1 week ago
ITAT Deletes ₹3.41 Crore Tax Addition Over Void Sale
A land sale was recorded in Patel’s name, but he said he never sold the land.
He said someone used fake signatures and a fake power of attorney.
The land was shown as sold for ₹6.82 crore in cash.
A civil court later declared the sale deed invalid.
Tax officials still tried to tax Patel on his share of the supposed profit.
The tax tribunal said there was no proof that Patel received any money.
It also said that an ongoing appeal did not justify taxing him protectively.
The tribunal therefore removed the ₹3.41 crore tax addition.
The ITAT Ahmedabad deleted a ₹3.41 crore capital-gains addition against Suraj Jayantilal Patel.
The disputed land sale was recorded at ₹6.82 crore on 25 July 2014.
Patel said the transaction used a forged power of attorney and forged signatures.
A civil court declared the sale deed void on 3 June 2020, finding fraud and no proven payment of consideration.
The tribunal said the Revenue had not shown that Patel received the alleged cash or justified a protective assessment.
- Who
- Suraj Jayantilal Patel, the Income Tax Department, and the Income Tax Appellate Tribunal, Ahmedabad.
- What
- The ITAT deleted a ₹3.41 crore long-term capital-gains addition arising from a disputed land sale.
- Where
- The land was in Hanspura Village, Ahmedabad, and the ruling was issued by the ITAT Ahmedabad bench.
- When
- The alleged sale occurred on 25 July 2014; the civil court voided the deed on 3 June 2020; the ITAT ruling was delivered on 21 April 2026.
- Why
- The tribunal found no evidence that Patel received the alleged cash consideration and noted that the sale deed had been declared void because of fraud.
Taxpayer’s Position
Revenue’s Position
Whether Patel received the sale proceeds
Taxpayer’s Position
Patel argued that he never sold the land, did not authorise the transaction, and there was no evidence that he received any of the alleged ₹6.82 crore.
Revenue’s Position
The Revenue supported the addition based on information about the recorded land sale and argued that the tax department’s interests needed protection.
Effect of the pending appeal
Taxpayer’s Position
Patel argued that the civil court had already declared the deed void, so the alleged sale could not support taxation.
Revenue’s Position
The Revenue said the ownership dispute had not reached finality because the buyers’ appeal was pending before the Gujarat High Court.
Validity of the assessment
Taxpayer’s Position
The ITAT accepted that the addition could not stand without evidence of receipt and also noted that acquisition cost would have to be deducted even if a gain were taxable.
Revenue’s Position
The Assessing Officer had treated Patel’s proportionate share of the alleged consideration as long-term capital gains on a protective basis.
Key facts
- Disputed sale value
- ₹6,82,53,000
- Tax addition
- ₹3,41,26,500, treated as Patel’s proportionate share
- Assessment year
- AY 2015-16
- Civil court ruling
- The Principal Senior Civil Judge, Ahmedabad (Rural), declared the sale deed void on 3 June 2020.
- Alleged method
- The sale was reportedly executed using a forged power of attorney and forged signatures, with the consideration allegedly paid in cash.
- ITAT decision date
- 21 April 2026
- Other litigation
- The buyers’ appeal against the civil court order remained pending before the Gujarat High Court.
Sources
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