ITAT Deletes ₹28.83-Lakh LTCG on Son as POA Is Not Property Title

Roop Narayan Choudhary Vs DCIT (ITAT Jaipur)

A Power of Attorney Is Not a Property Title: ITAT Deletes ₹28.83-Lakh LTCG Imposed on Son as ‘Deemed Owner’

The assessee’s appeal before the Tribunal was delayed by 765 days.

The CIT(A) had passed an ex parte order, which was required to be challenged before the ITAT by 12.02.2024. However, the assessee claimed that he learned about the order only on 25.03.2026 through his tax consultant.

The email address registered on the income-tax portal belonged to the consultant, upon whom the assessee was completely dependent. The consultant filed an affidavit admitting that due to his own mistake & failure to visit his office, the appellate order was not communicated to the assessee.

The Revenue opposed condonation on the ground that the assessee had also failed to appear before the CIT(A).

Agriculturist Should Not Suffer for Adviser’s Default

The Tribunal noted that the assessee was an agriculturist unaware of the appellate order, whereas the Department’s electronic communications were sent to the consultant’s registered email address.

The tax consultant had personally accepted responsibility through an affidavit. Therefore, the delay was attributable to professional negligence rather than any deliberate inaction by the assessee.

The ITAT observed that a litigant otherwise entitled to a hearing should not suffer because of the mistake or negligence of the professional engaged to render legal services.

It further acknowledged that although digital technology benefits the public, a large section of the population remains unfamiliar with documents sent through email & continues to depend entirely upon tax consultants.

Adopting a liberal interpretation in the interest of substantial justice, the Tribunal condoned the delay of 765 days & admitted the appeal.

Second Reopening for Property Transaction

The assessee had originally filed his return declaring total income of ₹12,64,270. His assessment was reopened once & completed u/s 147 r/w Section 143(3) at ₹41,34,140.

The assessment was thereafter reopened for a second time on the ground that the assessee had entered into immovable-property transactions involving a difference between the stated sale consideration & stamp-duty value.

In response to notice u/s 148, the assessee filed a return on 31.03.2019 declaring income of ₹12,64,270. Since he did not respond to subsequent notices u/ss 143(2) & 142(1), the AO completed the assessment from the available material.

Applying Section 50C, the AO adopted stamp-duty value of ₹35,93,274, allowed indexed purchase cost of ₹7,10,000 & assessed the balance ₹28,83,274 as LTCG in the assessee’s hands.

Mother Was the Registered Owner

The assessee’s mother, Smt. Bhuri Devi, was the absolute owner of the property under a registered purchase deed. The assessee had acted only as her power-of-attorney holder while executing the subsequent conveyance in favour of his wife, Smt. Jhuman Devi, & son, Shri Siddharth Narayan Choudhary.

The registered instruments were placed in the paper book.

The assessee did not press the legal ground challenging reopening & confined his arguments to the merits of the capital-gain addition.

The central issue was whether a son who merely executed the sale deed as his mother’s attorney could be treated as owner of the property & taxed upon the resulting capital gain.

AO Creates ‘Deemed Ownership’ from Assumptions

The AO reasoned that the transactions were conducted in cash & that the assessee had not proved transfer of the sale proceeds to his mother.

He further observed that Smt. Bhuri Devi was described as a housewife in the purchase deed & apparently had no independent source of income. From this, the AO inferred that the original investment of ₹4 lakh must have been made by the assessee.

Since the property was ultimately conveyed to the assessee’s wife & son, the AO treated the assessee as its deemed owner & assessed the LTCG in his hands.

The CIT(A) dismissed the appeal for want of prosecution without deciding this issue on merits.

Attorney Has No Dominion Over Sale Proceeds

The Tribunal found the AO’s reasoning unsustainable.

A registered sale deed established Smt. Bhuri Devi as the property’s absolute owner. The assessee merely acted as her attorney while executing the conveyance. Acting under a power of attorney did not transfer ownership to him or give him dominion over the sale proceeds.

The AO effectively assumed the role of a civil court by questioning how a housewife could have invested ₹4 lakh in purchasing the property & then declaring the assessee its deemed owner.

Such a conclusion could not override the registered title merely on suspicion. If the Department doubted Smt. Bhuri Devi’s source of investment or the purchasers’ transactions, their respective cases could have been examined in accordance with law. Those concerns could not justify taxing the attorney as owner.

ITAT Decides Merits Instead of Remanding

Although the CIT(A) had not decided the appeal on merits, the Tribunal found that all relevant registered documents were already available on record.

Considering that grave injustice had occurred at both the assessment & first appellate stages, the Bench declined to prolong the dispute by remanding it.

It held that the assessee, being merely the attorney of the registered owner, was not liable for LTCG. The addition of ₹28,83,274 was deleted & the appeal was allowed.

Author’s Comments

The ruling affirms that a power of attorney creates authority, not ownership. The attorney may sign, present & complete a conveyance for the principal, but the resulting capital gain ordinarily belongs to the person who owns & transfers the asset.

The AO’s suspicion regarding the mother’s source of investment could justify an enquiry in the correct person’s case, subject to limitation & law. It could not create an unstated deeming fiction against the son.

The case also protects taxpayers from professional communication failures, while reminding advisers that portal-linked emails carry serious responsibility.

In short, the son may have held the pen under the power of attorney, but his mother held the title—and the capital gain could not be written into his hands.

FULL TEXT OF THE JUDGMENT/ORDER OF INCOME TAX APPELLATE TRIBUNAL

The Appellant, Roop Narayan Choudhary (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 14.12.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”] qua assessment year 2012-13 on the grounds inter-alia that:-

“1. Under the facts and circumstances of the case the Ld. CIT(A) grossly erred in confirming the invalid and illegal action of the Ld. AO without hearing of assessee appellant hence violation of principle of natural justice and ‘audi alteram partem’.

2. Under the facts and circumstances of the case Ld. CITA(A) grossly erred in confirming the invalid and illegal action of Ld. AO while complete assessment proceeding is illegal, invalid and without jurisdiction and barred by limitation hence may kindly be quashed.

3. Under the facts and circumstances of the case Ld. CIT(A) grossly erred in confirming the action of Ld. AO in making addition of Rs. 28,83,274/ on account of alleged Long Term Capital gain, during the year without evidence and without considering the materials and explanations available on records in their true perspective and sense,

4. Under the facts and circumstances of the case Ld. CIT(A) grossly erred in confirming the action of Ld. AO in confirming the addition on account of long term capital gain without having any corroborative material on record against the complete valid chain of documents as submitted by the assesse,

5. Under the facts and circumstances of the case Ld. CIT(A) grossly erred in confirming the action of Ld. AO in confirming the action of Ld AO for charging Interest U/s 134A, B and C of the act,

6. The appellant reserved her right to add, amend or alter the grounds of appeal on or before the date of appeal hearing.”

2. At the very outset, Ld. AR for the assessee by moving an application sought to condone the delay of 765 days in filing the present appeal supporting with an affidavit of Shri Ankit Gupta Tax practitioner on the grounds inter alia that assessee had challenged assessment order before Ld. CIT(A), who has decided the same ex-parte vide order dated 14.12.2013 and appeal was required to be filed within 60 days i.e. on 12.02.2024; that assessee has received communication of order passed by Ld. CIT(A) on 25.03.2026 through his Tax Consultant handling the matter that email ID i.e. [email protected] registered with Income Tax portal belongs to the assessee’s Tax Consultant and the assessee was entirely dependent upon his professional; that immediately on receipt of information from his tax consultant, he has filed the appeal.

3. However on the other hand, Ld. DR for the Revenue opposed the application on the ground that when assessee has not appeared before Ld. CIT(A) despite different notices issued to him. He has not entitled for any relief to condone the delay in filing the present appeal.

4. We are of the considered view that in the totality of the circumstances in which assessee being agriculturist was not aware of the impugned order passed by Ld. CIT(A), even email of his tax consultant was with the income tax department on which impugned order communicated, it is proved on record that the entire delay was caused due to mistake or negligence on the part of tax consultant of the assessee, who was hired to render the legal services. At the same time, it is settled principle of law that due to negligence or mistake of the tax consultant, assessee cannot be made to suffer, who has otherwise entitled to be heard on merits. So in order to do substantial justice provisions for condonation of delay are required to be given liberal interpretation.

5. Moreover in the instant case, tax consultant himself filed an affidavit making confession that due to his mistake, he could not pass on the impugned order to the assessee as he has not visited his office. No doubt digital technology is for the benefit of public at large but large population of India is still ignorant about the documents sent on email ID, rather they are entirely dependent upon their tax consultant. In these circumstances, we find it “sufficient cause” to condone the delay of 765 days in filing the present appeal, hence condoned. The appeal is being heard on merits.

6. Briefly stated, facts necessary for consideration and adjudication of the issue at hand are: Assessee filed his original return of income for A.Y. 2012-13 at the total income of Rs. 12,64,270/-. Thereafter case was reopened, assessment was completed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) at total income of Rs. 41,34,140/-. Again assessment was reopened by initiating proceedings u/s 147of the Act on the ground that during the year under consideration the assessee has entered into a transaction of immovable property and there is difference between sale amount and stamp duty amount tabulated as under:-

7. When the return of income of the assessee was examined, the assessee has not shown transaction recorded in the above table in his return of income, thus the income of Rs. 35,93,274/- chargeable to tax has escaped assessment. Assessee in response to the notice u/s 148 of the Act filed return of income on 31.03.2019 declaring total income of Rs. 12,64,270/-. Thereafter assessee has not filed any response to the notices issued u/s 143(2) and 142(1) of the Act nor put in appearance in person or though his representative. Consequently, Assessing Officer proceeded to frame assessment on the basis of material available on record. The Assessing Officer by declaring assessee as deemed owner of the land has gained capital gain and thereby added an amount of Rs. 28,83,274/- to the total income of the assessee under the head LTCG.

8. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal, who has dismissed the appeal for want of persecution on failure of the assessee to appear before him despite availing off numerous opportunities. Feeling aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal.

9. We have heard Ld. ARs for the assessee and Ld. DR for the Revenue and perused the record available on file.

10. Undisputedly, Assessing Officer has reopened assessment second time for the reasons that assessee has failed to show the transaction entered into by him for purchase of land for consideration of Rs. 8,00,000/- having stamp duty value of Rs. 18,27,292/-, thus income of Rs. 35,93,274/- chargeable to tax has escaped assessment, Assessing Officer proceeded to make addition of Rs. 28,83,274/- by declaring the assessee as deemed owner and thereby calculated the capital gain after giving due benefit of indexation of the purchase cost as under:-

As calculated above Rs. 28,83,274/- is added back to the total income of the assessee under the head of LTCG”

11. Ld. AR for the assessee has not pressed the legal ground for reopening, however contested the impugned order on merits. No doubt, Ld. CIT(A) has not decided the appeal on merits, but merely passed the order ex-parte for want of prosecution on the part of the assessee, however the Bench has deemed it fit to decide this appeal on merits on the basis of material available on record with the assistance of Ld. AR for the assessee and Ld. DR for the Revenue as grave injustice has been done to the assessee at the assessment proceedings as well as at the stage of first appellate proceedings.

12. Undisputedly, Smt. Bhuri Devi, mother of the assessee was absolute owner of the property in question by virtue of the sale deed dated 25.01.2025 available at page 43 to 52 of the paper book. It is also not in dispute that Smt. Bhuri Devi being absolute owner of the property in question executed power of Attorney qua the land in question in favour of the assessee on 10.12.2018. It is also not in dispute that assessee being Attorney of his mother Smt. Bhuri Devi executed a sale deed dated 12.05.2011 in favour of Smt. Jhuman Devi and one Mr. Siddharth Narayan Choudhary wife and son of the assessee respectively. Both the sale deeds are available at page 23 to 42 of the paper book.

13. In the backdrop of the aforesaid undisputed facts the sole question arises determination in this case is “as to whether the assessee, Sh. Roop Narayan Choudhary being Attorney of Sh. Jhuman Devi has become the owner of the sale proceeds and as such liable to pay the capital gain”.

14. Bare perusal of the findings of Ld. CIT(A) in paras 3.1 to 3.4 goes to prove that entire findings have been returned by the Assessing Officer as well as Ld. CIT(A) are on the basis of whims and fancies by ignoring the law and facts on the file for facility of reference finding of return by AO are extracted as under:-

“3.1 As evident from the above, all transactions are done in cash mode. Therefore no proof is available with the assessee in support of his contention that the entire amount has given/transferred to Smt. Bhuri devi, mother of the assessee. It is also possible that the assessee misguide the department knowing that no remedial action will be taken at this stage in the case of Smt. Bhuri Devi.

3.2 It is also no doubt that the transaction made by the assessee on behalf of his mother i.e being a power of attorney holder but in absence of proof it is not possible to consider the entire amount has been transfer in the hand of his mother.

3.3 Mother of the assessee Smt. Bhuri Devi has purchased the said plot on 25.01.2005 at Rs. 4,00,000/- and as per sale deed, occupation of Smt. Bhuri Devi is House Wife. Hence it is clear that there is no source of income of his mother. Therefore, investment for purchased of land of Rs. 4,00,000/- was done by the assessee. He was deemed owner of the land. Further, the said land is sold to (1) Smt. Jhuma Devi W/o Sh. Roop Narayan Choudhary (ii) Sh. Siddharth Narayan Chou Thary S/o Sh. Roop Narayan Choudhary i.e family member of the assessee.

3.4 Considering the above facts, as deemed owner of the land was the assessee, capital gain is hereby calculated in the hand of the assessee after giving due benefit of indexation of purchase of cost.

As calculated above Rs. 28,83,274/- is added back to the total income of the assessee under the head of LTCG”

15. When the assessee has merely acted as Attorney of his mother Smt. Bhuri Devi, who was absolute owner of the land in question, he had no dominion over the sale proceeds of the land in question. The Assessing Officer has proceeded to decide the issue as Civil Court by holding that Smt. Bhuri Devi being a house hold lady had no source of income. These findings returned at the back of Smt. Bhuri Devi that how she has invested amount of Rs. 4,00,000/-in purchasing the property. The AO further proceeded to hold that assessee is deemed owner of the land in question. We fail to understand in the face of registered sale deed in favour of Smt. Bhuri Devi how the assessee can be declared as deemed owner of the property in question.

16. The Assessing Officer instead of examining the case of Smt. Bhuri Devi and subsequent owner namely Smt. Jhuman Devi and Sh. Siddharth Narayan Chouldary, who have purchased the land in question proceeded to hold the assessee as deemed owner and made addition of Rs. 28,83,274/- under the head long term capital gain.

17. Despite having all the documents available on record, the Assessing Officer proceeded to reopen assessment second time and has not preferred to receive the reply of the assessee, but proceeded to declare the assessee as deemed owner of the property in question just to justify his initiation of proceedings u/s 147 of the Act. We are of the considered view that the assessee being Attorney of Smt. Bhuri Devi owner of the property is not liable to pay any long term capital gain as he had no dominion over the sale proceeds of the property in question.

18. All these facts were available on record, but Ld. CIT(A) has not preferred to dispose of the appeal on merits. In the interest of justice the Bench has not preferred to remand the appeal back to Ld. CIT(A) rather decided the same on merits on the basis of ample material available on record.

19. In view of what has been discussed above, we are of the considered view that addition made by AO and sustained by ld. CIT(A) is not sustainable in the eyes of law, hence ordered to be deleted.

20. Resultantly, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 03-09-2026