2025 Supreme(Online)(ITAT) 22216

INCOME TAX APPELLATE TRIBUNAL (INDORE BENCH)
B.M. Biyani, Accountant Member, Paresh M. Joshi, Judicial Member
ITO-2(1) Indore – Appellant
Versus
Gurdeep Singh Chhabra – Respondent
ITA No. 726/Ind/2024 | Cross-Objection No. 14/Ind/2025

A registered sale deed relates back to the date of its execution rather than its registration, pursuant to Section 47 of the Registration Act. Reassessment proceedings initiated on the basis of a misidentified assessment year derived from the date of registration are invalid and unsustainable.

Headnote:(A) Income Tax Act, 1961 - Sections 147 and 148 - Reassessment proceedings - Limitation and Jurisdiction - Sale of property - Assessment year - Registered document relating back to date of execution - Application of Section 47 of the Registration Act, 1908 - A registered document shall operate from the time it would have commenced to operate if no registration were required, implying it relates back to the date of execution despite the actual registration occurring in a subsequent financial year. (Paras 10, 11, 13)

(B) Appeal - Scope and ambit - Powers of Appellate Authority - Legal grounds going to the root of the matter - Challenge to jurisdictional validity of proceedings can be raised as additional grounds even for the first time before the Tribunal if facts are on record and require no new investigation. (Paras 5, 7)

Facts of the case:
The assessing authority initiated reassessment proceedings for the relevant assessment year, contending that capital gains on the sale of an immovable property were omitted from the original return. The assessee contended that the sale deed was executed and presented to the registration authorities in the preceding financial year, and that the registration process completion date in the subsequent year does not shift the taxability of the transaction. The appellate authority nullified the reassessment on limitation grounds, which led the revenue to appeal the order and the assessee to file cross-objections.

Findings of Court:
Upon analysis of the sale deed, the court found the date of execution and presentation to the registration authorities occurred in the prior financial year. Citing the principle of 'relation back' under the Registration Act, the court confirmed that the transaction was complete in the earlier assessment year. Furthermore, the court noted that the assessment of the same transaction in the case of a co-owner by the department in the earlier year rendered the current reassessment proceedings inconsistent and legally unsustainable.

Issues: Whether a registered sale deed operates from the date of its execution or the date of its registration, and whether the reassessment proceedings initiated for the assessment year under consideration were valid in law.

Ratio Decidendi: A registered instrument relating to immovable property relates back to the date of its execution as per Section 47 of the Registration Act. Consequently, the transaction pertains to the assessment year corresponding to the date of execution. Reassessment proceedings based on an incorrect determination of the assessment period are void and unsustainable.

Result: Assessee's cross-objection allowed; Revenue's appeal dismissed.