The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that no capital gain tax payable on property transfer between spouses.
The bench of Anubhav Sharma (Judicial Member) and S. Rifaur Rahman (Accountant Member) has set aside a tax addition of Rs. 1.4 crore that had been made on account of alleged undisclosed capital gains in the case of late Sunil Kumar, a Faridabad-based individual as no consideration was involved.
The case stemmed from the transfer of a residential property located at A-14, Nehru Ground, NIT, Faridabad, executed on 30 November 2012 by Sunil Kumar in favour of his wife, Smt. Bimla Devi. The conveyance deed mentioned a consideration of ₹1.40 crore, which the Assessing Officer (AO) treated as taxable capital gain, alleging it to be unaccounted income.
Sunil Kumar had filed his return of income for AY 2013-14 declaring only ₹1.98 lakh. The matter was later reopened under Section 147 of the Income Tax Act, 1961. Due to the COVID-19 pandemic and ill health—he suffered from kidney ailments and passed away in April 2025—Kumar could not comply with certain notices issued during assessment proceedings. The National Faceless Assessment Centre (NFAC) eventually passed an ex parte order in September 2021, adding ₹1.40 crore to his income.
The Commissioner of Income Tax (Appeals), NFAC, upheld the assessment in February 2025, stating that the sale deed clearly mentioned receipt of full consideration and hence the claim of a non-monetary transfer was not believable.
The ITAT noted that the conveyance deed itself contained verification by the sub-registrar that “NIL” consideration was actually paid. Bank account statements of both the assessee and his wife showed no flow of funds supporting the alleged consideration. The wife had submitted an affidavit affirming that no money was paid for the transfer. A family settlement agreement of 30 October 2018 further supported the assessee’s claim that the transaction was part of resolving family disputes rather than a commercial sale.
The ITAT observed that if the transaction was meant to benefit the wife, it could have been achieved by way of a gift or family arrangement without monetary exchange. “Thus, payment of consideration seems to be a sham transaction,” the order stated, criticizing the tax authorities for not adopting a “prudent approach.”
Accordingly, the ITAT allowed the appeal and directed deletion of the ₹1.40 crore addition from the assessee’s taxable income.
Case Details
Case Title: Sunil Kumar Versus ITO
Case No.: ITA No.957/Del/2025
Date: 20.08.2025
Counsel For Petitioner: Praveen Kumar Misra, CA
Counsel For Respondent: Vipul Kashyap, Sr.
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