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Facts
The assessee sold an immovable property for Rs. 13,00,000 during the assessment year 2010-11. The assessee claimed a long-term capital loss of Rs. 36,483, stating no capital gain arose from the sale. The primary dispute revolves around the cost of acquisition and the validity of documents presented by the assessee.
Held
The Tribunal held that a notarized sale agreement can be considered as evidence of agreement. Considering the assessee's calculation showing a long-term capital loss and the nature of the documents presented, the Tribunal found no long-term capital gain. Therefore, the appeal of the assessee was allowed.
Key Issues
Whether a notarized sale agreement can be considered valid evidence for establishing the cost of acquisition in the absence of a registered sale deed, and whether the assessee incurred a long-term capital gain or loss.
Sections Cited
133(6), 271(1)(c), 54
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Income Tax Appellate Tribunal, JAIPUR BENCHES,’’SMC” JAIPUR
fu/kZkj.ko"kZ@AssessmentYear : 2010-11 Shri Sahjad Qureshi cuke The ITO Vs. Opp. Masjid Abdul Hamid Nagar Ward- 2(2) Gopi Nath Marg, Panch Batti, M.I. Road Jaipur Jaipur 302 001 LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACPQ 5805 H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri Gaurav Sharma, Advocate jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 24/04/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: : 23 /06/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi[ for short CIT(A) ]dated 16.01.2025 for the assessment year 2010-11 raising therein following grounds of appeal. ‘’I am holder of power of attorney for the property (Property details: Plot No.48, Narayanpuri-B, Jhotwara, Jaipur Rajasthan 302 012) which has been sold. During the assessment year 2010-11, he sold an immovable property worth Rs.13,00,000/-. During the year, the assessee had sold his house property. The SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR assessee had incurred no capital gain from sale of the house property. The computation of the capital gain of the house is as follows: (a) Full value of consideration (date of sale 06-10-2009: - Rs.13,00,000/- (b) Cost of acquisition (date of purchase 12-01-2006):- with indexed cost ofRs.13,36,483/- (actual purchase cost 1051000*632/497 (c) Long term Capital Loss: 36,483/- (a – b). From the above calculation we can understand that the taxpayer has incurred long term capital loss during the assessment year 2010-11. The loss does not give rise to any tax liability. So from the above,we can see that the taxpayer has no long term capital gain, on which no tax is payable.’’ 2.1 Apropos ground of appeal, it is noticed that the ld. CIT(A) has partly allowed the appeal of the assessee by observing as under:- ‘’6.2 I have perused the assessment order, grounds of appeal, submission of the appellant and remand report submitted by the appellant carefully. I find that ignorance of law cannot be accepted as excuse against the liability to pay due taxes. I find from the assessment order and remand report that the land under consideration was originally purchased by Mr. Mohammad Sharif which was sold on 6-10-2009 by the appellant as power of attorney holder. However, the appellant could not prove that the sale consideration was actually paid to Mr. Mohammad Shaif, hence the AO concluded that the property was purchased by the appellant under the guise of power of attorney, hence the AO taxed the entire sale consideration as long term capital gain in the hands of the appellant. During remand proceedings also, the appellant could not prove his claim. After submission of remand report, the appellant has changed his version and admitted that he had purchased the said landin 2006 for Rs.10,51,000/- and submitted notorized copy of purchase deed dated 12-01-2006. However, the appellant has not proved the genuineness of said purchase deed since the same is not registered before Govt. authorities and the claim of purchase consideration paid of Rs.10,51,000/- is also not proved with evidence since the payment is claimed to have been in cash. On 30-12-2024, the appellant has submitted the notorized affidavit of the seller Mohammand Sharif in support of the consideration of Rs.10,51,000/-. However, I find that the affidavit is not supported by any corroborative evidence. Hence, the same cannot be accepted as evidence. From the above facts, I find the appellant has changed the version every time and failed to produce supporting evidence to prove his claim. However, I find that the property was purchased by Mr. Mohammad Sharif for Rs.4,00,000/-, hence the benefit of indexed cost of acquisition from 2008 i.e. date of registry of power of SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR attorney is allowed to the appellant. The AO, therefore, directed to recalculate the long term capital gain accordingly after allowing the benefit of indexed cost of acquisition on Rs.4,00,000/-.Thus the ground raised by the appellant is partly allowed.
7. In the result, the appellant is partly allowed.’’ 2.2 During the course of hearing, the ld. AR of the assessee submitted that there is no capital gain as such and the assessee is not required to pay tax for which he has filed following detailed submission before the Bench. ‘’I hereby submit reply and appeal ground, I am holder of the power of attorney for the property (property details Plot no. 48, Narayanpuri-B, Jhotwara, Jaipur, Rajasthan-302012) which has been sold. During the AY 2010-11 he sold a immovable property worth Rs. 13,00,000. The assessee has't filed the return for the assessment year 2010-11. During the year assesseehad sold his house property. The assessee had incurred no capital gain from sale of house property. The computation of the capital gain of the assessee is as follows:- Full value consideration Rs.13,00,000/- Date of sale : 6-10-2009 (Copy of registry of sale is enclosed Net consideration Rs.13,00,000/- Less: Cost of Acquisition Rs.13,36,483/- Date of Acquisition : 12-01-2006 (Copy of the purchase agreement and power of attorney is attached for your reference) Rs.1051000 * 497 Less: cost of improvement Nil Long Term capital Gain/Loss Rs. – 36,483/- Less: Exempted u/s 54 From the above calculation we can understand that there is Long Term Capital Loss is exempted from tax to the assessee during the A.Y 2010-11 Therefore from the above we can see that assessee has no Long Term Capital profit exempt on which no tax chargeable. On 12-01-2006 an agreement for the sale of the property has been made between me and Mohammed Sharif. After that on 01-01-2008 an agreement of power of attorney was done between me and Mohammed Sharif I would like to inform you that, I had purchased the said property on 12-01-2006 through a notarized sale agreement. I have paid the full sale consideration value for this property to the seller. Thereafter, I had got the Power of Attorney executed on 01-01-2008 for selling the property. In the remand report to Respected Income tax Officer, I had submitted the notarized sale agreement, the affidavit of receiving payment by the seller in support of the agreement. I submitted these documents to Respected commissioner of income tax appeals also. But Respected Income tax Officer and Respected commissioner of incometaxappeals did not accept the notarized sale agreement, the affidavit of receiving payment by the seller in support of the agreement. Due to which a Partly demand has been imposed on me which is completely wrong and unjustified. I would like to tell you that in the assessment year 2010-2011, there was a Prevalence of notarized sale agreement and cash payment in property deals. I too had done the deal as per this Prevalence The notarized agreement is completely valid and legally valid. For the validity of notarization, 1 am presenting the following facts as per the Registration Act, of 1908:- Validity of a notarized document Affidavits and declarations: Usually valid indefinitely unless they contain a specific validity period Power of attorney (POA): A general POA is valid until revoked or if the principal dies. Agreements and contracts. The validity depends on the terms mentioned in the agreement. A notary agreement is considered as an evidence of agreement. It is typically necessary to register the agreement with the relevant authorities and obtain other documents such as a sale deed, registration papers, and Encumbrance certificate Validity of a notary agreement in court In court, a notarized agreement is considered valid unless someone can prove A notarized sale agreement in India is considered legally valid and binding, but it is crucial to note that it does not automatically make the document enforceable in court if it is not registered with the appropriate authorities; meaning, while a SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR notarized agreement can be used as evidence in court, a registered sale deed is generally preferred for full legal validity in property transactions. Key points about notarized sale agreements in India: Notary verification: A notary public verifies the identities of the signatories on the agreement, adding a layer of authenticity. Evidence in court: A notarized sale agreement can be presented as evidence in court Is a notary agreement admissible in court? It is admissible in the court of law according to the Registration Act, of 1908. What is the Supreme Court judgement on agreement to sale? The Supreme Court has reaffirmed that mere possession of a property under an agreement to sell does not confer ownership unless a sale deed is duly registered under the Indian Registration Act, 1908.
Sir, I request you to, please accept the all document and remove the wrong and unjustified demand amount imposed on me. I am attaching document for your reference:-
1. 1. The Copies of the Bank Statement of the assessee of BOM Bank is attached for your reference 2 The Copy of Computation of Total Income files is attached for your reference.
3. Sale agreement, power of attorney agreement and notarized purchase agreement attached for your reference. 4. affidavit of receiving payment by the seller in support of the notarized purchase agreement attached for your reference.
5. Other related document for your reference.’’ SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR Ld. AR of the assessee in addition to the written submission vehemently argued that the assessee has filed the notarized affidavit towards the claim of acquisition cost and ld. CIT(A) without giving sufficient reasons ignored the affidavit filed before him. If the ld. CIT(A) has considered the claim in part then why not in full. 2.3 On the other hand, the ld.DR supported the order of the lower authorities and submitted that the assessee has already been benefited from the finding so given by the ld. CIT(A) and thereby ld. DR supported the finding recorded in the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record. The brief facts of the case are that the assessee is an individual. The assessee had not filed his return of income for the assessment year 2011-12. The case of the assessee was reopened based on information received by the AO in ITS module of ITBA that the assessee had sold an immovable property situated at Plot No. 48 Narayanpuri-B, Jhotowara for sale consideration of Rs.13,00,000/- during the year under consideration. To this effect, ld. AO made an addition of Rs.13.00 lacs in hands of the assessee by observing as under:- ‘’Capital Gain: On perusal of ITS details available on system it is noticed that the assessee has sold an immovable property situated at P.No. 48, Narayanpuri-B, Jhotwara, Jaipur for sale consideration of Rs. 13,00,000/- during the year under SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR consideration Letter u/s 133(6) was sent to the Sub Registrar for copy of registered sale deed. The copy of registered sale deed was received on 27 12.2017 On perusal the registered sale deed it is noticed that the assessee was power of attorney holder The assessee has hold the property as power of attorney holder for less than 36 months. No evidence has filed during the assessment proceeding that the sale consideration is not received by the assessee. The assessee and his Id. AR attended the office and all the facts are brought to their knowledge. They never claimed that the assessee has sold the property only as a power of attorney holder and the sale consideration was transferred to actual owner. If the sale consideration was transferred to actual owner the assessee certainly claimed this fact and produced the evidence in his favor. This shows that assessee has purchased the property a power of attorney holder and sold it. The assessee has not produced any evidence for cost of acquisition. On 21.12.2017 the Id. AR of the assessee Shri Saiyad Ali filed a power of attorney only. In the absence of the cost of acquisition the sale consideration of Rs. 13,00,000/- is treated as income of the assess to Assessee has concealed the income therefore penalty u/s 271(1)(c) is separately initiated on this issue.’’ In first appeal, the ld CIT(A) has partly allowed the appeal of the assessee by observing as under:- ……On 30-12-2024, the appellant has submitted the notorized affidavit of the seller Mohammand Sharif in support of the consideration of Rs.10,51,000/-. However, I find that the affidavit is not supported by any corroborative evidence. Hence, the same cannot be accepted as evidence. From the above facts, I find the appellant has changed the version every time and failed to produce supporting evidence to prove his claim. However, I find that the property was purchased by Mr. Mohammad Sharif for Rs.4,00,000/-, hence the benefit of indexed cost of acquisition from 2008 i.e. date of registry of power of attorney is allowed to the appellant. The AO, therefore, directed to recalculate the long term capital gain accordingly after allowing the benefit of indexed cost of acquisition on Rs.4,00,000/-.Thus the ground raised by the appellant is partly allowed.’’ SHRI SAHJAD QURESHI VS ITO, WARD 2(2), JAIPUR The Bench noted from the records that the assessee had purchased the said property on 12-01-2006 through a notorized sale agreement and paid full sale consideration value to the seller for this property. It is noted that the assessee had got the power of attorney executed on 01-01-2008 for selling the property. It is also noted that the assessee submitted the notarized sale agreement, affidavit of receiving payment by the seller in support of the agreement before the lower authorities who did not accept the same. The Bench feels that a notorized sale agreement is required to be considered as evidence of agreement and it can be presented as evidence in Court also. The Bench has also taken into consideration the computation of the capital gains as mentioned by the assessee (supra) which shows the long-term capital loss of Rs. (-) 36,483/-. Thus, there appears no long term capital gain to the assessee if the document presented by the assessee is considered. Hence, in view of the above facts, circumstances of the case and the documents produced before the Bench (supra), we do not concur with the findings of the ld. CIT(A). Thus, the appeal of the assessee is allowed.
Order pronounced in the open court on 23 /06/2025.
Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 23/06/2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- ShriShahjad Qureshi, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 2(2), Jaipur 3. vk;djvk;qDr@ Theld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File ( By order,
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