ITAT holds that unregistered land-sale agreements, supported by identities and consideration details, sufficiently explain capital source for section 68
Meetu Kumari | Nov 24, 2025 |
Agreement to sell and sale consideration cannot be doubted for merely non-registration of sale deed: ITAT
The assessee, an individual running a proprietorship concern named Nandini Processors, filed his return declaring Rs. 16.38 lakh income for AY 2016-17. During limited scrutiny, the Assessing Officer examined the source of capital introduced in the business and the assessee’s investment in a Ghaziabad flat. The assessee explained that the capital came from the sale proceeds of ancestral agricultural land in Village Taalsurah, District Ballia, jointly held with family members. However, the AO was not satisfied because no registered sale deed was produced and treated Rs. 2,15,73,388 as unexplained under section 68.
Appeal Before CIT(A): On appeal, the CIT(A) upheld the addition, observing that despite repeated opportunities, the assessee failed to file the sale deeds or bank statements of co-owners to conclusively establish the source. Aggrieved, the assessee then approached the Tribunal.
Main Issue: Whether unregistered agreements to sell agricultural land, supported by consideration and identity details, are adequate to explain the source of capital introduced in the business, in absence of registered sale deeds.
Tribunal’s Decision: The Tribunal held in favour of the assessee and deleted the entire addition. It noted that the assessee had filed a sworn declaration that all documents in the paper book had already been submitted before the lower authorities. These agreements clearly record the full receipt of consideration for the family land. Such agreements may not confer title under property law, but they do carry evidentiary value for explaining a source of funds.
The CIT(A) himself acknowledged that the assessee had produced agreements and complete identity details of buyers and sellers. Yet no independent verification or rebuttal was undertaken by the tax authorities. The Tribunal held that rejecting these documents merely because formal sale deeds were not executed was unjust.
Therefore, the Tribunal deleted the addition of Rs. 2,15,73,388 under section 68 and allowed the appeal.
To Read Full Judgment, Download PDF Given Below
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