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2020 (9) TMI 961 - AT - Income TaxLong term capital gain - actual owner of the property - Holder of Power Of Attorney (POA) - Transfer of asset u/s 2(47) - as per assessee he executed the sale deed in the capacity of agent/ power of attorney holder on behalf of six principal co-owners - AO recorded statements of the persons who had issued the power of Attorney and submitted that the land was sold to the appellant earlier for ₹ 2,50,000/- and they have not received the consideration in respect of the sale made by the appellant - DR submitted that the assessee was actual owner of the property and the assessee has not come forward to explain his conduct for the last 5 years after getting the power Attorney from the said 6 persons - HELD THAT - Admittedly, immovable property can only be transferred by a person for a consideration by transferring the possession of property through a registered written document as per section 54 of the Transfer Of Property Act read with the corresponding provisions of Stamp Duty And Registration Act . In the present case the revenue has failed to bring on record any document demonstrating handing over of possession / transfer of possession from alleged seller to the assessee either by transfer of title from them to the assessee either by way of a gift or by way of a sale deed. In the absence of any transfer document coupled with transfer of possession it cannot be concluded that the assessee was owner of the property in law. Reliance by the assessing officer on Power Of Attorney, is misplaced as there is neither the handing over of the possession from these persons to the power Attorney holder (assessee) took place nor there is a reference of any sale consideration in the power Attorney. We are also of the opinion that the power Attorney was also revocable. It cannot be inferred or concluded that the 6 persons have transferred the property to the assessee or in other but the assessee was the owner of the property which was sold by the assessee for a consideration of ₹ 10 lakhs on which the long-term capital gain had arisen as the guidance value was more than 69 lakhs. Assessee has set up his case being that of the power Attorney holder, but the Assessing Officer has failed to bring on record the chain of the title document in the form of registered sale deed etc , which can prove that apprent was not real or in other words transfer took place within four corner of law by virtue of POA. In the present case needful has not been done by the assessing officer to bring on record the title of the assessee, by virtue of which the assessee became owner of the property . In the light of the above we are of the opinion that the assessee is able to make out a case for grant of relief favour and accordingly the case of the assessee is required to be allowed and the assessment made by the revenue is required to be deleted. As relying on cases M/S SESHASAYEE STEELS P. LTD. 2019 (12) TMI 702 - SUPREME COURT and SURAJ LAMP INDUSTRIES PVT. LTD 2011 (10) TMI 8 - SUPREME COURT no transfer of property had taken place from these persons to the assessee, the addition in the hands of the assessee is bad in law and accordingly the appeal of the assessee is allowed .
Issues Involved:
1. Validity of initiation of proceedings under Section 147 and issuance of notice under Section 148. 2. Non-supply of reasons for initiating proceedings before framing the assessment. 3. Approval under Section 151 for initiating proceedings. 4. Addition under the head Capital Gain applying Section 50C. 5. Assessment of capital gain in the hands of the appellant as a power of attorney holder. 6. Reliance on statements of persons who executed the power of attorney without allowing cross-examination. 7. Rejection of appellant’s submissions regarding ownership and applicability of Section 50C. Detailed Analysis: 1. Validity of Initiation of Proceedings under Section 147 and Issuance of Notice under Section 148: The appellant contended that the initiation of proceedings under Section 147 and the consequent issuance of notice under Section 148 were invalid. The Tribunal noted that the Assessing Officer (AO) had received information regarding the sale of an immovable property and initiated proceedings by issuing a notice under Section 148. The appellant had responded by stating that the originally filed Income Tax Return (ITR) should be treated as filed in response to the notice. The Tribunal did not find any procedural irregularity in the initiation of proceedings and issuance of notice. 2. Non-Supply of Reasons for Initiating Proceedings Before Framing the Assessment: The appellant argued that the reasons recorded for initiating proceedings were not supplied before framing the assessment. The Tribunal observed that the AO had recorded statements of the persons who issued the power of attorney, which indicated that the land was sold to the appellant earlier and they had not received the consideration for the subsequent sale. The Tribunal found that the AO had sufficient reasons to initiate proceedings and the non-supply of reasons did not vitiate the assessment. 3. Approval under Section 151 for Initiating Proceedings: The appellant claimed that the required approval under Section 151 was not obtained or was mechanical. The Tribunal did not find any evidence to support this claim and held that the approval process was duly followed. 4. Addition under the Head Capital Gain Applying Section 50C: The AO had assessed the Long-Term Capital Gain (LTCG) in the hands of the appellant based on the sale consideration and the circle rate value. The Tribunal noted that the appellant had executed the sale deed as a power of attorney holder and not as the owner. The Tribunal held that the provisions of Section 50C could not be applied to the appellant as he was not the owner of the property. 5. Assessment of Capital Gain in the Hands of the Appellant as a Power of Attorney Holder: The appellant contended that he was merely a power of attorney holder and not the owner of the property. The Tribunal observed that the AO had failed to bring on record any document demonstrating the transfer of possession or title from the alleged sellers to the appellant. The Tribunal held that the tax liability arising out of the LTCG should be fastened on the registered owners of the property and not on the appellant. 6. Reliance on Statements of Persons Who Executed the Power of Attorney Without Allowing Cross-Examination: The appellant argued that the AO relied on the statements of the persons who executed the power of attorney without allowing cross-examination. The Tribunal held that the AO could not rely on oral statements contrary to the written registered document (Power of Attorney) without satisfying the conditions under the Evidence Act. 7. Rejection of Appellant’s Submissions Regarding Ownership and Applicability of Section 50C: The Tribunal found that the AO and the Commissioner of Income Tax (Appeals) had rejected the appellant’s submissions without appreciating the facts. The Tribunal reiterated that the appellant was merely a power of attorney holder and not the owner of the property. The Tribunal emphasized that immovable property can only be transferred through a registered deed of conveyance and not through a power of attorney. Conclusion: The Tribunal allowed the appeal of the appellant, holding that the assessment made by the revenue was bad in law. The Tribunal relied on the decisions of the Supreme Court in the matters of Seshasayee Steels (P.) Ltd. and Suraj Lamp Industries, reiterating that a power of attorney does not convey title or create any interest in immovable property. The Tribunal ordered the deletion of the addition made by the AO and allowed the appeal of the appellant.
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