Kazi Mohammad Asif Khan Vs ITO (ITAT Raipur)
Capital Gains Year Cannot Be Settled Without Examining the Sale Deed: ITAT Remands Dispute over Execution and Registration Dates
Background
The Raipur Tribunal set aside an appellate order confirming ₹3,10,14,600 as short-term capital gains and directed fresh examination of the sale deeds to determine when the transfer actually occurred.
The controversy arose because the assessee claimed that the deeds were executed on 23 March 2015, whereas registration took place on 17 April 2015 and 23 April 2015. These dates fell in different financial years and consequently affected the assessment year in which the transaction could be taxed.
The Tribunal did not conclusively determine the transfer date or delete the addition on merits. It restored the matter to the CIT(A) for verification and fresh adjudication.
Reopening and Assessment
The assessee, an individual carrying on retail business in dairy and agricultural products under M/s Qazi Traders, had not filed an original return for Assessment Year 2016–17.
Information received from the Sub-Registrar and banking channels indicated property transactions valued at ₹3,10,14,600 and cash deposits of ₹17,20,000 in a savings account with Union Bank of India.
Following proceedings under Section 148A, the Department issued a notice under Section 148 on 14 March 2023. In response, the assessee filed a return on 28 June 2023, declaring total income of ₹1,69,550 and agricultural income of ₹2,55,000 for rate purposes. Business receipts were offered under Section 44AD.
The AO observed that capital gains from the property transactions had not been offered in the return. After issuing notices and a show-cause notice, he completed the assessment on 4 January 2024 under Section 147 read with Section 144B, adding the entire ₹3,10,14,600 as short-term capital gains.
Assessee’s Case Before the CIT(A)
The assessee contended that transfer had occurred on 23 March 2015, when the sale deeds were executed. Accordingly, the transaction belonged to Assessment Year 2015–16, rather than Assessment Year 2016–17.
He relied on judicial decisions in support of considering the substance and timing of the transaction instead of treating registration as the sole determining event.
The assessee also referred to proceedings for Assessment Year 2015–16 and raised concerns about inconsistent treatment of the same transaction across assessment years.
CIT(A)’s Findings
The CIT(A) emphasised that the registered deeds bore dates in April 2015 and concluded that the transaction fell within the previous year relevant to Assessment Year 2016–17.
Although acknowledging that registration may not invariably determine taxability, the CIT(A) held that the assessee had not produced evidence establishing execution or transfer in March 2015.
The appellate authority also observed that purchase documents had not been furnished to substantiate acquisition cost. It therefore confirmed the AO’s treatment of the entire consideration as short-term capital gains.
The contention concerning assessment in the earlier year was rejected. The CIT(A) considered that the assessee had not demonstrated actual taxation of the same income twice.
Tribunal Finds the Crucial Document Insufficiently Examined
Before the Tribunal, the assessee’s counsel submitted that the evidence of transfer on 23 March 2015 appeared in the sale deeds themselves.
The Tribunal found that the CIT(A)’s order did not address whether the body of the deeds contained such evidence. Merely referring to the registration dates did not resolve the specific contention concerning their contents.
The Tribunal also noted that the Department could not effectively refute the assessee’s submission at the hearing or place direct evidence establishing the relevant transfer date.
Consequently, the actual timing of transfer required verification.
The assessee further contended that the same property transaction had already been examined for Assessment Year 2015–16 and resulted in a capital loss. The Tribunal treated this as another matter requiring detailed verification, rather than accepting it as an established fact.
Directions on Remand
The Tribunal directed the first appellate authority to scrutinise the contents of the sale deeds and determine the matter in accordance with law.
If necessary, the CIT(A) could obtain a remand report from the AO. The fresh proceedings were required to comply with the principles of natural justice.
The assessee was correspondingly directed to respond to hearing notices and cooperate with the appellate proceedings.
Thus, the enquiry must address the claimed March 2015 transfer, the significance of subsequent registration and the alleged treatment of the same transaction in Assessment Year 2015–16.
Decision
The Tribunal set aside the CIT(A)’s order and restored the matter for de novo adjudication. The appeal was allowed for statistical purposes.
It did not hold that execution necessarily prevailed over registration in this case. Nor did it finally determine the capital gain or loss, acquisition cost or allegation of duplicate assessment.
Author’s Comments
The practical lesson is that a registration date cannot answer a factual contention about the deed’s execution without examining the deed itself. Where execution and registration straddle financial years, the relevant clauses and surrounding evidence become particularly important.
The taxpayer’s assertion about an earlier assessment also requires documentary reconciliation. The earlier order, property particulars and computation must establish whether the same transaction was actually considered and how it was treated.
This order provides an opportunity for that examination. It is a remand decision, not a final ruling that the gains belong to Assessment Year 2015–16. The case-law descriptions reproduced from the CIT(A)’s order should likewise not be mistaken for propositions independently endorsed by the Tribunal
Cases Discussed
CIT v. Podar Cement Pvt. Ltd. (Supreme Court; (1997) 226 ITR 625): The assessee relied upon this decision in support of his contention concerning the timing of transfer. The CIT(A) distinguished it on the facts. The Tribunal reproduced this discussion without independently deciding the applicability of the precedent.
CIT v. Manjula J. Shah (Bombay High Court; (2012) 16 taxmann.com 42): Cited by the assessee regarding the significance of the transfer date. The CIT(A) considered the decision distinguishable. The Tribunal did not finally determine its application.
CIT v. Excel Industries Ltd. (Supreme Court; (2013) 358 ITR 295): Relied upon before the CIT(A) in connection with consistency of the Revenue’s treatment across assessment years. The CIT(A) rejected the argument on the facts presented.
CIT v. Bilahari Investment (P.) Ltd. (Supreme Court; (2008) 299 ITR 1): Referred to in the CIT(A)’s discussion concerning consistency in tax treatment. The Tribunal did not independently adopt or reject its application.
CIT v. Vatika Township (P.) Ltd. (Supreme Court; (2015) 1 SCC 1): The CIT(A)’s order referred to this decision in discussing documentary evidence and the year of taxability. The description reproduced in the appellate order should not be treated as an independent holding of the Tribunal or a verified statement of the Supreme Court’s ratio.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 30.06.2026 for the assessment year 2016-17 as per the grounds of appeal on record.
2. Brief facts in this case are as follows:
“The appellant, Kazi Mohammad Asif Khan, is an individual engaged in retail business of dairy and agriculture products under the name M/s. Qazi Traders. For the Assessment Year 2016-17, the appellant had not filed the original return of income under Section 139 of the Income-tax Act, 1961. The case was selected for reopening under the category of “Risk Management Strategy (RMS)” based on information received from the Sub-Registrar Office, Raipur, and from banking channels. The information available with the Department revealed that the appellant had sold immovable properties valued at Rs.3,10,14,600/- during the year under consideration. Additionally, the appellant had deposited cash of Rs.17,20,000/- in his savings bank account maintained with Union Bank of India. The case was subjected to proceedings under Section 148A of the Act, wherein the appellant failed to furnish any response or reply to the notices issued by the Department. Consequently, the case was reopened under Section 147 of the Act by issuing notice under Section 148 on 14.03.2023, after obtaining prior approval from the Competent Authority and following due procedure. In response to the notice under Section 148, the appellant filed a return of income in ITR-4 on 28.06.2023 declaring total income of Rs.1,69,550/- and agricultural income of Rs.2,55,000/- for rate purposes. The business receipts were offered for taxation under Section 44AD of the Act. During the assessment proceedings, several notices under Sections 142(1) and 143(2) were issued to the appellant. The appellant furnished partial replies to these notices but failed to offer the capital gains arising from the sale of immovable properties in the return of income filed for AY 2016-17. A Show Cause Notice dated 26.12.2023 was issued to the appellant, proposing variation on account of undisclosed short-term capital gains. The appellant was given an opportunity to respond by 29.12.2023. However, the appellant failed to furnish any reply or explanation to the Show Cause Notice. Based on the information available and the failure of the appellant to substantiate his claims, the Assessing Officer proceeded to complete the assessment by passing an order under Section 147 read with Section 144B of the Act on 04.01.2024, making an addition of Rs. 3,10,14,600/- as Short Term Capital Gains.”
3. That before the Ld. CIT(Appeals)/NFAC, the assessee submitted as follows:
“9.4 The appellant claims that the transfer took place on 23.03.2015, i.e., the date of execution of the sale deeds, and therefore, the taxability arises in AY 2015-16. However, the registered sale deeds, which are the primary documents evidencing the transfer, bear the date of registration as 17.04.2015 and 23.04.2015. The registration of sale deeds is a crucial event that creates a public record of the transfer of immovable property. Section 2(47) of the Income-tax Act, 1961 defines “transfer” in relation to a capital asset to include the sale, exchange, or relinquishment of the asset, or the extinguishment of any rights therein, or the compulsory acquisition thereof under any law, or the conversion of the asset into stock-in-trade, or the maturity or redemption of a zero-coupon bond. Section 45(1) of the Act provides that any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax under the head “Capital Gains” and shall be deemed to be income of the previous year in which the transfer took place. The appellant has relied on the judgment of the Hon’ble Supreme Court in the case of CIT v. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC) to contend that capital gains accrue in the year of transfer when the conveyance is executed, not on the date of registration. The appellant has also relied on the judgment of the Bombay High Court in CIT v. Manjula J. Shah (2012) 16 taxmann.com 42 (Born) to support the contention that registration is not the determinative factor for taxability.”
4. In this backdrop, the Ld. CIT(Appeals)/NFAC has held and observed as follows:
“The undersigned has perused the sale deeds and the facts of the case. The registered sale deeds are the primary documents that evidence the transfer of immovable properties. The registration dates are 17.04.2015 and 23.04.2015, respectively. The appellant’s claim that the transfer took place on 23.03.2015 is not supported by any evidence on record. The appellant has not produced the execution date of the sale deeds or any other document to establish that the transfer was effected in March 2015. The hon’ble courts have held that the date of registration is not always the determinative factor for taxability, and the date of execution may be relevant if the appellant can establish that the transfer was effected on the date of execution. However, in the present case, the appellant has failed to produce any evidence to demonstrate that the transfer took place on 23.03.2015. The registered sale deeds, which are the only documents on record, show the registration dates as 17.04.2015 and 23.04.2015. These registration dates fall in the previous year relevant to AY 2016-17. The undersigned finds that the appellant’s reliance on the judgment in CIT v. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC) is misplaced. In that case, the Hon’ble Supreme Court held that in the case of a company, the transfer of property takes place on the date of execution of the conveyance and not on the date of registration, as the company is a juristic person and the registration is a procedural formality. However, the Hon’ble Supreme Court has also held that the date of transfer depends on the facts and circumstances of each case. In the present case, the appellant has not produced the execution date of the sale deeds, and the registered sale deeds clearly show the registration dates. The undersigned cannot accept the appellant’s claim without any supporting evidence. The appellant has relied on the judgments in CIT v. Excel Industries Ltd. (2013) 358 ITR 295 (SC) and CIT v. Bilahari Investment (2008) 299 ITR 1 (SC) to contend that the Revenue cannot take contradictory positions across assessment years. The undersigned is not convinced by this argument. The principle of consistency applies when there is a consistent view taken by the Revenue on the same issue for the same appellant over a period of years, and the facts and circumstances are identical. In the present case, there is no consistent view taken by the Revenue, as the proceedings for AY 2015-16 were still pending and the assessment order for that year was passed subsequently. The appellant cannot claim consistency based on an order that was passed after the impugned assessment order. The undersigned is satisfied that the Assessing Officer was justified in treating the capital gains as Short Term Capital Gains in AY 2016-17. The registered sale deeds are dated 17.04.2015 and 23.04.2015, which fall in the previous year relevant to AY 2016-17. The appellant has failed to produce any evidence to demonstrate that the transfer took place earlier. The appellant has also failed to produce the registered purchase deeds to claim the indexed cost of acquisition. In the absence of such evidence, the Assessing Officer was justified in computing the capital gains as the total consideration received, i.e., Rs. 3,10,14,600/-. The undersigned also notes that the appellant’s claim regarding the cash deposits is not relevant to the issue of capital gains. The appellant has failed to provide any credible explanation for the cash deposits, and the same were not considered in the assessment order. Even if the cash deposits are accepted to be explained, it does not affect the finding that the appellant failed to offer the capital gains on the sale of immovable properties for taxation in AY 2016-17. The undersigned has carefully considered the judicial precedents relied upon by the appellant. The judgment in CIT v. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC) is distinguishable on facts, as the appellant has not established the date of execution of the sale deeds. The judgment in CIT v. Manjula J. Shah (2012) 16 taxmann.com 42 (Born) is also distinguishable, as the facts of that case are not identical to the present case. The appellant has not produced any evidence to demonstrate that the transfer was effected on the date of execution. The undersigned, however, finds merit in the contention of the Assessing Officer and relies on the following Supreme Court judgment. In the case of CIT v. Vatika Township (P.) Ltd. (2015) 1 SCC 1, the Hon’ble Supreme Court held that while deciding the year of taxability of capital gains, the substance of the transaction and the documentary evidence must be considered. The Court held that the date of registration of a sale deed is a crucial factor in determining the year of transfer, and the appellant must establish the date of execution if he seeks to claim that the transfer took place on an earlier date. In the present case, the appellant has failed to establish the date of execution of the sale deeds, and the registered sale deeds clearly show the registration dates. Therefore, the year of taxability is correctly determined as the previous year relevant to AY 2016-17.
9.5 Based on the above analysis, the undersigned finds that the Assessing Officer was justified in adding Rs. 3,10,14,600/- as Short Term Capital Gains to the total income of the appellant for AY 2016-17. The appellant has failed to produce any evidence to demonstrate that the transfer took place in AY 2015-16 or to claim the indexed cost of acquisition. The registered sale deeds are the primary documents on record, and they clearly show that the registration took place in the previous year relevant to AY 2016-17. The appellant’s reliance on the assessment order for AY 2015-16 is not relevant, as that order was passed subsequently and does not bind the Assessing Officer for AY 2016-17. The appellant’s claim of double taxation is also not sustainable, as the income has not been taxed in two different assessment years. The appellant has not demonstrated that the capital gains were offered for taxation in AY 2015-16. The fact that the Assessing Officer for AY 2015-16 may have accepted the transaction does not mean that the income was actually taxed in that year. The appellant’s contention that the same income is being taxed twice is, therefore, devoid of merits. The undersigned is satisfied that the Assessing Officer has followed due procedure, provided adequate opportunities to the appellant, and passed a reasoned order based on the available evidence. The addition of Rs.3,10,14,600/- as Short Term Capital Gains is confirmed. This ground of appeal is dismissed.
Ground No. 4: [as per para 4 above]
9.6 The appellant has craved leave to add, alter, vary, omit, amend, or delete one or more grounds of appeal at any time before or at the time of hearing of the appeal. This ground is general in nature and does not require any specific adjudication. It is accordingly disposed of as not pressed, dismissed.
9.7 The appellant’s contention is rejected. The notices were validly served at the address available in the PAN database, and the appellant participated in the proceedings. The appellant’s contention is rejected. The Assessing Officer provided adequate opportunities, and the appellant failed to respond to the Show Cause Notice.. The addition of Rs.3,10,14,600/- as Short Term Capital Gains is confirmed. The appellant failed to prove that the transfer took place in AY 2015-16 or to claim the indexed cost of acquisition.”
9.8 The assessment order passed under Section 147 read with Section 144B of the Income-tax Act, 1961 dated 04.01.2024 is hereby upheld and confirmed.
10. In the result, the appeal of the appellant is dismissed.”
5. That as evident from the record, the registration dates of sale deeds are 17.04.2015 and 23.04.2015, respectively. The assessee’s claim that transfer took place on 23.03.2015 was not supported by any evidence on record. However, at the time of hearing the Ld. Counsel for the assessee submitted that evidences of transfer took place on 23.03.2015 is well explained in the very sale deed itself. However, in the entire findings of the Ld. CIT(Appeals)/NFAC whether at all evidence of transfer took place on 23.03.2015 is mentioned in the body of the sale deed or not, nothing is emanating from the findings of the Ld.CIT(Appeals)/NFAC. That even the Department at the time of hearing could not establish or bring on record any part payment made earlier or also could not refute the contention made by the Ld. Counsel for the assessee. It is therefore, to be verified when the transfer was affected. Also, it has been contended by the Ld. Counsel that the same property had been assessed in A.Y.2015-16 and held as capital loss. All these issues have to be verified in detailed and since the Ld. CIT-DR could not refute the contention of the Ld. Counsel for the assessee nor could produce any direct evidence as to the evidence of transfer took place, it is directed that the First Appellate Authority shall scrutinized contents of the sale deed, if required, call for remand report from the A.O and adjudicate the matter as per law complying with principles of natural justice. The assessee shall also comply with the hearing notices issued from the office of the Ld. CIT(Appeals)/NFAC. Accordingly, we set aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication as per law complying with the principles of natural justice.
6. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 7th October, 2026.
