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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinha
Dilipkumar Vitthaldas The Income Tax Desai Officer, B/202, Madhumati Vs Ward-3(1)(1), Complex, Uma Char Ahmedabad Rasta, Waghodiya Road, Vadodara, Gujarat-390019 PAN: AJTPD5047L (Appellant) (Respondent) Assessee Represented: Shri Samir Parikh, A.R. Revenue Represented: Shri Trupti Patel, Sr.D.R. Date of hearing : 08-05-2024 Date of pronouncement : 14-05-2024 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
These appeals are filed by the Assessee as against two appellate orders both dated 24.08.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and Penalty levied under section 271(1)(c) of the Income Tax Act relating to the Assessment Year 2012-13 respectively.
The registry has noted that there is a delay of 87 days in filing these appeals by the assessee. The assessee explained by way of Notarized Affidavit that he was away from India and residing at USA and when his brother Mahesh Vitthaldas Desai visited India in December 2023, he discussed the issue with Chartered Accountant and got the appeal papers to USA for assessee’s signature. Thereafter filing the same before the Tribunal has caused the delay of 87 days in filing the appeal. The assessee enclosed the United States Passport copy of his brother, who visited India in December 2023. We are satisfied with the reasons stated in the Notarized Affidavit thereby we hereby condone the delay of 87 days in filing the above appeals and adjudicate the cases on merits.
The brief facts of the case is that the assessee is an individual who has not filed his Return of Income. The assessee as a Power of Attorney on behalf of his brother Shri Mahesh Vitthaldas Desai and his wife Smt. Smita Mahesh Desai (who are Non Residents) has sold an immovable property situated at Moje, Danteshwar, Sundariya Bunglow, Block No. 10, Vadodara District for a consideration of Rs. 30,00,000/-. However the Stamp Valuation Authority valued the property at Rs.46,49,290/-. Thus the assessee neither disclosed the above sale transaction nor filed the Return of Income u/s.139 of the Act relating to Asst. Year 2012-13. Therefore the case was reopened for escapement of income and issued a notice u/s. 148 of the Act on 30.03.2019 which was duly served upon the assessee. The assessee did not respond to the 148 notice and also to the notices issued u/s. 142(1) calling for various details and information from the assessee. Therefore in the absence of details, the Assessing Officer passed an exparte reassessment order by making an addition of Rs.46,49,290/- as the undisclosed Long Term Capital Gain of the assessee.
Aggrieved against the reassessment order, the assessee filed an appeal before Ld. CIT(A) with a delay. The delay was condoned by the Ld. CIT(A) and after considering reply filed by the assessee and the Affidavit by Shri Mahesh Vitthaldas Desai and Smt. Smita Mahesh Desai dismissed the appeal filed by the assessee by observing as follows: “5.4 Nowhere in the affidavit Sh. Maheshkumar V. Desai and Smitaben M. Desal have stated that they have paid any taxes on the consideration received. For all practical purposes Shri Dilipkumar V. Desai is representative assessee of Shri Maheshkumar V. Desai. As per section 160 of the Income Tax Act, 1961. 160. (1) For the purpose of this Act, "representative assessee" means- (i) in respect of the income of a non-resident specified in subsection (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163, (2) Every representative assesses shall be deemed to be an assessee for the purposes of this Act. Furthermore the Agent has been defined as per section 163 of the Income Tax Act as who may be regarded as agent. 163. (1) For the purposes of this Act, "agent", in includes any person in India- (a) who is employed by or on behalf of the non-resident, or (b) who has any business connection with the non-resident, or (c) from or through whom the non-resident is in receipt of any income, whether directly or indirectly, or (d) who is the trustee of the non-resident, and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India: 5.5 Thus, as per definitions of Section 160 and 163, the appellant is liable to pay tax if the person who has sold property have failed to do so being the representative assessee.
5.6 In the case of P.P. Mahatme v. Assistant Commissioner of Income-tax, Circle- 2. Margao [2019] 112 taxmann.com 253 (Bombay) Bombay high court has held that "Assessee was a Power of Attorney holder to an NRI, namely, LMP- An immovable property owned by LMP along with other co-owners was usurped by her relatives - Pursuant to settlement in a civil suit filed by LMP and other co-owner for same, LMP received certain amount as consideration towards her share in property - A reopening notice under section 148 was issued to assessee on ground that aforesaid amount received by LMP was taxable as capital gains - Assessee contended that impugned reopening was barred by limitation; and, secondly, there was a family settlement in which impugned amount in question was received and same was inexigible to capital gain tax It was noted that impugned reopening notice dated 14-3-2005 issued to assessee as Power of Attorney holder of NRI-assessee being within 6 years from end of relevant assessment year 1999-2000, was well within period of limitation Further, merely because said dispute regarding immovable property involved some family members and such dispute was ultimately settled by filing consent terms, same could not be styled as a family settlement and on such basis, it could not be held that consideration received as a result of such settlement did not constitute capital gain." 5.7 The said judgment was also upheld by the Hon'ble Supreme Court in P.P. Mahatme v. Assistant Commissioner of Income-tax [2021] 126 taxmann.com 176 (SC).
In view of the above discussion undersigned sees no reason to interfere with the orders of the Assessing Officer. Thus, the appeal raised by the appellant is dismissed.”
Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal: (i) The Learned CIT (Appeal) is not correct in confirming the addition made by Ld. A.O. (ii) Dilipkumar V Desai is only a Power of Attorney holder for executing sale deed and is not a legal owner of the said property. He was not gaining any monetary benefits from this transaction. The sales consideration of Rs. 30,00,000/- was received by legal owner Mr. Mahesh kumar Vitthaldas Desai and Smt. Smitaben Maheshkuamr Desai. (iii) Assessee has executed sale deed as a power of attorney holder and not as an owner of the property. Any liability of tax on sale of property is of owner and not of power of attorney holder. (iv) Alternatively if the addition was confirmed in the hands of the assesse as a representative assesse than purchase value of the said property should be allowed from sale consideration.
(v) The assessee craves leave to add, amend, alter, delete, change or modify any or all grounds of appeal before or at the time of the hearing.
6. We have heard rival parties and perused the materials available on record. The main contention of the assessee that he executed the Sale Deed only as a Power of Attorney holder and not as the owner of the immovable property. Hence the capital gain liability is to be paid only by the owners and not that of the Power of Attorney holder. Alternatively if the addition was confirmed in the hands of the assessee, as a Representative Assessee, then the cost of acquisition of the said property should be allowed from the sale consideration.
7. We have given our thoughtful consideration and perused the materials available on record. It is undisputed fact that Shri Mahesh Vitthaldas Desai and Smt. Smita Mahesh Desai are Non- Resident Indians and they have appointed the assessee as their Power of Attorney to sell the immovable property at Vadodara. As per Section 163 of the Act, the assessee being an Agent in relation to the Non-Residents namely his brother Shri Mahesh Vitthaldas Desai and Smt. Smita Mahesh Desai, the assessee is liable to pay tax, if the owners who sold the property have failed to pay the respective taxes being a Representative Assessee. However neither the owners of the property nor the assessee being a Representative Assessee filed the Income Tax Return disclosing the above capital gain transaction. Further the assessee failed to appear before Assessing Officer in the reassessment proceedings, which has resulted in passing an exparte order.
7.1. However the assessee’s claim of cost of acquisition is to be given to the assessee is raised before this Tribunal, which legally sounds well. Therefore in the interest of justice, we deem it fit to set aside the matter back to the file of Jurisdictional Assessing Officer to give the assessee one more opportunity of hearing and file computation of capital gain with relevant materials. Needless to say, the assessee should co-operate by filing the required details, failing which the Ld. JAO is directed to decide the matter in accordance with law. Thus the appeal filed by the Assessee in is allowed for statistical purpose.
is levy of penalty u/s. 271(1)(c) of the Act. Since the quantum appeal is set aside to the file of Jurisdictional Assessing Officer, the Penalty order is also set aside with a direction to the A.O. to proceed with the Penalty proceedings in accordance with law after passing order on the quantum assessment.
In the combined result, both the appeals filed by the assessee are allowed for statistical purposes.