The ITO, Ward-2(1), Vadodara V. Shri Karsanbhai Sodhabhai Rathod, Baroda

ITA 557/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7828 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.557/AHD/2016 / ASSTT. YEAR: 2009-2010 ITO,WARD-1(2)(1) VADODARA. VS. SHRI KARSANBHAI SODHABHAI RATHOD 29, DIVYALOK PARK SOCIETY CHHANI JAKATNAKA BARODA 390 002. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI V.K. SINGH, SR.DR ASSESSEE BY : SHRI MUKUND BAKSHI, AR ! / DATE OF HEARING : 04/07/2018 '#$ ! / DATE OF PRONOUNCEMENT: 09 /07/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-5, VADODARA DATED 10.11.2015 PASSED FOR T HE ASSESSMENT YEAR 2009-10. 2. SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN DELETING ADDITIONS MADE BY THE AO ON ACCOUNT OF CAP ITAL GAIN ACCRUED TO THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO HAD RECE IVED AN INFORMATION ABOUT TRANSFER OF PROPERTY. HE OBSERVED THAT THE A SSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THIS ASSESSMENT YEAR. HE EXECUTED A SALE DEED ON BEHALF OF SIX ORIGINAL OWNERS VIDE WHICH SA ME PROPERTY WAS ITA NO.557/AHD/2016 2 TRANSFERRED FOR A CONSIDERATION OF RS.1,18,10,352/- . THE LD.AO FURTHER OBSERVED THAT FOR THE PURPOSE OF STAMP DUTY, VALUAT ION OF THIS PROPERTY WAS ADOPTED AT RS.2,07,61,224/-. THE AO PASSED EX PARTE ASSESSMENT ORDER. HE DETERMINED THE LONG TERM CAPITAL GAIN AT RS.2,02,91,808/-. HE ASSESSED THIS LONG TERM CAPITAL GAIN IN THE HAND S OF THE ASSESSEE ON PROTECTIVE BASIS BECAUSE DURING THE ASSESSMENT PROC EEDINGS HE CALLED FOR RELEVANT DOCUMENTS FROM THE OFFICE OF SUB-REGIS TRAR AND FOUND THAT ACTUALLY SIX PERSONS WERE ORIGINAL OWNERS OF THE PR OPERTY. THEY HAVE ASSIGNED THEIR RIGHTS BY WAY OF DEVELOPMENT AGREEME NT TO THE EXTENT OF 70% TO THE COMPANY VIZ. MS.RAJNI BUILDER P.LTD. (PA N : AAACR 9879 D). THUS, ACCORDING TO THE AO, CAPITAL GAIN/BUSINE SS INCOME TO THE EXTENT OF 70% DESERVES TO BE ASSESSED ON SUBSTANTIV E BASIS IN THE HANDS OF RAJNI BUILDER P.LTD. HOWEVER, ON PROTECTI VE BASIS, TOTAL AMOUNT WAS ASSESSED IN THE HANDS OF THE ASSESSEE. 4. DISSATISFIED WITH THE ACTION OF THE AO, THE ASSE SSEE CARRIED THE MATTER BEFORE THE LD.CIT(A). THE LD.CIT(A) HAS DEL ETED THE ADDITION BY OBSERVING AS UNDER: 6.3 I HAVE CONSIDERED THE FACTS AND THE CIRCUMSTAN CES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, TH E SUBMISSIONS OF THE ASSESSEE, MATERIAL AVAILABLE ON THE RECORDS AND RELEVANT JUDICIAL PRONOUNCEMENTS ON THE SUBJECT. IT IS NOT D ISPUTED THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTIES. HE WA S MERELY POWER OF ATTORNEY HOLDER BY THE SIX ORIGINAL OWNERS , FOR THE PURPOSE OF THE SALE TRANSACTION. THE ASSESSEE HAD S IGNED THE SALE DEED FOR THE TRANSFER OF THE IMMOVABLE PROPERTY, ON BEHALF OF THE SAID SIX ORIGINAL OWNERS AND HE HAD NO VESTED INTER EST OR OWNERSHIP OR ANY OTHER RIGHTS IN THE PROPERTY. THE PROPERTY WAS SOLD BY THE ORIGINAL OWNERS AND THE SALE CONSIDERAT ION WAS RECEIVED BY THEM. THERE IS NOTHING ON RECORD TO EVIDENCE/ESTABLISH THAT THE ASSESSEE HAD BENEFITTED IN ANY WAY FROM THE TRANSFER OF THE SAID IMMOVABLE PROPERTY. A POWER OF ATTORNEY IS A WRITTEN DOCUMENT IN WHICH ONE PERSON (THE PRINCIPAL) APPOINTS ANOTHER PERSON TO ACT AS AN AGENT ON HIS O R HER BEHALF, THUS CONFERRING AUTHORITY ON THE AGENT TO PERFORM CERTAIN ACTS OR FUNCTIONS ON BEHALF OF THE PRINCIPAL. IT IS A LEGAL DOCUMENT ITA NO.557/AHD/2016 3 GIVING ONE PERSON (CALLED AN 'AGENT' OR 'ATTORNEY-I N-FACT') THE POWER TO ACT FOR ANOTHER PERSON (THE PRINCIPAL). TH E AGENT CAN HAVE BROAD LEGAL AUTHORITY OR LIMITED AUTHORITY TO MAKE LEGAL DECISIONS ABOUT THE PRINCIPAL'S PROPERTY AND FINANC E. THE POWER OF ATTORNEY IS FREQUENTLY USED IN THE EVENT OF A PRINC IPAL'S ILLNESS OR DISABILITY, OR WHEN THE PRINCIPAL CAN'T BE PRESENT TO SIGN NECESSARY LEGAL DOCUMENTS FOR FINANCIAL TRA NSACTIONS. 6.4 HON'BLE MADRAS HIGH COURT HAS, IN THE CASE OF C IT VS C. SUGUMARAN [2015] 57 TAXMANN.COM 20 (MADRAS), HELD T HAT WHERE OWNER OF PROPERTY EXECUTED POWER OF ATTORNEY IN FAV OUR OF ASSESSEE WITHOUT ANY CONSIDERATION AND THEREAFTER P ROPERTY WAS REGISTERED IN NAME OF ASSESSEE'S WIFE FOR CERTAIN S UM, SINCE PROPERTY RIGHTS HAD NOT BEEN HANDED OVER TO ASSESSE E, HE COULD NOT BE TREATED AS OWNER OF PROPERTY FOR COMPUTING C APITAL GAIN IN HIS HANDS. IN THE PRESENT CASE ALSO, THERE IS NOTHI NG ON RECORD TO PROVE THAT THE ASSESSEE HAD RECEIVED ANY PART OF TH E CONSIDERATION OUT OF THE SOLD PROPERTY OR HAD PAID ANY CONSIDERATION TO THE ORIGINAL OWNERS FOR OBTAINING POWER OF ATTORNEY FROM THE SIX ORIGINAL OWNERS OF THE PROPER TY. IN VIEW OF THIS, IT IS EVIDENT THAT THE ASSESSEE WAS NEITHER T HE OWNER OF THE PROPERTY IN QUESTION, NOR HAD HE SOLD IT. HE HAD AL SO, NOT RECEIVED ANY PART OF THE CONSIDERATION ON ACCOUNT OF THE TRA NSFER OF THE PROPERTY. CAPITAL GAINS, IF ANY, WAS TO BE CHARGED IN THE HANDS OF THE SIX ORIGINAL OWNERS OF THE PROPERTY, INSTEAD, T HE ASSESSING OFFICER HAS WRONGLY ASSESSED WHOLE OF THE LTCG IN T HE HANDS OF THE ASSESSEE, WHICH IS LEGALLY NOT TENABLE. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF THE ASSESSING OFFICER IN P ROTECTIVELY ASSESSING THE LTCG IN THE HANDS OF THE ASSESSEE AS POWER OF ATTORNEY HOLDER OF THE ORIGINAL OWNERS, CANNOT BE S USTAINED. THEREFORE, ADDITION OF RS.2,02,91,810/- IS DIRECTED TO BE DELETED. THE ASSESSEE SUCCEEDS ON THIS GROUND OF APPEAL. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. AS SEEN FROM THE FIN DING OF THE LD.CIT(A) ASSESSEE HAS JUST ACTED AS A REPRESENTATIVE OF ORIG INAL OWNERS OF THE PROPERTY. HE WAS HOLDING A POWER OF ATTORNEY. HE HAS ACTED ON BEHALF OF THEM. THEREFORE, THE RIGHT PERSON FOR ASSESSMEN T OF CAPITAL GAIN IS THE PERSON WHO OWNS THE PROPERTY AND IN WHOSE BEHAL F ASSESSEE ACTED AS AN AGENT ONLY. THE LD.CIT(A) HAS APPRECIATED TH IS FACT AND THEREAFTER DELETED THE PROTECTIVE ADDITION. IT IS ALSO IMPORT ANT TO NOTE THAT STATUS ITA NO.557/AHD/2016 4 OF SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE ORIGI NAL OWNERS OR RAJNI BUILDERS P.LTD. COULD NOT BE POINTED OUT BEFORE US IN SPITE OF OUR INQUIRY. IT IS NOT ASCERTAINABLE, WHETHER SUBSTANTIVE ADDITI ON IS THERE OR NOT AND IF NOT THEN, HOW THE PROTECTIVE ADDITION IS SUSTAIN ABLE. AFTER GOING THROUGH WELL REASONED ORDER OF THE LD.CIT(A), WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 9 TH JULY, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER