CHENNAI: A registered sale deed carries a strong presumption of authenticity and validity. The Income Tax Appellate Tribunal (ITAT) in Chennai highlighted that registration is a significant act that confers a high level of trust to the document.
The tribunal, consisting of judicial member Aby T Varkey and accountant member S R Raghunatha, made this remark while overturning an order from an assessing officer who dismissed a sale deed as proof for the purchase of a flat, which also impacted the long-term capital gains exemption from the sale of a property and subsequent reinvestment in another residential property.
This case originated from an appeal by Chandra Swaminathan, represented by her attorney R Vishnu Jayaram, contesting an assessment order regarding her income tax for 2017-18. She had sold her apartment through a registered sale deed for significant consideration, part of which was received in cash and the remainder via banking transactions.
The proceeds from the flat’s sale, along with funds from expensive imported household items and cash gifts, were used by her to purchase another residential flat.
Consequently, she claimed a deduction under Section 54 of the Income Tax Act, which provides exemptions on long-term capital gains, on the grounds that the capital gain resulting from the transfer of her flat was reinvested into acquiring a new residential flat. The assessing officer (AO) denied her claim and classified the amount as unexplained income. This decision was also upheld by the Commissioner of Income Tax, leading the petitioner to appeal to the tribunal.
Upon reviewing the appeal, the tribunal stated: “The AO’s actions towards the petitioner were overly aggressive, and the additions made were baseless. The AO relied on irrelevant information; the arguments from the lower authorities lacked logic and were filled with speculation, making the additions indefensible.”
The tribunal concluded that the petitioner had provided substantial evidence to substantiate the sale and purchase transactions needed to claim the deduction.
