AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 557
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....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 dated 22/03/2013. While framing the assessment the AO made disallowance of exp....
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....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 26-10-2012. The assessee has already discharged his onus of establishing property owned by Shri Sultana Meena and on sale transaction of this property thr....
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....nnot 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 Nos mentioned in Power of attorney are 535, 536, 537, 538, 541, 542, 546, and 534 (PB page 41) and the same Khasra numbers are mentioned in the registered sale deed (PB pg 47). Further, this ....
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.... 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 ITR 370 (III) Rai Bahadur Mohan Singh Oberoi Vs CIT [1973] 88 ITR 53 SC, (IV) CIT Vs Daulat Ram Rawatmull 87 ITR 349 (SC), (V) Jayanti Lal Patel Vs Astt CIT [1998] 233 ITR 588 (Raj); Further, there is no finding of Id AO that when this property was purchased by ....
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....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 assessee had acted merely as an agent. The Tribunal also gave a finding that there was no supporting evidence to disbelieve the claim of the assessee. The Tribunal was of the view that the assessee could not be treated as owner of the property sold on 23.10.2008 and therefore there was no question of computing capital gains in t....
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....ion 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 decided the issue in the case of Shri Suraj Narain Khatoria, vs. Income Tax Officer ITA No 1043/JP/2011 AY 2008-09 order dated 27-05-2013 in favour of assessee. The findings of Hon'ble ITAT in this case was as under:- "11. We have heard parties with reference to material on record. Shri Bharat Singh, S/o- Shri Moti Singh and Shri Vijay Pal Singh, S/o....
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....le 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 asset. The Income Tax Department has also not assessed him as a representative 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 full value of consideration at Rs. 42 lacs in his hands, is neither justified nor ....
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.... 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 prove that the sale consideration so received was handed over to the said Shri Sultan Meena and also in the absence of any receipt by the owner of the land, stating that the assessee acted merely an agent. Admittedly, the revenue has not brought out any material suggesting that the assessee received this consideration as the owner of the land. As per the sale deed enclosed at page 46 of t....
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....rney 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 immovable property. The power of attorney is a creation of an agency whereby the grantor authorizes the grantee to do acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done and by him. The coordinate Bench of this Tribunal in the case of Shri Suraj Narain vs. ITO in ITA No. 1043/JP/2011, under the identical facts decided the similar issue as under:- "1....
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.... 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 consideration. We are unable to sustain the finding of the Ld. CIT(A). Hence, the AO is directed to delete the addition however, he is free to take action against the real owners as per law. The ground no. 2 of the assessee's appeal is allowed. 5. Now, we take up ground no. 1, i.e. against treating the income of Rs. 7,50,000/- as under the head as "income from other sources" as against the receipts earned from brokerage income....