands of assessee irrespective of the fact that the full consideration not received by the assessee?
In the present case, the assessee transferred his land through a registered sale deed for a consideration of Rs 3.40 crores paid by cheques. Out of these cheques, two were dishonored and returned unpaid to the assessee. The AO, while completing the assessment against the assessee demanded income tax from the assessee holding that the transfer of land has been done through these two registered sale deeds wherein the sales consideration was mutually agreed upon, accepted and deemed to be received before signing and registering the sale deed before the Registering Authority and deduction for not receiving any part of sales consideration in the future is not acceptable from the full value of consideration under the provisions of Act and the transaction is subject to levy of capital gains tax.
ITAT states that a registered sale deed does carry an evidentiary value. At the same time, where the assessee is able to prove by cogent evidence brought on record that no sale has in fact taken place, then, in such a scenario, the taxing and appellate authorities should consider these evidences brought on record by the assessee and basis examination thereof, decide as to whether sale has taken place or not in the given case. Further, it has been held that the title in the property does not necessarily pass as soon as instrument of transfer is registered and the answer to the question regarding passing of title lies is the intention of the parties executing such an instrument. The Registration is no proof of an operative transfer and where the parties had intended that despite execution and registration of sale deed, transfer by way of sale will become effective only on payment of the entire consideration amount, then in such a scenario, the transfer will be effected only on payment and receipt of full sale consideration and not at the time of execution and registration of sale deed.
In the instance case, given that the sale transaction fell through in view of non-fulfillment of the terms of sale deed whereby cheques have been dishonored and he has failed to discharge the full sale consideration, there is no transfer and no income which has accrued or arisen to the assessee besides the fact that there is no receipt of sale consideration, thus no real income in hand of the assessee and in absence thereof, the assessee is not exigible to capital gains tax
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