LAXMI NARAIN AGARWAL,JAIPUR vs. ACIT, ACIT

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 100/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2009-10 Laxmi Narain Agarwal cuke ACIT, Vs. 104, Ridhi Sidhi Apartment Jaipur Ahinsa Circle, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ABSPA 1338 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Manish Agarwal (C.A.) jktLo dh vksj ls@ Revenue by : Sh. Anup Singh (Addl. CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 09/08/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 26 /09/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax, Appeal, Udaipur-02 [ Here in after referred as (CIT(A)) ] for the assessment year 2009-10 dated 17.01.2023, which in turn arises from the order passed by the ACIT, Cirlce-04, Jaipur passed under Section 147/143(3)/153A of the Income tax Act, 1961 (in short 'the Act') dated 30.12.2019.

1.

1. On the facts and in the circumstances of the case and in law, ld.CIT(A) has grossly erred in confirming the action of ld.AO in reopening of assessment u/s 147 of the Income Tax Act on wrong notion that the appellant had not disclosed capital gain on sale of property in his return of income, whereas no such sale was made by the assessee, in his individual capacity during the year under consideration. Appellant prays that reopening of assessment is not in accordance with law and consequent order passed deserves to be quashed.

2. On the facts and in the circumstances of the case and in law, ld. CIT(A) has grossly erred in confirming the action of ld.AO in making addition of Rs.65,79,132/- as short term capital gains in the hands of assessee by ignoring the fact that land was neither owned nor sold by the assessee in individual capacity, but was sold by him as power of attorney holder for real owners. Appellant prays that action of ld.AO in brushing aside the fact that sale consideration of Rs.10 lacs so received was received on behalf of real owners which stood transferred to them and thereby charging the capital gain in the hands of assessee deserves to be held bad in law.

3. That, the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.”

3. The fact as culled out from the records that the assessee is an individual, engaged in civil contractor business. The assessee had filed his return for the financial year 2008-09 relevant to A.Y 2009-10 on 27.09.2009 with the DCIT, Circle-06, Jaipur thereby declaring total income at Rs. 3,36,94,940. The case was selected for scrutiny and finally completed on 23.12.2011 u/s 143(3) of the Income Tax Act, 1961 at an income of Rs. 3,56,23,808/-. Later on a search and seizure action was undertaken in the case of the 3 Laxmi Narain Agarwal vs. ACIT assessee on 15.03.2012. The case was centralized with the Central Circle-03, Jaipur u/s 127. Notice u/s 153A was issued on 14.09.2012 in compliance to which the assessee filed his return of income on 18.10.2012 declaring total income at Rs. 3,36,94,940/-. The case was assessed u/s 153A r.w.s 143(3) at an income of Rs. 3,89,80,300/- vide order dated 24.03.2014. Later, while completing assessment for the A.Y.2013-14 it was found that certain income of the assessee has escaped assessment, therefore, after recording proper reasons and receiving approval of the Principal Commissioner of Income-tax, Jaipur-II, Jaipur proceedings u/s 147 were initiated and notice u/s 148 was issued on 30-03-2016, which was duly served upon assessee on 31-03-2016. In response to this the assessee filed his return of income on 27-04-2016. Notice u/s 143(2) was issued on 30-09-2016. In response to this notice Shri Manish Agarwal, C.A., A/R of assessee attended from time to time. The assessee filed an objection against initiation of proceedings u/s 148 on 14-12-2016 which was decided vide letter dated 16-12- 2016.

4 Laxmi Narain Agarwal vs. ACIT 3.1 During the reassessment proceeding the assessee filed the required details. On examination of record, the ld. AO found that the assessee had sold one land at Alwar on 21.11.2088 for Rs. 10,00,000/- which was valued by the sub-registrar at Rs. 75,79,132/-. During assessment proceedings for A. Y. 2013-14, it was found that the assessee was the owner of this land and in fact this land was sold by the assessee on 21.11.2008 to himself and four other persons. The assessee alleged that he had sold this land being power of attorney holders of the land measuring 36 Air Khasra Number 1728 Village Alwar No.1. The owner of this portion of land was Shri Ram Dutt Sharma, Shri Bijendra Kumar, Shri Mahendra Singh, Smt. Rajkumari, Smt. Anju Bhargava, Kumari Aakanshi and Kumari Shivani. During the assessment proceeding the assessee submitted that this land belongs to above seven person and he acted only as power of attorney holder. The ld. AO admitted in the assessment order that the assessee was nominated as power of attorney holder for land measuring 36, Air Khasara number 1728, Village Alwar No.1 and this land was converted into residential plot measuring 1440 sq. mt. Vijay Nagar Scheme, Alwar by UIT, Alwar and later on revised to some other plot. The land so allotted by UIT Alwar under Vijay Nagar Scheme 5 ITA No. 100/JP/2023 Laxmi Narain Agarwal vs. ACIT was not mentioned in the power of attorney. The ld. AO also noted that the power of attorney executed on 05.08.2008 and land was allotted on 07.08.2008, the act creates suspicion. These seven persons were not known to assessee, then how they appointed him as power of attorney holder. They have mentioned that they are not able to take care of the plot, then how they can appoint a person, and not known to them, as power of attorney who is not residing at Alwa, who is having his business in Jaipur. How a person who is living 165 kms away can take better care of property than persons who are residing at same place.

3.2 A detailed analysis of the submission of assessee was made and it was found that the assessee was appointed as power of attorney holder for 36 Air land out of khasra no. 1728 Village Alwar no.1 and not for the land measuring 1440 Sq Mtr at Vijay Nagar Scheme issued by UIT Alwar. A show cause notice was issued to the assessee on 16-12- 2016 which is reproduced as under:-

1. 1. But the land sold was 1440 Sq Mtrs allotted by UIT, Alwar in Vijay Nagar Scheme. You were not appointed power of attorney for the plot of land sold by you on 28- 11-2008.

2. That your case has been completed us 142(3) read with section 153A:- It may be mentioned that you have not disclosed material facts about the sale of land in question, therefore, this fact could not be verified by the AO during assessment proceedings.

3. You have claimed that the land was purchased by M/s Laxmi Murti Developers, but on going through the registered deeds nowhere it is found that the land was purchased by Laxmi Murti Developers. As per sale deed the land was purchased by five persons and all of them have paid the amount separately from their personal bank account. 3.3 In response the assessee submitted reply on 23.12.2016, ld. AO considered the submissions of the assessee but the assessee failed to reply the following questions :

3.6 I have considered the submissions of the assessee. The assessee failed to reply following question:- a. How these persons were known to him. b. The assessee failed to produce these persons for examination. c. Present whereabouts of these seven persons were not furnished, so the assessee prevented department to cause enquiry in his case. As such law of estoppels apply in this case. d. The assessee failed to submit that these persons have declared capital gains on sale of land during the year under consideration and declared sales consideration u/s 50C. e. The act of assessee prevented the department to cause enquiry in the case of alleged sellers and thus a large amount of revenue escaped/evaded.

7 Laxmi Narain Agarwal vs. ACIT 3.4 The assessee purchased piece of land which was under dispute. The land was purchased on 05.08.2008, the date on which power of attorney executed, for Rs. 10,00,000/- and entire amount was paid in cash which has been later on shown by the assessee as paid from alleged Laxmi Developers. The land got converted in another piece of land by UIT, Alwar on 07.08.2008 i.e only two days after purchase of land and this converted land was sold on 24.11.2008 for allegedly Rs. 10,00,000/- which was valued by sub registrar for Rs. 75,79,132/-. Thus, the sale value u/s. 50C was 75,79,132/- and purchase price of land was Rs. 10,00,000/-. Thus, the short term capital gain on sale of land is worked out at Rs. 65,79,132/-.

3.5 The ld. AO noted that the payment of Rs. 10,00,000/- was not disclosed by the assessee, therefore, the same added as unexplained investment made by the assessee.

4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:

“4.5 After careful consideration of the submissions made and the material available on record and also the remand report of the AO, I 8 Laxmi Narain Agarwal vs. ACIT found that the assessee was appointed as a power of attorney holder of the land measuring 36 air Khasra No. 1728 at Village Alwar No. 1 and the land sold by him was not referred in the said power of attorney. The AO observed that power of attorney was executed on 05.08.2008 and the land was allotted on 07.08.2008. The persons who gave the power of attorney to the assessee were not known to him then how can they appoint him as a power of attorney holder more particularly when it was mentioned in the- power of attorney that they were not able to take care of the plot then how to they appoint a person, not known to them as a power of attorney holder who is not even residing at Alwar and having his business at Jaipur. It is also not understandable that they have sold the land for a sum of Rs.10 lacs only against which a fresh land was allotted just two days after by the UIT, Alwar having value of more than Rs. 75 lacs. All these clearly shows that the power of attorney is nothing but an arrangement made by the assessee to camouflage the transaction where he had purchased the Tand from the original owners and executed a power of attorney in his favour and after allotment of the land on the acquisition of UIT, Alwar, had sold the land so allotted at a better price. Further argument of the assessee that the land was purchased by the partners of the firm is also not verifiable from the perusal of the sale deed where the land was purchased in the name of five individuals. The appellant failed to furnish present whereabouts of these seven persons. If the appellant was known to these persons then he was required to provide these details to the assessing officer. However, the appellant could not furnish these details before the assessing officer. The appellant failed to prove that these persons had declared capital gains on sale of land during the year under consideration and declared sales consideration u/s 50C. Thus the appellant prevented the assessing officer from making further enquiries from these seven persons. Under these circumstances, I am of the considered view that the assessee was de-facto owner of the land and AO has rightly made the addition of short term capital gain of Rs. 65,79,132/- in his hands which addition is hereby upheld. In the result, this ground of appeal is dismissed.” xxxxx 5.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order of the Income tax act, 1961 for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under: On careful consideration of the facts, material available on record, submissions of the appellant and the remand report of the AO, I found that the payment made by the appellant against the purchase of land was recorded in his books of accounts which was examined on two earlier occasions by the Assessing Officer and no issues were 9 Laxmi Narain Agarwal vs. ACIT raised about the source of the investment made. While disposing the ground of appeal No. 1 above, I have already held that the land was purchased by the appellant and since payment of Rs. 10 lacs was made in cash which is recorded in the books of accounts maintained by him. The appellant claimed that this land was purchased by the partnership firm and in his books of accounts, the sale consideration was debited in the ledger account of the partnership firm, copy of which was also placed on record. Though it is not admitted that the land was purchased by the firm, however, the fact remains that the same was duly recorded in the books of accounts of the assessee, thus the investment so made cannot be held as unexplained investments. In view of these facts, I am of the considered view that no addition could be made on account of investment which is duly recorded in the books of accounts accordingly, I hereby direct to delete this addition of Rs. 10 lacs. As a result this ground of appeal is allowed.”

5. As the appeal of the assessee was not allowed in full, the assessee prefers the present appeal on the grounds as raised in para 2 above. The ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; “Briefly stated the facts of the case are that the assessee is a civil contractor. The return of income for the year under consideration was filed declaring total income at Rs. 3,36,94,940/- on 27.09.2009. The case was selected for scrutiny u/s 143(3) and assessment was completed u/s 143(3) at a total income of Rs. 3,56,23,808/- by making various disallowances and matter was settled in assessee’s favour by the order of Hon’ble ITAT, Jaipur Bench, Jaipur. Thereafter a search was conducted in the case of the assessee on 15.03.2012 and a return declaring a total income of Rs. 3,36,94,940/- was filed in response to notice u/s 153A of the Act. This income was assessed at Rs. 3,89,80,300/- on 24.03.2014. The matter again travelled upto the hon’ble ITAT the same was again settled in favour of the assessee. Thereafter the case was reopened by issue of notice u/s 148 and the assessment stood completed at the total income of Rs. 4,29,70,770/- by making additions of Rs. 75,79,132/- which includes addition of Rs. 65,79,132/- made towards short term capital gains and Rs.10,00,000/- u/s 69A on allegation of undisclosed investment in purchase of plot. In 10 Laxmi Narain Agarwal vs. ACIT appeal preferred by assessee before ld. CIT(A), addition of Rs.10,00,000/- was deleted, whereas addition of Rs.65,79,132/- on account of short term capital gain was confirmed. The present appeal is preferred against the addition so confirmed by ld. CIT(A). With this background, ground-wise submission is made as under: Ground of Appeal

No.

1. In this ground of appeal, assessee has challenged the action of ld.CIT(A) in confirming the reopening of assessment u/s 147 of the Income Tax Act, which was on wrong notion that assessee had not disclosed capital gain on sale of property in his return of income no such sale was made by the assessee, in his individual capacity during the year under consideration. Brief facts are that seven owners namely Shri Ramdutt Sharma S/o Tikaram, Bijendra Kumar S/o Chunnilal, Mahendra Singh S/o Shyolal, Smt. Rajkumari W/o Jhawar Lal, Smt. Anju Bhargava W/o Shri Akhilesh Bhargava, Kumari Akankshi Bhargava and Shivanshi Bhargava both daughters of Late Shri Akhilesh Bhargava were the owner of 73 are. land in Khasra No. 1728 in Alwar. The said land was jointly owned by these total seven owners and out of which this land, 36 are. land on the west side of total piece of land of 73 are. was under the possession of UIT, Alwar and due to their personal assignments, they are not able to make correspondence with the UIT, therefore, they appointed the assessee Shri Laxmi Narain Agarwal as their power of attorney holder in terms of the power of attorney made and registered with the Sub Registrar on 05.08.2008. As per this power of attorney, assessee was appointed to carry out the following activities on behalf of the original owners:- “………vr% ge gekjs [kkl ifjfpr Jh y{ehukjk;.k vxzoky iq= Jh vkj- ,l- vxzoky tkfr egktu mez djhcu 55 lky O;olk; O;kikj fuoklh 1@513 fo|k/kj uxj] t;iqj okys dks fcyk egsUrkuk fn;s viuk eq[;rkj vke fu;qDr djrs gSa vkSj vf/kdkj nsrs gS fd bl 36 ,s;j Hkwfe rjQ if’pe dh ckcr leLr dk;Z tSls tehu dh tek nsuk] udy ysuk] tokc nkok] izkFkZuk i=] 'kiFk i=] vkfn is’k djuk] tehu dh iSekb’k djkuk] bZUrdky ntZ djk;s]tehu dh tekcUnh] fxjnkojh] lsfVyesUV] ipkZ yxku iVVk feyku {ks=Qy vkfn dh udy ysos] 36 ,s;j Hkwfe dk eqvkotk fdlh Hkh ljdkjh] xSj ljdkjh dk;kZy; ls Lo;a ds uke ls ysos] cSad esa [kkrk [kqyok;s] fdlh Hkh izdkj dh jde Lo;a ds uke ls izkIr djs] pSd Lo;a ds uke ls izkIr djsa] gyQukek nsos o QSlyk] vkns’k] c;ku] xokgku oxSjk dh uxy izkIr djs mudks dksVZ oxSjk es is’k djs] ikuh fctyh ds dUksD’ku izkIr djuk] rkehj djokuk] fdlh Hkh O;fDr dks jgu] c; oxSjk djuk] foØ; dh jftLVªh lkfye ;k VqdM+ksa esa IykV cukdj Lo;a ds uke ls ;k vU; ds uke ls djokuk] vkoklh;] O;olkf;d ;k vkS|ksfxd iz;kstukFkZ ljdkj ls iVVk ysuk] iVVs@yhtMhM dk iath;u dk;kZy; mi iath;d vyoj ds ;gka djk;s] Hkwfe dks ljdkj vokIr djs rks eqvkotk ysuk] cnys esa Hkwfe ysuk] cnys esa feyh Hkwfe dk foØ; dk bdjkjukek lkfye ;k IykVksa dk fy[kuk] jlhn nsuk] izfrQy uxn@pSd vkfn ls Lo;a ds uke ls izkIr djuk] vxj fdlh izdkj dk dksbZ fookn mRiUu gksos rks nhokuh QkStnkjh vnkyrksa eas odhy fu;qDr djds leLr dkuwuh dk;Zokgh djuk gekjh vkSj ls iSjoh djuk] ;kus vc rd tks Hkh ljdkjh xSj ljdkjh dk;kZy; o vnkyrs tSls uxj fodkl U;kl] fo|qr foHkkx] okVj oDlZ] Hkwfe Hkou dj] lc jftLVªkj dk;kZy;] uxj ifj"kn~] iapk;r o rglhy oxSjk o nhokuh QkStnkjh vnkyrs Hkkjr o"kZ esa dk;e gSa o Hkfo"; esa dk;e gks 11 Laxmi Narain Agarwal vs. ACIT ls lEcfU/kr leLr dk;Z gekjk eq[;rkj vke djsxk] eq[;rkj vke tks Hkh dk;Z djsxk] og ges ekU; gksxk rFkk ;g le>k tk;sxk tSls ge Lo;a gh nLr[krr djds Qyk dk;Z dj jgs gaSA” The assessee in terms of the rights given to him has sold that piece of 36 are. of land to the firm M/s Laxmi Murti Developers and the purchase deed was got registered by the five persons who incidentally be the partner of the M/s Laxmi Murti Developers (APB 11-19). The ld.AO has failed to understand the transaction and by alleging that assessee had purchased this land from the original owners in his individual capacity and then sold it to M/s Laxmi Murti Developers and the capital gain earned from such transaction has not disclosed and accordingly notice u/s 148 was issued on 30.03.2016. Since the Sub Registrar has valued the said land at Rs. 75,79,132/- for charging the stamp duty, it was alleged that the difference between the stamp value adopted by Sub Registrar for charging the stamp duty on the sale deed dated 21.11.2008 stated in the deed and the actual consideration paid by the partners of M/s Laxmi Murti Developers at Rs. 10,00,000/- be taxed as short term capital gain in the hands of the assessee. In this regard, as stated above, reassessment proceedings were initiated on the basis of sale deed which was executed between the seven original owners of the land situated at Alwar representing through assessee as their power of attorney holder and the individual partners of M/s Laxmi Murti Developers. Since in terms of the power of attorney deed as reproduced above the assessee was empowered to get the compensation in any manner in case the 36 air land is acquired by the government and assessee was also authorized to get the compensation even in his own name. After efforts of the assessee, the UIT, Alwar has agreed to issue a piece of a residential land admeasuring 1440 sq. mtr. at Vijay Nagar, Alwar in compensation to the land possessed by it owned by the seven owners i.e. the piece of 36 are. west side of the total land for which the assessee was appointed as power of attorney. Accordingly, a lease deed issued by the UIT, Alwar for the land allotted at Vijay Nagar was registered on 20.10.2008 wherein all the seven original owners of the previous land are shown as the allottees and name of the assessee is written as their power of attorney holder (APB 22-25). Since the land was sold to the partners of the Laxmi Murti Developers, the UIT, Alwar has changed the title in the name of new owners in terms of its order dated 23.12.2008 (APB 26-28). From the series of events, as explained above, it is very much clear that the assessee was firstly appointed as power of attorney holder of a land by the original seven owners on whose behalf assessee get the allotment of residential land in lieu of the acquisition of the land owned by them and thereafter as had sold the said residential land in the capacity of power of attorney holder only. Thus the reopening of assessment by ld.AO is not in accordance with law in view of following facts:

Assessee was a Power of Attorney holder of the original owners, which fact is evident from registered sale deed dated 24.11.2008 (APB 11- 19), wherein it has been clearly mentioned that assessee has executed the transaction on behalf of the seven original owners and not in his individual capacity. In other words, when assessee was not a legal owner of impugned land, how could he “transfer” legal title of the same to someone else. Thus, if at all any action was to taken, it was in the case of the original owners and not in the case of assessee because assessee has acted as agent of the original owners and cannot be fastened upon with the liability of Capital gain tax. The allotment of land was made by the UIT, Alwar in the name of seven original owners (APB 22-25) and later on the same was transferred in the name of five buyers (APB 26-29) further establish the contention of the assessee. Since, all these facts were evident from the registered sale deed available on record, notice issued u/s 148 of the Act in the name of assessee is void ab initio. It is further submitted that the validity of initiation of reassessment proceedings has to be judged with regard to the material available with the assessing officer and that too by framing the opinion strictly based on the documents and information in possession, that certain income has escaped assessment and not in a mechanical manner as has been done in the case in hand. The reassessment initiated on the basis of presumptions by grossly ignoring the registered sale deed, which clearly showed that the assesse had acted in fiduciary capacity as POA on behalf of the original owners and was never be the seller in his individual capacity of the said property, but in fact could be said to be one of the purchaser of the said land, being one of the partners in the firm. The ld. CIT(A) has failed to appreciate the facts and simply uphold the action of the AO by observing that the assessee has failed to substantiate the same with evidences though all such evidences were already available on record and were also filed before the ld. CIT(A). It is also a matter of fact that the assessment for the year under appeal was firstly completed u/s 143(3) wherein all the bank accounts were examined and thereafter as a result of search, assessment u/s 153A were also completed. It is also relevant to state that no incriminating document whatsoever with regard to this transaction was found nor the transaction has been doubted by any of the authority since the assessee has acted in bonafide manner as a power of attorney holder of the original owners and thus the department has accepted the correctness of the transaction however, only during the course of assessment proceedings of AY 2013-14, the then AO took a contrary stand and alleged that assessee was the owner of the said land when it was sold to the partners of M/s Laxmi Murti Developers. At this juncture, your attention is also invited to the fact that on the one hand the ld.AO has hold the assessee as a seller and ignored the fact that in 13 Laxmi Narain Agarwal vs. ACIT the sale deed executed on 21.11.2008 assessee is one of the buyer and it is impossible that a person owned a piece of land, sell the same to himself and Sub Registrar has got such deed registered. Further the same AO in A.Y. 2013-14 has again made the addition on account of capital gain from sale of 1/5th share of such land (APB 74-88). In the circumstances it is submitted that the assessee was never be the owner of the land and always acted in the capacity of an agent appointed through power of attorney by the original owners, therefore, the allegation of escapement of income of capital gain on the sale of such land in the hands of the assessee is wrong and accordingly the proceedings initiated u/s 148 deserves to be quashed. Ground of Appeal

No. 2: In this ground of appeal, the assessee has challenged the action of ld. CIT(A) in confirming the addition of Rs. 65,79,132/- made on account of short term capital gain by alleging that the same has been earned by the assessee from sale of land which was not disclosed in the regular returns. The brief facts as stated above, are that a piece of land situated at khasra No. 1728, Alwar was owned by seven persons and being not well versed with the legal affairs appointed the assessee as their power of attorney holder to represent them in all proceedings before UIT, Alwar with regard to issue of legal title of the land and for execution of all legal documents. The assessee in terms of the said power of attorney dated 04.08.2008 (APB 7-10) got the patta issued and registered in respect of the land from UIT, Alwar (APB 22-25) wherein all the seven holders were reflected as owners of the said land. Thereafter, they (seven owners) decided to sell the said land and accordingly assessee as a power of attorney holder executed the sale deed (APB 11-19). The said land was purchased by one partnership firm M/s Laxmi Murti Developers and assessee is one of the partner in the said firm. The said sale deed was thus executed on behalf of the seven people by the assessee in the capacity of POA holder of the original owners. In these circumstances, the assessee was nominated with a Power of Attorney for land measuring 36 Air out of the total 72 Air, Khasra No. 1728, village Alwar No. 1, which was co-owned by seven people as under: [APB 7-10]

1. Shri Ram Dutt Sharma 2. Shri Bijendra Kumar 3. Shri Mahendra Singh 4. Smt. Rajkumari 5. Smt. Anju Bhargav 6. Kumari Aakanshi and,

7. Kumari Shivani 14 Laxmi Narain Agarwal vs. ACIT After the patta was issued on 20.10.2008 in the name of the above stated seven persons and a clear title stood vested in the original buyers, they have decided to sell the same and accordingly, a sale deed was got registered on 24.11.2018 for a total consideration of Rs. 10 Lacs. On these facts the ld.AO in the remand report which incidentally be submitted by the ld. DR as their submission in this appeal, has alleged as under; i) The issue of POA by original owners in favour of assessee, was in fact sale of subject land to assessee as the original buyers did not know the assessee and there was no reason to issue POA in favor of a person who resided in Jaipur by people who resided in Alwar itself; ii) The assessee had paid Rs. 10 lacs as purchase consideration for the said land, and later on shown this amount as paid by M/s Laxmi Murti Developers. iii) The said land under control of UIT Alwar, was exchanged by the UIT under its order dated 29.09.2008 (APB 26) and another land measuring 1440 sq. mtrs was allotted to the original owners, which was then sold to the said firm for Rs. 10.00 lacs. Since the land was valued at Rs. 75,79,132/- The same was deemed by the ld. AO to be the net consideration by virtue of sec 50C, as the assessee did not produce the original owners before the ld. AO. With regard to the allegation that assessee is residing at Jaipur then how could he be able to handle the matter before the UIT, Alwar, it is submitted that assessee is a AAA class civil contractor and carrying out many projects for various Government authorities including UIT, Alwar which projects were situated in and around Alwar. Therefore it was very convenient to the assessee not only to represent the matter in Alwar but also since he was executing the contracts for UIT, Alwar, he was in a position to properly coordinate with the authorities with respect to the dispute going on about the ownership / compensation in respect of the subject land. The fact that the assessee has transferred the sale consideration received on behalf of the original owners to them is never in dispute nor doubted by the department at any stage of the proceedings. Further from the perusal of the POA, it is very much clear that the same was signed by all the seven original owners and the assessee as power of attorney holder in presence of Sub Registrar and further states that, out of 7 owners 4 were already residing outside Alwar and the balance three had shifted from Alwar for the purpose of earning. Thus the allegation of the AO that issuing POA to a person residing in Jaipur by owners who were in Alwar itself is factually incorrect, and the POA issued was genuinely issued in favor of the assessee who could dealt with the legal matters arising due to the land being under the control of UIT, Alwar.

15 Laxmi Narain Agarwal vs. ACIT Another allegation of the ld.AO is that there was absolutely no reason to issue POA in favour of the assessee is also baseless, made on imaginary grounds without considering the explanations and the necessities existed at that time for which AO cannot walk into the shoe of the businessman to measure the necessity and urgency of an act which had done to protect the interest of the parties. The ld.AO further alleged that the contention of the assessee that the land was purchased by firm was incorrect as perusal of the sale deed revealed that the land was sold to five individuals and not the firm. In this regard it is submitted that, indeed the sale deed mentioned five persons as purchasers, but it was brought to the notice of ld. AO that all the five parties to the purchases deed had entered into a partnership vide deed executed on 30.07.2008 and it has been expressly provided in the partnership deed that the partners are authorized to buy lands in their own name for and on behalf of the firm and the amount contributed against purchases consideration would be shown as credit in their respective capital accounts as their capital contribution proportionately (APB 38). In this process the subject land was owned by the partnership firm and was shown as the asset of the firm in its balance sheet consistently until it was sold in AY 2013-14 where due LTCG arisen on the profits earned from the sale of the same was declared in the return of income filed (APB 45-47) and was duly accepted by the department as no further action against the return of income filed was taken and this fact remains undisputed. It is also submitted that in AY 2013-14, the addition of Rs. 33,98,698/- was made in the hands of the assessee as long term capital gain being 1/5th share arisen from the sale of land however, the same was deleted by ld. CIT(A) vide orders dated 17.01.2023 and such orders were accepted by the department and no appeal is preferred. The relevant observations of ld. CIT(A) as contained in para 6.4 at page 23 of the order are reproduced herein below (APB 111):- It is thus submitted that once it has been held that the land was owned by the firm and not by the assessee at any stage, the assessee could not be made liable for capital gain at the time of the purchase of the land from the original seven owners where the sale deed was executed by assessee as a power of attorney holder. Ld. AO has further alleged that if the POA was issued in favour of the assessee to look after the legal matters and get a clear title to the same and effect the further sale on behalf of the original owners to the firm merely because, title of the concerned land was not clear, then why was the land sold to the firm in Nov, 2008 when the UIT had allotted the alternate piece of land in Vijay Nagar, Alwar on 07.08.2008. In this regard it is submitted that 07.08.2008 is the date when the UIT had decided to allot 40% residential land in lieu of the original piece of land holding in Khasra No. 1728 which was in possession of UIT, Alwar.

16 Laxmi Narain Agarwal vs. ACIT However, this decision was communicated to the original owners vide letter dated 29.09.08 (APB 26-29) after which the patta was issued in respect of the new land measuring 1440 sq. mtrs in Vijay Nagar only on 20.10.2008 (APB 22-25) and after getting a clean title, the subject land was sold to the firm on 21.11.2008 and the sale deed was executed. Thus the time gap between the decision to allot alternate land on 07.08.08 and registration of the sale deed on 21.11.08 stands fully and logically substantiated more particularly looking to the fact that no person would purchases any piece of land which has no legal title. Further, the decision of sale of land by the original seven owners to the partners of M/s Laxmi Murti Developers for a consideration of Rs. 10 lakhs is their sole discretion and ld. AO cannot doubt their decision and it is an established law that AO cannot walk into the shoe of the businessman who had made the decision based on the circumstances existed at that point of time, therefore, this observation of the AO is baseless and ld. CIT(A) has failed to appreciate these fact while confirming the addition. In view of these facts, it is submitted that the allegation of the ld. AO is dumbfounded based merely on surmises and the entire addition of Rs. 65,79,132/- made by holding the sale of land by original owners through POA holder as being sale made by the assessee in his individual capacity and computing short term capital gain by considering the stamp value (Rs.75,79,132/-) as the deemed sale consideration by invoking provisions of sec 50C of the Act deserves to be deleted. It is further submitted that provisions of sec 50C if at all invoked, needs to be done in the hands of the original owners, and by no stretch of imagination can be done in the hands of the assessee, who is in fact acted in the fiduciary capacity and the representative of all the sellers. The addition of Rs. 65,79,132/- thus deserve to be deleted and the assessee prays accordingly.”

S.No. Date Particulars APB 1. 04.08.2008 Execution of Power of Attorney in favour of assessee 7-10 by seven original owners namely: 1. Ramdutt Sharma 2. Bijendra Kumar 3. Mahendra Singh 4. Rajkumari

2. 20.10.2008 Allotment of lease deed of 1440 sq. mtr. land at Vijay 22-26 Nagar by UIT, Alwar as compensation for acquisition of 36 Air land refered in Point No. 1 above to the original owners and assessee was referred as their Power of Attorney holder. 3. 21.11.2008 Execution of sale deed by assessee as power of 11-19 attorney holder for the land allotted at Vijay Nagar in favour of Five buyers including the assessee who treated the said land as asset of the firm M/s Laxmi Murti Developers 4. 30.07.2008 Copy of partnership Deed and amendment deed of 30-43 M/s Laxmi Murti Developers 5. 2013-14 Copy of ITR and computation of income of M/s Laxmi 46-47 Murti Developers where the capital gains from the sale of land was offered for tax 6. 2013-14 Copy of assessment order of the assessee for AY 79-88 2013-14 where the assessee’s share in capital gains from the sale of said land was added as income of the assessee 7. 2013-14 Copy of order of ld.CIT(A) for AY 2013-14 deleting the 89-114 addition made by AO on account of capital gains by holding that the same has already been declared by the Firm M/s Laxmi Murti Developers in para 6.3 & 6.4 at APB 110-112 Since the department has accepted the fact the said land was originally purchased by the partnership firm M/s Laxmi Murti Developers from the original seven persons to whom the said piece of land was allotted by the UIT, Alwar in lieu of the compensation on the acquisition of their land and no appeal is preferred against the appellate order passed in AY 2013-14. Merely because assessee has acted as the power of attorney holder only during the year under appeal when the said land was sold to the partners of firm M/s Laxmi Murti Developers the addition is made.

It is thus humbly submitted that the addition made by the ld.AO deserves to be deleted.”

To support this contention reliance was placed on the following decisions:

PAGE S.No PARTICULARS NOS. Copy of Computation of Income for A.Y.2009-10. 1-2 1. Copy of replies filed before the ld.AO during assessment proceedings 3-6 2. Copy of Power of Attorney dated 04.08.2008. 7-10 3. Copy of sale deed dated 21.11.2008. 11-19 4. Copy of Ledger account of M/s Laxmi Murti Developers in the books of the assessee. 20 5. Extract of relevant portion of Bank a/c of the assessee. 21 6. Copy of Patta issued in respect of alternate land given by UIT Alwar. 22-25 7. Copy of intimation of UIT Alwar regarding exchange of existing land against new land 26-29 8. allotted by UIT. Copy of certificate of registration of firms in the case of M/s Laxmi Murti Developers. 30 9.

“Sub: Appellate proceedings in the case of Shri Laxmi Narayan Agarwal, PAN- ABSPA1338G, (ITA No. 1009/JP/2023) for the A.Y. 2009-10- regarding ******* Madam 20 Laxmi Narain Agarwal vs. ACIT Kindly refer to your office letter No. 61 dated 28.04.2023 on the above subject. The comments of this office on the points as desired in your letter are given as under: Short Term Capital Gains on sale of land: Rs. 65,79,132/- On Examination of record, It was noticed that the assessee had sold a land at Alwar on 21.11.2008 for a consideration of Rs. 10,00,000/- which was valued by the Sub-Registrar at Rs. 75,79,132/-. During the course of assessment proceedings for A.Y. 2013-14, it was found that the assessee was the owner of this land and in fact this land was sold by the assessee on 21.11.2008 to himself and 4 other persons. The owners of this portion of land were Shri Ram Dutt Sharma, Shri Bijendra Kumar, Shri Mahendra Singh, Smt. Rajkumari, Smt. Anju Bhargava, Kumari Aakanshi and Kumari Shivani. The assessee submitted that this land belongs to above seven persons and he acted only as a power of attorney holder. It may be mentioned that assessee was nominated as power of Attorney holder for land measuring 36 Air khasra number 1728, Village Alwar No. 1 and this land was converted into residential plot measuring 1440 sq mtr Vijay Nagar Scheme, Alwar by UIT, Alwar and later on revised to some other plot.  The land so allotted by UIT Alwar under Vijay Nagar Scheme was not mentioned in Power of Attorney.  Power of attorney was executed on 05.08.2008 and land was allotted on 07.08.2008, this act created suspicion.  These seven persons were not known to assessee, then how they appointed him Power of Attorney holder. They had mentioned that they were not able to take care of the plot, then how they could appoint a person, not known to them, as power of attorney holder who is not residing at Alwar, who is having his businesses in Jaipur.  How a person who is living 165 kms away can take better care of property than persons who are residing at same place.  A detailed analysis of the submission of assessee was made and the AO found that the assessee was appointed as power of attorney holder for 36 Air land out of khasra no. 1728 Village Alwar no.1 and not for the land measuring 1440 sq Mtr at Vijay Nagar Scheme issued by UIT Alwar.

21 Laxmi Narain Agarwal vs. ACIT 2. The AO considered the submissions of the submission of the assessee and found that the assessee failed to reply following question:- a. How these persons were known to him. b. The assessee failed to produce these persons for examination. c. Present whereabouts of these seven persons were not furnished, so the assessee prevented department to cause enquiry in his case. As such law of estoppels apply in this case. d. The assessee failed to submit that these persons had declared capital gains on sale of land during the year under consideration and declared sales consideration u/s 50C. e. The act of assessee prevented the department to cause enquiry in the case of alleged sellers and thus a large amount of revenue escaped/evaded.

22 Laxmi Narain Agarwal vs. ACIT 10,00,000/-. In this way, Short Term Capital Gains on sale of land was worked out as under :- Sale consideration u/s 50C(24.11.2008) Rs. 75,79,132/- Less Purchase cost(05.08.2008) Rs. 10,00,000/- Short term capital gains on sale of land Rs. 65,79,132/- 5. In the appellate proceedings before the Hon'ble ITAT the assessee inter alia has stated that sale consideration of Rs. 10,00,000/- so received was received on behalf of real owners which stood transferred to them and hence no capital gains can be charged in the hands of assessee. On perusal of assessee's bank account with Vijaya Bank, it is revealed that no amounts have been transferred to the so called real owners of the land. Since the assessee has failed to substantiate the submissions made before the Hon'ble ITAT hence he should not be allowed any relief by the Hon'ble ITAT. The report is submitted accordingly.”

8.1 As regards the ground of re-opening the assessment the ld. DR relied upon the findings recorded for re-opening in the order of the ld. AO and has also relied upon the following case laws:

 Praful Chunilal Patel vs. M. J. Makwana/ACIT [1999] 236 ITR 832 (Guj.)  Phool Chand Bajrang Lal vs. ITO [1993]69 Taxman 627 (SC)  Raymond Woollen Mills Ltd. vs. ITO [1999]236 ITR 34 (SC)  CIT, Delhi-X, New Delhi vs. Vipin Batra [2008] 166 Taxman 102 (Delhi)  CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC)  Sumati Dayal vs. CIT [1995] 80 Taxman 89 (SC)

23 Laxmi Narain Agarwal vs. ACIT 8.2 Based on the decision relied upon the ld. DR argued that the ground of appeal No. 1 raised by the assessee is required to be dismissed. As regards the ground no. 2 raised by the assessee the ld. DR contended that as income has escaped the assessment has correctly been charged as income of the assessee. To support the argument the ld. DR has placed reliance on the decision of the apex court in the case of CIT VS. Durga Prasad More as the ld. AO has correctly in appreciation of the deed of property correctly charged the income to the assessee and therefore, the ground no. 2 raised by the assessee is required to be dismissed.

26 Laxmi Narain Agarwal vs. ACIT On careful consideration of the facts, material available on record, submissions of the appellant and the remand report of the AO, I found that the payment made by the appellant against the purchase of land was recorded in his books of accounts which was examined on two earlier occasions by the Assessing Officer and no issues were raised about the source of the investment made. While disposing the ground of appeal No. 1 above, I have already held that the land was purchased by the appellant and since payment of Rs. 10 lacs was made in cash which is recorded in the books of accounts maintained by him. The appellant claimed that this land was purchased by the partnership firm and in his books of accounts, the sale consideration was debited in the ledger account of the partnership firm, copy of which was also placed on record. Though it is not admitted that the land was purchased by the firm, however, the fact remains that the same was duly recorded in the books of accounts of the assessee, thus the investment so made cannot be held as unexplained investments. In view of these facts, I am of the considered view that no addition could be made on account of investment which is duly recorded in the books of accounts accordingly, I hereby direct to delete this addition of Rs. 10 lacs. As a result this ground of appeal is allowed.”

From the above finding of the ld. CIT(A) which is based on the remand report the bench noted that once the ld. CIT(A) has accepted that the assessee has purchased the property and the source of the same is not disputed by the revenue in the earlier two assessment proceeding considered that the purchase of the property at Rs. 10,00,000/- by the assessee and the only dispute that whether the difference between the actual consideration and value adopted for stamp duty purpose can be added as income of the assessee as purchase and seller [ as power of attorney holder 27 Laxmi Narain Agarwal vs. ACIT ]. On this issue we are of the considered view that once in the earlier two assessment proceedings it has been accepted the fact that the assessee has purchased a property and the assessee has merely as one of the co-buyer has purchased the property where in he acted as seller of the same property as power of attorney holder of seven person the revenue cannot fastened the liability of difference amount between the sale consideration and value adopted for the stamp duty purpose u/s. 50 C of the Act when in the earlier two round the source of purchase of property verified and in the remand proceeding and before the ld. CIT(A) it has been categorically held that the assessee is the purchase of the property and therefore, difference between the stamp duty value and actual consideration based on these facts cannot be made in the hands of the assessee. In the light of this discussion the grounds of appeal no. 2 raised by the assessee is allowed.

10. Since, we have considered the appeal of the assessee on merits the ground of re-opening taken by the assessee becomes educative in nature and ground no. 3 being general does not require our adjudication.

In the result, appeal of the assessee is allowed.