The assessee an individual had filed return for relevant AY. The assessee along with her spouse had purchased and sold two plots, located in Sanand District. The assessee and her spouse was owner of these two plots in equal ratio. The assessee during the year had shown a short term capital gain of Rs. 4,85,230/- on the sale of such plots. During assessment, the AO on perusal of sale deed observed that each plot was sold for Rs. 1,76,51,000/- only. Accordingly, the share of the assessee for each plot in the sale consideration cames out at Rs. 88,25,500/- aggregating to Rs. 1,76,51,000/- for both the plots. On question by the AO about the mismatch, the assessee submitted that these plots were sold to M/s. Nikshal Properties Pvt. Ltd. (NPPL) for Rs. 83,61,000/- each as per Banachitthi made between them dated 6th September, 2010. However, NPPL subsequently agreed to sale such plots to M/s. Ardor Structure Pvt. Ltd. (ASPL) for total consideration of Rs. 1,76,51,000/- for each plot. In the agreement dated 11-02-2011 the assessee was shown as seller, ASPL was shown as the purchaser whereas, NPPL was shown as confirming party. Thus, the assessee claimed that its share in the sale price was for Rs. 83,61,000/- only. However, the AO was not satisfied with explanation. The AO held that the entire transaction had been made by the assessee to reduce the tax burden. Accordingly, the AO held that it was a colorable device made by the assessee to escape for the tax liability. Accordingly, the AO made the addition for Rs. 92,90,000/- in the hands of the assessee. On appeal, CIT(A), deleted the addition made by the AO. Aggrieved Revenue filed appeal before the Tribunal.

Tribunal held that,

++ the assessee has sold her share in the plot for Rs. 41,80,000/- for each plot. However, the AO observed that each plot was sold to M/s. ASPL for Rs. 1,76,51,000/-. Out of such amount, an amount of Rs. 92,90,000/- was given to the confirming party, which was not believed by the AO during the assessment proceedings. Accordingly, the AO made the addition of Rs. 92,90,000/-. It was noted that the assessee claimed that the sum of Rs. 92,90,000/-was received by M/s NPPL in pursuance to the Banachitthi dated 06-09-2010. This Banachitthi dated 06-09-2010 was disbelieved by the AO as it was not registered and made on Non Judicial Stamp Papers. Section 49 of Indian Registration Act provides that an unregistered document affecting the transactions of immovable property is a valid transaction. Thus, it is clear that the Banachitthi made between the assessee and NPPL is enforceable under the provisions of law. Therefore, no adverse inference can be drawn against the assessee if the Banachitthi is not registered;

++ Gujarat High Court in the case of Taraben has held that the Banachitthi are enforceable. It is also beyond doubt that the payment was received by the NPPL through banking channel as evident from registration deed. It was also noted that the impugned transaction was duly confirmed by the director of NPPL in the statement recorded u/s 131 of the Act. The director of NPPL duly admitted the fact in the statement recorded under section 131 of the Act that the impugned transaction was duly disclosed in its books of accounts. It was hold that the payment was made to NPPL as per the Banachitthi dated 06-09-2010 which was enforceable under the provisions of law. Therefore, the payment made to NPPL cannot be said as a colorable device used by the assessee to escape the tax liability. Thus the ground of appeal of the Revenue is dismissed.

(See 2019-TIOL-225-ITAT-AHM)