NITINBHAI PANCHABHAI DHAKECHA,RAJKOT V. THE INCOME TAX OFFICER - WARD 1(1)(5), RAJKOT

ITA 399/RJT/2023

AI Insights

The case involves an appeal by Nitinbhai Ranchabhai Dhakecha against the order of the National Faceless Appeal Centre (NFAC) which upheld the addition of \\u20b916,99,579 as Long Term Capital Gain on the sale of immovable property. The appellant, acting as a Power of Attorney for the actual owner, contested that he was not the seller and thus not liable for the capital gains tax. The Tribunal found that the appellant was merely a Power of Attorney holder and not the actual seller, and thus the addition of the capital gain in his name was erroneous. The Tribunal also noted the absence of crucial documents like the purchase deed and bank statements in the assessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26411 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Other Referred Cases: Vishnubhai Kanjibhai Desai (R/Special Civil Application No. 9063 of 2024 dated 30.08.2024)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.D. GUPTA; LD.
• Assessee Lawyers: SAMIR BHUPTANI; LD
• Keywords: Condonation of delay; Set aside; Additional evidence; Cost of acquisition
• Section: 143(3); 250

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, AM. & DINESH MOHAN SINHA, JM आयकर अपील सं./ITA No. 399/RJT/2023 (िनधाŊरण वषŊ / Assessment Year: (2007-08) (Hybrid Hearing) िनधाŊįरती की ओर से/Appellant by : Shri Samir Bhuptani, Ld. AR ŮȑथŎ ओर से/Respondent by : Shri B. D. Gupta, Ld. Sr. DR सुनवाई की तारीख/ Date of Hearing : 25/11/2024 घोषणा की तारीख/Date of Pronouncement : 11/02 /2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld. CIT(A)”] vide order dated 12.06.2023, which in turn assessment order passed by Assessment Unit, Income Tax Department / Assessing Officer under section 143(3) r.w.s. 147 vide order dated 24.03.2015 of the Income Tax Act, 1961 (in short “the Act”). Nitinbhai Ranchabhai Dhakecha Doshi street, At. Sardhar Rajkot – 360025, Vs. The ITO, Ward – 1(1)(5), Aayakar Bhawan, Race Course Ring Road, Rajkot – 360001 ˕ायी लेखा सं./जीआइआरसं./PAN/GIR No.: AHMPD6641F (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) Page | 2 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO 2. grounds of appeal raised by the assessee are as follows: 1. Ld. CIT(A), NFCA erred in law as well as on facts in passing appellate order u/s 250 of the Income Tax Act, 1961, which is bad in law and without appropriate jurisdiction. 2. Ld. CIT(A), NFAC erred in law as well as on facts in upholding the addition of ₹. 16,99,579/- on account of alleged Long Term Capital Gain on sale of immovable property. 3. Ld. CIT(A), NFAC erred in law as well as on facts in contending in para no. 5 of the appellate order that the appellant has not furnished copy of Sale Deed, which is also in contradiction of para 4.5 of the appellate order. 4. Ld. CIT(A), NFAC erred in law as well as on facts in not appreciating the fact that the appellant is merely a Power of Attorney holder and not the Seller of the property and in view of the same the appellant could not have been taxed for Long term Capital Gain of the impugned property. 5. Ld. CIT(A), NFAC erred in law as well as on facts in upholding addition of Long Term Capital Gain without giving deduction of cost of acquisition. 6. Ld. CIT(A), NFAC erred in law as well as on facts in not directing Ld. AO to inquire and verify purchase deed from the office of sub-registrar. 7. Ld. CIT(A), NFAC erred in law as well as on facts in not referring the matter for violation with DVO. 3. Before the Tribunal, the assessee submitted additional grounds of appeal; Ld. AO erred in law as well as on facts in issuing notice/s. 148 of the Income Tax Act, 1961, which is based on erroneous belief and hence the same is bad in law without appropriate jurisdiction. Ld. AO erred in law as well as on facts in reopening the assessment and consequently passing assessment order, which is bad in law and without appropriate jurisdiction. 4. At the outset, this appeal is time barred by 109 days. Ld. AR has filed an application for condonation of delay alongwith affidavit and request for condonation of delay, relevant part of the Affidavit is reproduced: a. The appellate order was uploaded on the web-portal and the appellant was not aware of the same as he has not received any intimation on his email. Page | 3 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO b. The appellant came to know about the same only on last week of October, 2023, when the tax consultant had logged-in on the web portal for the purpose of filing of return of income for the A.Y. 2023-24. The appellate order was downloaded and the appellant was advised to meet with the council who had prepared the appeal before CIT(A). c. The appellant therefore collected the file from the council and handed over to another council to prepare appeal on 16th November, 2023. d.. The appeal was prepared then after and consequently the same is being filed on today with delay of 109 days. 5. Ld. AR of the assessee has submitted that assessee did not know about the I.T. portal. Tax Consultant told him about the order on last week of October. That the Ld. AR of the assessee prayed for condonation of delay and appeal be heard on merit. 6. Ld. Sr. DR for the revenue relied on the order of the Ld. CIT(A) stating that order was served through IT Portal on the assessee. However, Ld. Sr. DR has not objected to the prayer of the assessee. 7. We have heard the matter and perused the matter available on record. We note that delay by 109 days which is not deliberated action of the assessee and there is a sufficient clause for delay filling the appeal. We find that the in the interest of justice, the assessee should be given an opportunity to explain his case. Hence, delay is condoned and appeal of the assessee be heard on merit. 8. Brief facts of the case that the, 1) The appellant had filed his return of income declaring total income of Rs. 98,271/-. The assessment of the appellant has been re-opened by issuing notice u/s. 148 of the Act on the basis of the information received from ADIT(Inv.), Rajkot 2) That the appellant was a Power of Attorney holder of Shri Manharsinh Jalamsinh Parmar has sold an immovable property, on behalf of the owner Page | 4 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO Manharsinh Jalamsinh Parmar for Rs. 10,20,000/- but the valuation for the for the purpose of stamp duty was Rs. 16,99,579/-. In the course of the assessment proceedings the appellant submitted that his name was Parmar mentioned, in the sale deed, in the capacity of Power of Attorney Holder. The appellant submitted that he was not the owner of the immovable property and the actual owner was Shri Manharsinh Jalamsinh Parmar and the transaction cannot be taxed in his hand. However, Ld. AO did not appreciate the submission of the appellant and made the addition of Rs. 16,99,579/- in the income of the assessee for the AY 2007-08 as undisclosed Long Term Capital Gain without giving any deduction of cost of acquisition. 5) Being aggrieved of the assessment order the appellant filed an appeal before Ld. Commissioner of Income Tax(Appeals), which ahs been dismissed by Ld. CIT(A). 9. That the assessee filed an appeal before us against the order of Ld. CIT(A) dated 12.06.2023. 10. During the course of hearing of the appeal, Ld. AR of the assessee has submitted that the assessee did not sold the property. The assessee has only power of attorney holder to complete transaction on the behalf of owner of the property, Shree Maharsinh Jalamsinh Parmar, and the assessee has never received any payment against the property. 11. On the contrary, Ld. DR from the revenue submitted that transaction of Rs. 16,99,576/- was to be taxed since the stamp value of the property was ascertain at Rs. 16,99,579/-. And Ld. DR has further relied of the order of the Ld. CIT(A). Page | 5 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO 12. We have heard the arguments of both the parties and perused the material available on record. We have noted the main ground is that holding addition of Rs. 16,99,579/- made by the Ld. AO on Long Term Capital Gain without giving deduction of cost of acquisition. The department has initiate proceedings on the basis of report from ADIT(Inv.)-1, Rajkot, in respect of this property. The assessee has submitted written submission wherein, the appellant has not sold any land he was just a power of Attorney holder of the seller Shri Manharsinh Jalamsinh Parmar. The sale consideration has not been received by him. As per the deed, the property was sold for Rs. 10,20,000/- and the value ascertain by Stamp value was 16,99,579/-. 13. We are of the view that for making an assessment and even upholding the assessment order by Ld. CIT(A) the copy of purchased deed, copy of bank statement and power of Attorney were not available. 14. That the petitioner has submitted before this Bench, the written submission alongwith Power of Attorney and copy with a judgement and purchased deed as additional evidence. 15. The assessee has also submitted copy of Power Attorney, is hereby reproduced: I the undersigned Shri Manharsinh Jalamsinh Parmar, Age: Adult, Rel. Hindu, Occ. Business, Res. Rajkot, Harihar Society, 24-B, Chetan Deep, Rajkot. By the present power of attorney, I undertake that; I am sole owner, occupant and possessor of block situated in Rajkot’s Revenue Survey No. 443 and 444p in Shri Harihar CHSL (Reg. No. GH-510, Dt: 29.1.1962) on Plot No. 24-B land area sq. Mts. Sq. Yds. 203.00 which I purchased vide Regd. Sale deed No. 2274, Dt. 05.02.197 from Shri Dhanjibhai Devjibhai Sejpal and obtained possession occupation in pursuance thereof I have sole and absolute rights, to use, sale, arrange the said property. As such in all affairs to sale, arrange and in all legal procedures of the said property I am unable to remain present in person by present power of attorney I Page | 6 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO confer powers to Shri Nitinbhai Panchabhai Dhanekecha, Age: Adult, Rel. Hindu, Occ. Business, Res. Sardhar, Ral. Rajkot Dist. Rajkot and confer powers and authority to discharge all affairs and initiate procedures as below: 1. To sell said block property situated in Shri Harihar CHSL on plot No. 24- B land area Sq. Mts. Sq. Yds. 203.00 to any person, body, company, trust or organization or any person above to do all things necessary in connection with the sale, to enter into power of attorney typed and executed in Gujarat on Stamp Paper Rs. 50/- purchased vide No. A- 857373, Dt: Illegible in the name of: LL Baraiya, Advocate by Prakashbhai from stamp Vendor: DK Tanna, Rajkot. 16. We note that the assessee further submitted that the appellant has stated that, the property owner is Manharsinh Jalamsinh Parmar and property pertains to him only. The appellant was only a power of attorney to complete the transaction on the behalf of the Manharsinh Jalamsinh Parmar. 17. We note that the remand report was called by the Ld. CIT(A) and reply to rejoinder the assessee submitted the important legal issue involve is that, the property owner is Shri Manharsinh Jalamsinh Parmar has gave power of attorney to complete the transaction on his behalf which is also evidence from the sale deed as also from the power of attorney. Thus there is an error in making addition of this transaction in the name of assessee instead of doing in the name of actual owner. We further noted that, more ever the property belonged to seller Shri Manharsinh Jalamsinh Parmar and the assessee has acted only as his power of attorney holder and the sale consideration was not received by assessee. 18. The assessee has made a reliance on the decision of Hon’ble Gujarat High Court in the case of Vishnubhai Kanjibhai Desai (R/Special Civil Application No. 9063 of 2024 dated 30.08.2024.), wherein on identical facts and issue the jurisdiction high court has held as under: Page | 7 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO 18. Having considered the submission made by the petitioner on behalf of the petitioner as well as the observations made by the respondent Assessing Officer in the impugned order passed under section 148A(d) wherein, it is not disputed that the petitioner is working as peon in M/s. S. K. Enterprise and M/s. Anushri Enterprise. However, the transactions reported on portal were pertaining to both the partnership firms and the sale deeds were signed by the petitioner in the capacity of the Power of Attorney Holder and therefore, there is no question of any income being earned by the petitioner through such transactions which were reflected in the books of accounts of the Partnership Firm. 19. In view of the above undisputed facts, the petitioner cold not have been subjected to any proceedings for reassessment by issuing notice under section 148 of the Act. 20. In view of the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned order dated 28.03.2024 passed under section 148A(d) of the Act and notice under section 148 of the Act are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs. 19. We are of the view that impugned order should be set aside, in the interest of justice and remit the matter back to the file of Ld. AO for fresh adjudication on merit after giving due opportunity to the assessee to present his case and filed the additional evidence before the Ld. AO In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 11-02-2025 Sd/- Sd/- (Dr. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot Ǒदनांक/ Date: 11/02/2025 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT Page | 8 ITA No.399/RJT/2023 (A.Y.2007-08) Nitinbhai Ranchabhai Dhakecha v. ITO 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "