SEEKING HELP IN A CASE.

This query is : Resolved

Dev Yadav (Querist)
Follow

10 September 2016 SIR, MY CLIENT HAS SOLD HIS AGRICULTURAL LAND FOR 98 LAC AND DEPOSITED THE CASH IN THE ACCOUNT. BUT THE PROPERTY REGISTRATION VALUE WAS RS. 45 LAC AROUND. CLIENT HAD RECEIVED NOTICE AND NOW ASSESSED DEFINING THAT WE HAVE NOT ANY DOCUMENT EXCEPT PROPERTY REGISTRATION VALUE AND REST OF THE VALUE IS TAXABLE AND CONSIDERED AS OTHER INCOME. MENTIONING THAT THE CLIENT HAS AGREEMENT TO SALE, WHICH IS NOT REGISTERED AND HENCE CAN NOT BE TAKEN ON RECORDS. AND THE COMMISSIONER HAS ASKED CLIENT TO PRESENT THE BUYER BUT AT PRESENT WE ARE NOT ABLE TO PRESENT THE BUYER IN FRONT OF COMMISSIONER. IF I DO COLLECT THE COPY OF REGISTER FROM ASHTAM VENDOR IN WHICH IT HAS BEEN MENTIONED THAT HE HAS PURCHASED THE ASHTAM AND ASHTAM VENDOR ITSELF WRITTEN THE AGREEMENT TO SALE AS WELL. CAN THE ASSESSMENT WILL BE WITHHELD. AND COMMISSIONER (APPEAL) WILL CONSIDER THAT IN TO THE RECORDS. I NEED HELP IN THIS REGARD.

ACA Anurag

ACA Anurag (Expert)
Follow

11 September 2016 Dear Dev, You need to consult your professional advisors as they will deal it in better way U need to consult them

gbalakrishnan

gbalakrishnan (Expert)
Follow

11 September 2016 Even unregistered agreement for sale can become valid if you are able to produce the transferee as the possessor of that chuck of piece in his possession.

Dev Yadav

Dev Yadav (Querist)
Follow

11 September 2016 Thanks gbalakrishnan sir. Sir can you elaborate the sentence after 'if'......

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
Follow

23 July 2025 Certainly. The key issue in your case revolves around the difference between the registered value (₹45 lakh) and the actual consideration received (₹98 lakh) on sale of agricultural land, and how to substantiate the full value to avoid excess taxation under Income Tax Act (possibly Section 69A or 56(2)(x)).

🧾 Context Breakdown:
Registered sale deed value: ₹45 lakh

Actual cash received & deposited: ₹98 lakh

Notice received: AO treats the excess ₹53 lakh (₹98L - ₹45L) as unexplained income

No registered Agreement to Sale: Only an unregistered agreement exists

Buyer is unavailable for testimony

You are trying to submit an “Ashtami” document or vendor copy showing agreement-to-sale

🧩 Clarifying Mr. G. Balakrishnan’s Statement:
“Even unregistered agreement for sale can become valid if you are able to produce the transferee as the possessor of that chuck of piece in his possession.”

This means:

Unregistered sale agreements are not invalid per se.

If you can prove possession and part performance under Section 53A of the Transfer of Property Act, then such an agreement may be considered valid evidence.

However, producing the buyer (transferee) is crucial to substantiate the transaction — both in terms of possession and payment.

If buyer is unavailable, this weakens your defense.

✅ Recommended Actions:
Submit All Documentary Evidence You Have:

Copy of the unregistered agreement

Ashtami vendor’s registered document showing agreement origin

Bank statements showing cash deposit timing

Affidavit from your client regarding full sale consideration

Collect Circumstantial Proof:

Any receipt or acknowledgment from buyer

Revenue records (e.g. mutation or possession records) showing buyer’s name

Witness statements, if available

Legal Standpoint:

Though the unregistered agreement to sale is weak on its own, the combination of possession proof + payment trail may convince the Commissioner (Appeals).

Refer to judicial precedents such as:

Suraj Lamp Industries v. State of Haryana (SC)

K.P. Varghese v. ITO – focuses on real income concept

Argue Real Nature of Transaction:

Agricultural land is a capital asset, but not taxable under certain conditions (e.g., if it’s rural land).

Stress that this is a real sale at ₹98 lakh and not unexplained income under Section 69A.

Try Buyer Affidavit/Declaration:

If buyer can't attend, see if you can at least procure a notarized declaration or video statement.

⚠️ Risk if Buyer is Not Produced:
AO/Commissioner may invoke Section 69A for unexplained money.

₹53 lakh may be taxed at flat 60%+ surcharge+penalty (as per Income Tax Act).

🔚 Conclusion:
Yes, the Ashtami vendor record, along with other indirect evidence, may help, but without buyer's cooperation, your client’s case remains weak.

Hence:

File a strong appeal with evidence

Consider a compromise under settlement scheme (if available)

If needed, consult a tax advocate for representation at appellate tribunal (ITAT)

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now