2022 (12) TMI 688 - AT - Income Tax

Tribunal Rules in Favor of Assessee in LTCG Dispute

Mohd. Yusuf Versus The Income Tax Officer-3 (1), Raipur (C.G.)

Mohd. Yusuf Versus The Income Tax Officer-3 (1), Raipur (C.G.) - TMI Issues Involved:Appeal against order of CIT(Appeals)-I, Raipur on grounds of unjustness, unfairness, and violation of natural justice; Addition of Long Term Capital Gain (LTCG) on property transfer not owned by assessee; Lack of proper opportunity of hearing violating natural justice; Assessment of income at Rs.3,22,61,520/- including LTCG of Rs. 3,27,93,522/-; Dispute over tax liability on property transfer; Interpretation of power of attorney holder's role in property sale; Justification of bringing income/gain to tax in power of attorney holder's hands.Detailed Analysis:The appellant challenged the order of CIT(Appeals)-I, Raipur, alleging unjustness, unfairness, and violation of natural justice. The dispute arose from the addition of Long Term Capital Gain (LTCG) on the sale of a property not owned by the assessee. The Assessing Officer (A.O) observed that the property was transferred by the assessee under a registered sale deed but was not disclosed in the income tax return. The assessee claimed to have acted as a power of attorney holder for the actual owners, denying tax liability. The A.O disagreed, asserting that the assessee received the entire sale consideration and was liable for LTCG. The A.O assessed the income at Rs.3,22,61,520/-, including LTCG of Rs. 3,27,93,522/-.During the appeal process, it was established that the property was sold by the actual owners through the assessee as a power of attorney holder. The Tribunal found no justification to tax the income/gain in the hands of the assessee who merely facilitated the transaction. Citing legal precedents, the Tribunal emphasized that a power of attorney does not confer ownership rights, and income should be assessed in the hands of the rightful owners. The Tribunal noted that the A.O's failure to locate the owners did not justify taxing the income in the wrong person's hands. Consequently, the Tribunal set aside the CIT(Appeals) order and vacated the addition of LTCG made by the A.O in the assessee's hands.In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee based on the established facts and legal principles. The decision highlighted the importance of correctly attributing income/gain from property transactions to the rightful owners rather than intermediaries like power of attorney holders.This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented, and the Tribunal's decision based on legal interpretations and factual evidence presented during the proceedings.