TDS paid without purchase of property, Income Tax

[Deepak Bubna]

Hello,

When a sale deed was not executed yet the potential buyer paid TDS on entire consideration of the agreement, the onus to prove that sale did not take place shall lie on the department or the assessee ? The assessee has made every possible document available to prove that sale did not take place. This transaction was not reported in SFT either as required u/s 258BA of the Act. Since the seller is non-cooperative and has not even returned the amount paid as advance, confirmation from the seller is hard to obtain.

Thanks

Posts / Replies

[YAGAY andSUN]

In such a case, where the assessee has already furnished substantial documentary evidence to establish that the sale did not materialize—such as cancellation agreement, legal notices, absence of possession, and non-registration of the sale deed—the onus shifts to the department to prove otherwise. Payment of TDS under Section 194-IA, by itself, does not conclusively establish transfer of property under the Income Tax Act or the Transfer of Property Act. The department cannot solely rely on TDS deduction to infer that the transaction was completed, especially in the absence of registered title transfer or possession.

Furthermore, the non-reporting of the transaction in the SFT by the registrar and lack of corroborative documents from the seller support the assessee’s claim that the sale did not take place. In such cases, judicial precedents have held that where the assessee has discharged the primary burden of proof, the department must bring on record substantive material to rebut the claim. Non-cooperation from the seller cannot be held against the assessee, particularly where bona fide efforts and records substantiate the assessee’s position.