AI Drafter 
TaxTMI 
TaxTMI 
2017 (8) TMI 557
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....ng:- * Treating the land sold on behalf of Shri Sultan Meena as owned by the assessee without considering the fact that the assessee earned only brokerage on this transaction and without brining any material on record with regard to the ownership of the said land to the assessee. * Treating the sale consideration of Rs. 2,69,37,000/- of land of Shri Sultan Meena as income of the assessee under the head "income from other sources" without appreciating the fact in judicial perception that the assessee has acted in the capacity of power of attorney and the assessee was not owner of the land which is apparent from the registered sale deed and even otherwise also if the assessee is treated zs owner of the land then also profit is assessable under the head "Capital Gain" no under "Income from other sources'". 3. The assessse prays for leave to add, to amend, to deleted, or modify the all of any ground of appeal on or before the hearing of appeal." 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act) was framed vide order d....
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....tted detailed reply from time to time as under:- Vide letter dated 25/02/2013 "Personal Presence of Shri Sultan Meena The assessee has no regular dealing with Shri Sultan Meena and present where about of Shri Sultan Meena is not known to the assessee, therefore the assessee is not able to produce Shri Sultan Meena before your honour. It is relevant to mention here that the assessee make arrangement for sale of land of Shri Sultan Meena situated at Village Jaisinghpura Bass, Bhakrota, Patwar Halka Jaisinghpura, Teh. Sananer, Distt. Jaipur and in lieu of that the assessee got commission from Shri Sultan Meena. Since Shri Sultan Meena was not able to go to registrar office, therefore he gave power of attorney to assessee and the assessee singed the sales deed of land of Shri Sultan Meena in the capacity of his power of attorney holder and the same fact is mentioned on the registry." Vide letter dated 18/03/2013 "Sale of land. With regard to your query as per para 3 of the notice in respect of transaction of land of Shri Sultana Meena, all the requisite details/information has already been filed vide letter dated 27-02- 2013, 04-02-2013 and ....
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....39;ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof. Hon'ble Punjab & Harayana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P &H) also held that suspicion, howsoever strong cannot take the place of legal proof. (III) The contention of the Id AO that the stated power of attorney was executed on 20/01/2007 in which the land is shown to be agricultural whereas the said land stood converted to residential in 2005 The Id AO mentioned in Para 4.2 of his order that the power of attorney document dated 20/01/2007 produced by the assessee pertained to agricultural land whereas the JDA records showed that vide order dated 16/09/2006 of JDA, the said land has been converted into residential land under section 90(b) of the Rajasthan Land Revenue Act 1956. This finding has no bearing on the ownership of the land and status of the assessee in the deal as agent of Shri Sultan Meena. The power of attorney is for the same land which was sold by the assessee as an agent of Shri Sultan Meena. The khasra N....
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....ney against sale of the land. There is no finding of the Id AO that the assessee has utilized the money received from sale of land owned by Shri Sultan Meena for his benefit. No such utilization was found in the hands of the assessee. Even for sake of the argument if it is presumed that the money was not returned to Shri Sultan Meena and kept by the assessee then it becomes liability of the assessee not he income of the assessee. Therefore on this ground also the sale proceeds of the land cannot be assessed as income of the assessee. (vi) The modus operandi discussed in para (viii) at page 9 of assessment order is based on surmises and conjectures without having material:- The Id AO under the guise of the modus operandi of the sale of SC/ST land wants to say that the assessee was the real owner of the land which he purchased under agreement to sale and power of attorney. First of all the onus The onus was on the department to prove that the apparent is not real and the said onus was not discharged. Reliance is placed on following decisions:- (I) Sree Meenakshi Mills Ltd Vs CIT [1957] 31 ITR 28 SC; (II) CIT Vs S.P. Jain[1973] 87 ....
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.... Madras High Court in the case of CIT Vs Shri C Sugumaran Tax case (Appeal) No 840 of 2014 order dated 03-11-2014 {2014 (11) TMI 320) has considered the issue of taxability in the hands of power of attorney holder. In this case the Assessing Officer took the view that it is the assessee (the power of attorney holder) sold the property. The assessee/power of attorney holder contested the assessment of capital gains at his hands by pleading that he had acted only as a power of attorney holder of the actual owner Mr.Viswanathan, which plea was rejected by the Assessing Officer and the total income was computed at Rs. 61,25,290/- resulting in the demand of tax at Rs. 16,94,560/-. Aggrieved by the said order of the Assessing Officer, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals), who rejected the plea of the assessee, thereby dismissed the appeal. As against the said order, the assessee filed an appeal before the Income Tax Appellate Tribunal. The Tribunal placing reliance on the various clauses in the power of attorney, held that the recital contained in the power of attorney does not show that any consideration was paid to the actual owner and the as....
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....provision. We are not inclined to accept such an interpretation. The circular also states that the legal ownership would continue with the transferor; but the property rights if it is transferred by way of power of attorney would come within the ambit of sub-clause (vi) of Section 2(47) of the Income Tax Act. Assuming we accept the intention behind the circular, then there should be an element of transfer or enabling enjoyment of property right as stated in paragraph 11.2 of the circular by the power of attorney holder. 13. We find no such recital in the power of attorney as extracted by the Tribunal and referred to by us. On the contrary, the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment. It is not the case of the Department that the power of attorney is sham. If they accept the power of attorney is valid, then the plea of capital gains at the hands of the assessee has no legs to stand. Accordingly, we find no merits in this Tax Case(Appeal). (xii) On the similar facts and circumstances coordinating bench of Hon'ble ITAT Jaipur has dec....
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....9/12/2007 at page 50 of the assessee's paper book, it is revealed that said Shri Suraj Narain did not execute the sale deed as an owner of the aforesaid land measuring 0.30 hect.. He executed sale deed in his capacity as a power of attorney holder only wherein he had only a delegated right. This right was not independent right of the appellant. There is also no reliable material or documentary evidence on record to show that the said Shri Suraj Narain, the appellant before us had purchased the aforesaid land from any of its earlier owners before transferring the same in the name of Smt. Radha Devi Khatoria through sale deed dated 19/12/2007 as a power of attorney holder. It is a different matter that the sale consideration received by him on behalf of the previous owners was not paid or returned to them immediately after execution of sale deed or even up to the time of enquiries made by the Assessing Officer. The appellant, thus, being neither owner nor a deemed owner of the said capital asset, the said capital asset cannot be taken as property of the appellant. The sale consideration of the aforesaid land, therefore, could not be a subject matter of transfer of his own capital ass....
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....hich also shows that the sale was effected by the appellant for himself only and the consideration for obtaining the power of attorney in his favour was already paid by him to Shri Sultan Meena at the time of obtaining the power of attorney in his favour. Hence, I am of the view that the income of Rs. 269,37,000/- is the income of the appellant and the AO has rightly taxed the income in the hands of the appellant. Accordingly, the addition of Rs. 2,69,73,000/- made by the AO is confirmed. The ground of appeal is dismissed." 4.3 The only issue in this ground is whether the sale consideration of the land belonging to Shri Sultan Meena can be taxed in the hands of the assessee, who is admittedly Power of Attorney holder of Shri Sultan Meena. There is no dispute with regard to the fact that, Shri Sultan Meena is recorded owner in the land in question. There is also no dispute with regard to the fact that, there is no evidence on record suggesting that the Power of Attorney to Shri Sultan Meena was executed by the assessee by paying consideration of the land. The Authorities below doubted about the transaction on the basis that the assessee failed to produce Shri Sultan Meena to prov....
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....(47) of the Income Tax Act. Assuming we accept the intention behind the circular, then there should be an element of transfer or enabling enjoying of property right a stated in paragraph 11.2 of the circular by the power of attorney holder. 13. We find no such recital in the power of attorney as extracted by the Tribunal and referred to by us. On the contrary, the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment. It is not the case of the Department that the power of attorney is sham. If they accept the power of attorney is valid, then the plea of capital gains that the hands of the assessee has no legs to stand. Accordingly, we find no merits in this Tax Case (Appeal). The Revenue has not brought any contrary binding precedents. The assessee has also placed reliance on the judgment of the Hon'ble Supreme Court in the case of Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614], wherein the Hon'ble Supreme Court has held that a power of attorney is not an instrument of transfer in regard to any right, title or interest in any immovab....
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....m on behalf of the previous owners was not paid or returned to them immediately after execution of sale deed or even up to the time of enquiries made by the AO. The appellant, thus, being neither owner nor a deemed owner of the said capital asset, the said capital asset cannot be taken as property o the appellant. The sale consideration of the aforesaid land, therefore, could not be a subject matter of transfer of hi own capital asset. The Income Tax Department has also not assessed him as representatives assessee or an agent of the said shri Bharat Singh and Shri Vijay Pal Singh and as such question of making assessment of income from capital gains by application of provisions of Section 50-C of the Act adopting he full value of consideration of Rs. 42 lacs in his hands, is neither justified nor called for. The authorities below, therefore, have erred in bringing to tax the income from capital gains in his hand though the same may be a subject matter of taxation in the hands of the real owners. In this view of the mater, the addition so made being unjust and uncalled for, the same is directed to be deleted." 4.5 In view of the above binding precedents, on the issue under consid....