ADAM A SORATHIA,MUMBAI vs. ITO 20(1)(1), MUMBAI

In this appeal, the sole dispute arises from the action of the Assessing Officer in assessing the Long Term Capital Gain of Rs.51,76,870/- on sale of land situated at Village Kausa (Mumbra), Tal. Thane, Dist. Thane in the hands of the assessee.

In order to appreciate the controversy, the following discussion is relevant. The appellant is an individual engaged in the business of trading in building material mainly in cement. Assessee filed return of income on 17.09.2009 declaring an income of Rs.2,73,160/-. In the course of assessment proceedings, the Assessing Officer noted from the AIR details that assessee had entered into transaction with regard to sale of land at Village Kausa, Dist. Thane and that the same was not declared in the return of income. The Assessing Officer further noted that the stated consideration in the agreement was Rs.47,50,000/- as against its market value of Rs.1,02,50,000/-. The assessee was show-caused and after considering the replies, the Assessing Officer computed the Long Term Capital Gain of Rs.51,76,870/-. The said addition has since been upheld by the CIT(A) also, against which assessee is in further appeal before us.

At the time of hearing, the learned representative for the assessee pointed out that following Additional Ground of appeal has been raised by the assessee, which goes to the root of the matter :-

In terms of the said Additional Ground of appeal, it is sought to be canvassed that the income from sale of the impugned property is not assessable in the hands of the assessee inasmuch as he is not the owner of the said property and was merely a Power of Attornery-holder. The learned representative pointed out that the said plea inadvertently was not raised before the lower authorities, but since it goes to the root of the matter, same may be admitted. Further justifying the admission of such new plea, the learned representative referred to the Paper Book, wherein is placed a copy of the Irrevocable General Power of Attorney in favour of the assessee with regard to the impugned land given by the owners. It is sought to be pointed out that though it was not specifically pleaded before the Assessing Officer, yet the papers on record show that assessee was only the Power of Attorney-holder for enabling him to sell the immoveable property in question on behalf of the owners. It has also been pointed out that when the matter was referred by the Assessing Officer to the Valuation Officer, even the Preliminary Valuation report dated 05.12.2011 shows that assessee was only the holder of Power of Attorney on behalf of the nine co-owners who had directed the assessee to sell the immoveable property owned by them. In this context, the learned representative also referred to an Affidavit by the nine co-owners to say that assessee was only the Power of Attorney-holder and not the owner of the property.

The ld. DR has opposed the plea of the assessee for admission of the said Additional Ground of appeal.

Having heard the rival submissions, we find no justifiable reason to disentitle the assessee from raising the said Additional Ground of appeal since it goes to the root of the matter regarding assessability of the gains in the hands of the assessee. This plea was hitherto not raised before the lower authorities, but it is quite evident from the primary documents in connection with the said plea, which are already on record before the Assessing Officer. Only the Affidavit dated 09.10.2017 by the nine co- owners is a new piece of evidence which was not before the lower authorities. It is a trite law that income is liable to be assessed in the correct hands. The plea of the assessee is that the income is not assessable in his hands since he was not the owner of the property, but was only acting as a Power of Attorney-holder. Be that as it may, in our view, having regard to the principles of justice and fair play it would be appropriate that the matter is restored back to the file of the Assessing Officer who shall examine the plea raised by the assessee and thereafter adjudicate the controversy relating to assessability of Capital Gains on sale of property at Village Kausa, Dist. Thane in the hands of the assessee. Therefore, without going into the merits of the controversy, the matter is remitted back to the file of the Assessing Officer to be decided afresh.

In the result, appeal of the assessee is allowed for statistical purposes.