2014 (3) TMI 1181 - AT - Income Tax

Capital gain on sale of immovable property in terms of the provisions of section 163(1)(c) - assessee was appointed as attorney in respect to the properties on the basis of executed instrument titled as power of attorney the assessee executed two sale agreements through which the immovable property owned by Smt. Pamela Colleco was transferred to two independent buyers - whether the assessee can be held as the representative assessee in terms of the provisions of section 163(1)? - HELD THAT - By merely providing the address the assessee cannot absolve himself from his statutory liability of payment of tax arising on the income generated from the transaction of sale of the immovable property. Assessee is a legally appointed power of attorney holder in respect to the property owned by a non resident and on the basis of such attorney he has executed the sale agreements and has received consideration and no tax was paid either by the non resident or by the assessee himself. It is also a matter of fact that the revenue authorities on the basis of such power of attorney has registered the sale deeds in favour of the buyers in the revenue records. We have also perused the power of attorney placed in assessee s paper book and have found that the assessee was appointed as power of attorney holder of Smt. Pamela Colleco in clear terms without any conditions. Thus after going through all the documents and considering the material available on record we are of the considered opinion that the power of attorney is valid and on the basis of such attorney the assessee is held as agent of Smt. Pamela Colleco. Therefore we find no infirmity in the order of ld. CIT(A) in justifying the action of ld. AO in holding the assessee as representative assessee of Smt. Pamella Colleco. Accordingly we hold the assessee as the representative assessee of Smt. Pamela Colleco as provided in section 163 - Decided against revenue.

Summary

Issues Involved:
1. Validity of the order passed under section 163 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer in assessing the representative assessee.
3. Determination of the assessee as the agent of the non-resident under section 163(1) of the Income Tax Act, 1961.
4. Denial of fair opportunity and violation of principles of natural justice.
5. Efforts made to tax the real owner of the property.

Detailed Analysis:

1. Validity of the Order Passed Under Section 163:
The assessee contested the validity of the order passed under section 163, arguing that it was contrary to law and void-ab-initio. The CIT(A) upheld the order, but the Tribunal found that the jurisdiction for assessing non-residents lies with the authorities in Mumbai. The Tribunal noted that the Assessing Officer in Jaipur did not have the jurisdiction to assess the non-resident's representative, making the proceedings illegal and void-ab-initio. The Tribunal relied on the decision of the Calcutta High Court in the case of CESC Ltd. and Others Vs. DCIT, which held that only authorities in Mumbai have jurisdiction over non-residents.

2. Jurisdiction of the Assessing Officer:
The Tribunal observed that the jurisdiction for assessing non-residents is confined to Mumbai, especially when the non-resident has no local connection. In this case, the non-resident, Smt. Pamela Colleco, had a local connection through the power of attorney holder, Banwari Lal Sharma, who executed the sale deeds and received the sale consideration in India. The Tribunal found no evidence of the non-resident being assessed in Mumbai and noted that the Assessing Officer in Jaipur acted within his jurisdiction by treating the power of attorney holder as the representative assessee.

3. Determination of the Assessee as the Agent of the Non-Resident:
The Tribunal upheld the CIT(A)'s decision that Banwari Lal Sharma was the representative assessee of Smt. Pamela Colleco under section 163(1)(c) of the Income Tax Act, 1961. The Tribunal found that the power of attorney was valid and that Banwari Lal Sharma, as the power of attorney holder, executed the sale agreements and received the sale consideration on behalf of the non-resident. Therefore, he was rightly held as the agent of Smt. Pamela Colleco.

4. Denial of Fair Opportunity and Violation of Principles of Natural Justice:
The assessee argued that he was not given a fair opportunity to be heard before the order under section 163 was passed, violating the principles of natural justice. The Tribunal noted that the Assessing Officer did not provide sufficient opportunity to the assessee to present his case. However, the CIT(A) considered the submissions of the assessee and provided a detailed finding, thus curing the defect of lack of opportunity. The Tribunal found no merit in the assessee's argument and upheld the CIT(A)'s decision.

5. Efforts Made to Tax the Real Owner of the Property:
The Tribunal observed that the Assessing Officer made only a single attempt to contact the non-resident, Smt. Pamela Colleco, by issuing a notice under section 133(6) at her local address, which was duly served but not replied to. The Tribunal noted that the Assessing Officer should have made further inquiries to locate the non-resident. However, the Tribunal found that the assessee, as the power of attorney holder, could not absolve himself from the tax liability arising from the sale of the property. The Tribunal upheld the CIT(A)'s decision to treat Banwari Lal Sharma as the representative assessee.

Separate Judgments:
The Tribunal also dealt with appeals involving other assessees, Vivek Gupta and Ashish Gupta, who were held as agents of Smt. Pamela Colleco. The Tribunal followed its decision in the case of Banwari Lal Sharma and upheld the CIT(A)'s orders, holding that Vivek Gupta and Ashish Gupta could not be treated as agents of Smt. Pamela Colleco. The Tribunal dismissed the revenue's appeals in these cases.

Conclusion:
The Tribunal dismissed the appeal of the assessee, Banwari Lal Sharma, and upheld the CIT(A)'s decision to treat him as the representative assessee of Smt. Pamela Colleco. The Tribunal also dismissed the revenue's appeals in the cases of Vivek Gupta and Ashish Gupta, upholding the CIT(A)'s orders that they could not be treated as agents of Smt. Pamela Colleco.