Smt. Harmandeep Kaur Vs ITO (ITAT Chandigarh)
Sale of Rights in Plots Is Capital Transaction, Not Unexplained Money: ITAT Chandigarh Deletes ₹27.50 Lakh Addition u/s 69A
The Chandigarh SMC Bench of the Income Tax Appellate Tribunal, Chandigarh Bench allowed the appeal of Smt. Harmandeep Kaur for AY 2023-24 and deleted the addition of ₹27,50,000 made under section 69A read with section 115BBE, holding that the transaction represented taxable capital gains and not unexplained money.
The assessee had purchased two plots in 2010 and 2014 through allotment letters issued by M/s Solitaire Colonizers and Builders Pvt. Ltd., paid consideration in cash, and later sold the plots during the relevant year, duly offering capital gains to tax. The AO treated the sale proceeds as unexplained on the ground that registered sale deeds were not executed at the time of purchase, branding the transaction as an accommodation entry. The CIT(A) upheld the addition.
The Tribunal held that even an allotment letter confers a capital right, akin to rights arising from an agreement to purchase property. Transfer or relinquishment of such rights results in capital gains, not unexplained income. Importantly, the ITAT noted that no enquiry whatsoever was conducted by the AO or CIT(A) with the developer to disprove the genuineness of the allotment, and the addition was based purely on assumptions and presumptions.
Relying on settled principles (including the Supreme Court’s ruling in Sanjiv Lal v. CIT), the Tribunal held that the sale consideration cannot be taxed u/s 69A once the transaction is traceable to a capital asset/right, and the assessee has already offered the gain under the correct head.
Accordingly, the entire addition of ₹27.50 lakh was deleted, and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
