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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 248/JPR/2022
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR MkWa- ,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-@ fu/kZkj.k o"kZ@Assessment Years : 2009-10 cuke Suraj Kanvar ITO, Gadri, Badhal Phulera, Vs. Ward- 3(4), Jaipur. Jaipur-303602. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: EQHPK5537D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Neeraj Rathore (C.A.) jktLo dh vksj ls@ Revenue by : Ms Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing 15/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 20/03/2023 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC/CIT(A)”], dated 21.04.2022 for the assessment year 2009-10, which in turn arises from the order passed u/s 147/144 of the Income Tax Act, 1961 ( in short ‘ the Act’) by the Income Tax Officer, ward-3(4), Jaipur dated 03.10.2016.
Suraj Kanvar vs. ITO The assessee has raised the following grounds:-
2. “1. That the learned CIT-Appeals NFAC, Delhi erred in confirming the addition of Rs. 9,14,285/- as STCG made by the learned AO.
2. The learned ITO further erred in framing the order u/s 144 of the Income Tax Act, 1961 thereby estimating the total income from STCG as Rs. 9,14,285/-. 3.That the proceedings so initiated by the learned AO is bad in law as well as on facts.
4. That the petitioner craves to add alter or amend an or all of the ground of the appeal on or before the date of hearing.
The brief facts of the case are that the assessee is an individual, did not file return of income for the A.Y. 2009-10. As per information received from the Sub-Registrare-V, Jaipur, the assessee mad a sale of an immovable property on 23.05.2008. Between the sale value and registered value the higher one is of Rs. 9,14,285/-. Since, the assessee did not file any return of income for the relevant year the AO had the belief that income to the extent of Rs. 9,14,285/- has escaped assessment. Therefore, after taking prior approval from the PCIT-1, Jaipur, proceedings u/s 147 was initiated against the assessee and notice u/s 148 dated 16.03.2016 was issued to the assessee.
Suraj Kanvar vs. ITO 4. The ld. AO observed that the assessee has concealed the income of Rs.9,14,285/- on account of STCG as the return for the year under consideration has not filed by the assessee till date therefore she is liable to pay penalty u/s 271F to failure to furnish a return of income u/s 139(1) for the A.Y. 2009-10, for which separate proceeding proceedings are being initiated. As well as non-compliance of the notice issued to her u/s 148 dated 16.03.2016 and u/s 142(1) dated 20.06.2016 respectively by the assessee she is liable for penalty u/s 271(1)(b) of the I.T. Act, 1961 for the default, for which separate proceeding are being initiated. Since the assessee has concealed her income of Rs.9,14,285/- on account of STCG as discussed above by not filing the ITR for the A.Y. 2009-10 till the date of passing of the order. Therefore she is liable to pay penalty u/s 271(1)(c) of the I.T. Act 1961 for which separate proceeding are being initiated.
5. The assessee has filed the appeal before the ld. CIT(A) who after hearing the contention of the assessee dismissed the appeal of the assessee by giving his following relevant findings on the issues:-
Suraj Kanvar vs. ITO “6.1 I have considered the facts mentioned in the grounds of appeal and statement of facts, and the assessment order passed u/s 144 rws 147 dated 03/10/2016 of the Act in case of the assessee. As mentioned above, the appellant has failed to submit any response in regard to the hearing notices issued, therefore, the decision is made based upon the records available on file. 6.2 The appellant in grounds of appeal has contested that she is just a POA holder and not the actual seller and that the quantum of capital gains of Rs.9,14,285/- is too excessive. The appellant, a non-filer, holds power of attorney for a property located at P.No.59, Kailash Nagar, Jhotwara, Jaipur with an area of 240.33 sq. yard on behalf of Shri. Rattan Singh and Shri, Kamal Singh. The said property was sold by the appellant on 23.05.2008, the same day of registration of POA, for a consideration of Rs.8,50,000/- against the value of Rs.9,14,285/- as per stamp duty authorities. However, there is no evidence submitted that the appellant is merely the POA holder here and not the actual receiver of the said consideration. During the assessment proceedings, the assesse was issued several notices to which it failed to reply, therefore, the AO in accordance with the provision of section 2(47), 45(1) and 50C of the Act and in absence of ITR or replies, considered the registration value as the sale value of the property and assessed Rs.9,14,285/- as short term capital gains in the hands of the assesse. 6.3 During the appellate proceedings also, the assesse failed to submit any evidences to prove that she is a mere POA holder and that the sale consideration is transferred to or received by the actual sellers of the property. The appellant has questioned the quantum of addition however, no details regarding the cost of acquiring or calculation of capital gains is also submitted and why section 2(47), 45(1) and 50C should not be applicable in its case. Therefore, in absence of any submission/evidences from the assesse, I do not find
Suraj Kanvar vs. ITO any material/reason to doubt the addition of Rs.9,14,285/- as STCG made by the AO. Hence, the addition is upheld and appeal on all the grounds is dismissed.” 6. Being aggrieved by the ld. CIT(A) order, the assessee is in appeal before us. Before us the ld. AR for the assessee submitted a detailed written submissions which are as under:-
“1.Thatthe assessee is a housewife and not enjoying any taxable income as such no income tax return was filed for the assessment year 2009-10.
That a Power of Attorney was executed in the favour of assessee, by Mr. Ratan Singh and Kamal singh on 04.04.2006.(PB4-9)
3. That Suraj Kanwar executed a sale deed vide the power of attorney on 23.05.2008 for Rs. 8,50,000.00 (PB10-18). The sale proceeds were handed over to the actual owners Shri Ratan Singh and Shri Kamal singh. An affidavit from Ratan Singh confirming that the money was received by him is also enclosed. (PB 19-20)
The Ld. AO treated the value adopted by the stamp duty authority Rs. 9,14,285.00 as the income of the assesse who is only a POA holder, and treated the same as short term capital gain, treating the power of attorney as transfer.
That the petitioner vide sale deed dated 23.05.2008 sold the property as a Power of Attorney Holder but she was not the owner of the property, but only power of attorney holder.
That the transfer in relation to capital assets includes as under:-
"Transfer" in relation to a capital assets, includes:-
(i) the sale, exchange or relinquishment of the assets; or Suraj Kanvar vs. ITO (ii) the extinguishment of any rights therein, or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into; or is treated by him as, stock in trade of a business carried on by him, such conversion or treatment; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 534 of the Transfer of Property Act, 1882 (4 of 1882); or (vi) Any transaction (whether by way of becoming a member of or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring or enabling the enjoyment of, any immovable property."
Since the Power of Attorney holder is not the owner of the property, the above transaction cannot be treated as sales in the hands of the petitioner.
Under the circumstances and facts mentioned above, it is very much clear that since no sale is affected by the petitioner, the initiation of proceedings u/s 148 of the IT Act, 1961 is bad in law and the same may kindly be cancelled.
Without prejudice to the above, it is further submitted that while computing the short term capital gain, the AO has not allowed any deduction of cost of acquisition.
Reliance is placed on Commissioner of Income Tax vs C.Sugumaran (HC Madras) (2015)281 CTR (Mad) 115 where it was held as under: (PB 37-39)
Suraj Kanvar vs. ITO Capital Gain-Chargeability -Ownership vis-a-vis power of attorney - Assessee was merely a power of attorney holder and property rights were not handed over to him-There is no transfer to or enabling enjoyment of property in favor of the assessee in any manner and therefore, sub-cl.(vi) of s. 2(27) does not get attracted-Assuming and accepting the intention behind the Circular No 495, dr. 22Sept., 1987 then there should be an element of transfer or enabling enjoyment of property right as stated in para 11.2 of the circular by the power of attorney holder, which was absent in the present case-Assessee could no be treated as owner of the property sold while computing capital gains in his hand.
That the appeal was filed against the said order and the counsel Shri Niraj Rathore appeared before the then Hon'ble CIT(Appeals-IV), Jaipur and submitted documents to the CIT regarding the appeal. That the then Hon'ble CIT (Appeals- IV), Jaipur send the documents to the Assessing Officer for a remand report. That the best of our knowledge, remand report is on file of the Assessing Officer and we had applied for a copy of the same on 11.7.22. (PB 30-31) However, the same has not been made available to us. It is requested that remand report may be called from the AO. The CIT Appeals NFAC passed the order confirming the addition of AO and stating that there was no response from assessee.”
On the other hand, ld. Sr. DR supported the order of the ld. CIT(A) and submitted that it is an ex- parte order and it may be remand back to the AO.
We have heard both the parties, perused materials available on record. Before us, the ld. AR for the assessee has submitted the written submission and Paper book containing at page No. 1 to 39. We note that the ld. AO has passed ex-parte order and the ld. CIT(A) in its order recorded that the assessee during the appellate proceedings was issued a Suraj Kanvar vs. ITO several notices and no response was received from the assessee. In case of the assessee, the assessee has failed to submit any response in regard to hearing of notice issued. Therefore, the ld. CIT(A) passed the order based on the record available on the file. Further, ld. CIT(A) has erred in passing the order with evidence and documents produce before her.
8.1 Taking note consideration the present facts circumstances of the case, the ld. CIT(A) has not passed the order in merit, where she herself submit any evidence to prove that she is a mere power of attorney holder and that the sale is transfer to or received by the actual seller of the property. In this situation, the ld. AR for the assessee before us submits and contended that the sale deed was executed in the hands of Power of Attorney holder with supporting evidence in paper book. We observed that the ld. CIT(A) as well as ld. AO has wrongly made the addition in the hands of power of attorney holder, where it is erroneous and unfair.
8.2 In view of the above facts and circumstances, The Ld. AR prays that the matter may be remanded to the file of Ld. AO for a proper adjudication on merit after giving due opportunity of hearing to the assessee. The Ld. DR does not have any objection but prays to direct the assessee to represent his case before Ld. AO and do not seek unnecessary
Suraj Kanvar vs. ITO adjournments. In view of such pleadings by parties and also having regard to the principle of natural justice and fair play, we deem it fit and appropriate to remand this matter back to the file of Ld. AO for a proper adjudication after giving opportunity of hearing to the assessee, uninfluenced by his earlier decision. We order accordingly, the assessee is also directed to ensure participation in the hearing fixed by the ld. AO and do not seek unnecessary adjournment.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20/03/2023.