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TMI Blog2020 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the Assessing Officer under the head Capital Gain -applying the provisions of section 50C of the I.T Act. 5. Because the Ld.CIT(A) while confirming the addition has erred both on facts and in law in rejecting the appellant's specific ground and submission on the issue. Since the appellant executed the sale deed as power of attorney holder which is not in dispute, the capital gain cannot be assessed in the hands of the appellant. 6. Because the Assessing Officer has made the addition under the head capital gain solely relying on the statement of the persons who executed the power of attorney in the favour of the appellant. Ld. CIT(A) while confirming the addition has legally erred ignoring the fact that the statement cannot be relied upon and cannot be made basis of addition until and unless the opportunity of cross examination has been allowed . 7. Because the Ld. CIT(A) while confirming the addition has erred both on facts and in law in rejecting the appellant's specific submission and ignoring the fact:- i) In the statement of the persons who executed power of attorney in favour of appellant, they admitted that the photo and signature on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 65,31,869/-. Thus, the assessment was completed at Rs, 65,31,869/-. 5. The Ld. CIT(A) without appreciating the facts and rejecting the assessee's specific submission confirmed the addition. 6. Feeling aggrieved by the order passed by the lower authorities the assessee is in appeal before us for the grounds stated hereinabove. 7. The ld. AR for the assessee had submitted that the addition made by the assessing officer and confirmed by the Commissioner appeal were provided on the wrong assumption that the assessee is the owner of the property. It was submitted that the assessee was merely the registered Power of Attorney holder, which was very workable and there is no mention of handing over of the possession to the assessee by 6 persons. It was further pointed out that there is no sale document on record which shows that the property was transferred by the 6 persons by way of a registered document in favour of the power Attorney holder. It was further submitted that even in law the power Attorney holder cannot be assumed to be the owner of the property and therefore the reopening of the assessment and the additions made by the assessing officer in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted sale deed in favor of the assessee for sale consideration of ₹ 2,50,000/-. b. The PoA writers stated that the land was sold to the appellant for ₹ 2,50,000/-. However, on the other hand, they denied that any amount was received to them by the appellant on the sale of land. c. They admitted in their statements that the photos affixed on the PoA and signatures thereon belonged to them but they signed the PoA believing it to be a sale deed. Refer statement of Shri. Shanti Swaroop in reply to question 5 of the AO - Page 44 of Paper book) d. The statement regarding no knowledge of the PoA and that executing the same as a sale deed is more than a lie. e. The persons were literate and educated enough evidenced by: their signatures thereon the PoA (no one has put a thumb print pointing that they knew how to read and write) and thus could understand a document written in plain Hindi language in a legible manner. their educational details. (Kindly refer Page 6 of the CIT(A) Order). f. The PoA did not mention the amount of sale consideration proving the fact that it could not have been assumed as a sale deed by the writers of PoA. f. The Ld. AO did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Skill and diligence required from agent An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direction consequences of his own neglect, want of skill, or misconduct. F. The case skill or diligence required is not that such the Agent in Fact Possesses. But such as is reasonabley necessary for performance of his undertaking as reasonably to be expected. - A property of stamp valueof 69 Lakhs is being sold for 10,00,000/- implies a lack of skill and contrary to Principals Interest- Not an Agent. G. A.O. relied on false statement of the original sellers and rejected the Assessee s Statement. In respect of Agency, i.e. Power of Attorney, not stated to be irrevocable, the Assessee in his statement states that he has no proof or evidence of paying sale consideration to the original owners. Nor does he provide proof of rendering Accounts to the original owners. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a person can not be accepted contrary to the registered document unless it satisfy the requisite conditions as mentioned under Evidence Act, which in present case are missing. 12. It is a settled position of law and do not require much argument that the tax liability arising out of the long-term capital gain is required to be fastened on the registered owner of the property and not on the assessee who is merely a power-of-attorney order. We may also been to record that, the 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 11. In order that the provisions of Section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey is, as is well known, a document of convenience. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee. An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor. 15. Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank - 94 [2001] DLT 841, that the concept of power of attorney sales have been recognized as a mode of transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said 'SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision. 19. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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