Transfer of Land through Oral Agreement isn’t Valid: ITAT

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Case Details: Allam Adavaiah v. ACIT – [2023] 150 taxmann.com 53 (Hyderabad-Trib.)

Judiciary and Counsel Details

Rama Kanta Panda, Accountant Member & Laliet Kumar, Judicial Member
A. Srinivas, C.A. for the Appellant.
K.P.R.R. Murthy, Sr. AR for the Respondent.

Facts of the Case

Assessee vide registered sale deed dated 29-8-2003 had sold land to a purchaser. Assessee claimed that he transferred land to the purchaser during the assessment year 1995-96. Thus capital gain was to be taxed in the assessment year 1995-96 and not in the assessment year 2004-05.

However, the Assessing Officer (AO) taxed the capital gain in the assessment year 2004-05 and rejected the claim to tax the capital gains in AY 1995-96. AO held that the oral agreement could not be treated as a valid agreement as it was revocable, and the assessee produced no proof to show that the construction activity had started on the land after the oral agreement.

On appeal, the CIT(A) upheld the additions made by AO, and the matter reached the Hyderabad Tribunal.

ITAT Held

The Tribunal held that in the remand proceedings, no evidence of transfer of the land had been filed by the assessee except the letter issued by the purchaser. Even the said letter does not bear the date of taking over the possession of the land. The said letter mentioned that the possession was taken over through the Irrevocable General Power of Attorney in the earlier year. However, no such power of Attorney was produced by the assessee.

Further, the assessee had not brought on record the evidence to show that the land was the capital asset in the records of the purchaser with effect from the assessment year 1995-96.

From a reading of the provisions of section 2(47), it is abundantly clear that the case of the assessee for transfer of immovable property through the oral agreement does not fall in any of the limbs of section 2(47). The instant case was neither a case of sale nor exchange nor relinquishment or extinguishment of any right in the earlier assessment year. In fact, the assessee executed the registered sale deed in favour of the purchaser in the assessment year 2004-05. Therefore, the transfer took place in the said assessment year.

In addition, no oral evidence can be given against the registered document as per provisions of section 93 of the Indian Evidence Act. Moreover, in case of conflict between the oral statement and the written document, the contents of the written document shall prevail against the oral statement/agreement.

Therefore, the lower authorities were right in taxing capital gain in the Assessment Year 2004-05.

List of Cases Reviewed

Anarkali Sarabhai v. CIT [1997] 90 Taxman 509/224 ITR 422 (SC) (para 13) distinguished.

List of Cases Referred to

Anarkali Sarabhai v. CIT [1997] 90 Taxman 509/224 ITR 422 (SC) (para 13)
Kartikeya V. Sarabhai v. CIT [1997] 94 Taxman 164/228 ITR 163 (SC) (para 13)
CIT v. Grace Collis [2001] 115 Taxman 326/248 ITR 323 (SC) (para 13).

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