Loading judgment…
Facts
The assessee received advances totaling Rs. 12.50 Lacs in his bank account, claiming to be a power of attorney holder for a property sale and that the amounts were passed on to the owner. The Assessing Officer and CIT(A) added Rs. 18.50 Lacs as unexplained investment due to insufficient proof of genuineness, creditworthiness, and the actual transfer of funds to the property owner.
Held
The Tribunal acknowledged the assessee's claim that the advances were received as a power agent, with tax liability resting on the property owner. However, lacking conclusive proof of this, the assessment was restored to the Assessing Officer to verify the claim and for the assessee to submit requisite documents.
Key Issues
Whether advances received by an assessee acting as a power of attorney holder for a property sale constitute his own unexplained income or if the tax liability lies with the property owner, contingent upon substantiation of the claim and transfer of funds.
Sections Cited
143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of the order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-1, Kolkata [CIT(A)] dated 26-06-2024 in the matter of an assessment framed by the Ld. AO u/s.143(3) r.w.s. 147 of the Act on 16- 12-2019. The registry has noted delay of 73 days in the appeal, the condonation of which has been sought by the Ld. AR. Considering the period of delay, the delay is condoned and we proceed we proceed for disposal of appeal on merits.
Upon perusal of assessment order, it could be seen that an amount of Rs.10 Lacs was found credited in the bank account of the assessee from M/s Flash Builders and another amount of Rs.2.50 Lacs was received from Ravi Raj, HUF and Kannan Associates on 30-08-2011. Accordingly, the case was reopened and the assessee was directed to explain the same. It was stated by the assessee that the said amount represent advance against certain property for which the assessee was holding power of attorney. The amount was stated to be paid to the owner of the property. However, the assessee did not file the details of receiver of payment and confirmation thereof. From the documents, it was noted that one Smt. J. Poongothai nominated assessee as power of attorney to sell her property at Chennai. The assessee received advance but did not repaid the same through banking channels. The amount of Rs.11 Lacs was handed over in cash to Smt. J. Poongothai. The amounts of Rs.8 Lacs were transferred to one Shri RG Raghave as per the wishes of Smt. J. Poongothai. The assessee merely filed receipt signed by Smt. J. Poongothai but failed to prove the genuineness and creditworthiness of Smt. J. Poongothai. Accordingly, the receipt of Rs.18.50 Lacs was added as unexplained investment in the hands of the assessee. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.
The Ld. AR has stated that the advances were received as power agent only and the same would not constitute income of the assessee. The Ld. AR stated that obligation to pay applicable capital gains tax was on the owner of the property. The Ld. AR also filed details of payment made to Smt. J. Poongothai along-with her confirmation. The Ld. Sr. DR stated that except for receipt, no other document has been placed on record.
Apparently, the advance has been received by the assessee as power of attorney holder and accordingly, the obligation to pay tax on the same would lie with owner of the property. However, it has to be conclusively shown that the amount was received as power agent only and the same was handed over to the owner. To enable the assessee to substantiate the same, we restore the assessment back to the file of Ld. AO who is directed to verify the aforesaid claim of the assessee. The assessee is directed to file the requisite documents to establish the aforesaid fact.
The appeal stand allowed for statistical purposes. Order pronounced on 3rd February, 2025