Case Law Details
Smt. Maniza Jumabhoy Vs. Asst. Commissioner of Income Tax (ITAT Hyderabad)
Assessee has entered into is not a ‘sale deed’ as considered by the AO and CIT(A) but only an ‘agreement of sale cum Irrevocable General Power of Attorney’ for a property, which the Hon’ble Court has held that these three parties have no ownership rights or title and now property was/is in the possession of Hyderabad Water Works Department for a long period. Without establishing that the assessee has title to the property and also without any sale deed of the transaction, the agreement of sale registered may not give rise to transfer of rights in a particular property, particularly in view of the fact that the Hon’ble Supreme Court did not approve the transfer of property by way of GPA. In these circumstances, the very basis for levy of capital gains is in doubt. However, the order of the court has been pronounced subsequently and there may be further contentions on the issue between the parties. Therefore, it is better if AO examines the issue afresh, in the light of the orders of the Hon’ble Court on the issue and also the fact is that it is only an agreement of sale not a sale deed.
Full Text of the ITAT Order is as follows:-
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad, dated 25-10-2012. The appeal was originally disposed-off for non-appearance vide the order of ITAT date 5th August, 2014 and later it was recalled by the order dated 18-02-2015, as assessee preferred an MA.
2. The appeal was filed with a delay of 430 days. Assessee has filed an affidavit explaining the reasons for delay. It was submitted that assessee is staying in Singapore and has signed as a confirming party in a land transaction entered by her brother, Shri Karim Nawaz Alladin and the documents were sent by courier to her. When she visited in the year 2008-09, her Chartered Accountant has asked her to file the return of income and subsequently she was not aware about any of the proceedings. It was further informed that the order was not served on her and she came to know when her bank account in RBS Bank was attached by the department in February, 2014. After the said event, she got in touch with her relatives and obtained the appellate order and on the advice of the Chartered Accountant, arranged to file the appeal on 09-04-2014. She has given list of her visits to India in the affidavit and why she could not attend to the matter immediately. Considering the affidavit filed and the objections raised by the DR, we are satisfied that assessee was prevented by a reasonable cause in preferring the appeal as she was not available in India and hence, the appeal is admitted condoning the delay.
3. In the course of present proceedings, a doubt has arisen whether the appeal was signed by her or a facsimile signature was affixed on the forms? It was clarified that assessee did indeed signed the forms and further a fresh Form-36 was also filed on record.
4. Briefly stated, assessee is an individual and after issuance of notice u/s. 148 of the Act by the department, she filed return of income on 11-11-2011 for the AY. 2008-09, declaring total income of Rs. 29,644/-. The proceedings were initiated as there was a sale of immovable property during the previous year relevant to AY. 2008-09, property of 28.08 kuntas, which was sold to M/s. Sunrise Builders and Developers by Assessee, her brother Sri Karim Nawaz Alladin and also Smt. Farida Alladin. As ‘agreement of sale cum General Power of Attorney’ registered with a Sub-Registrar indicated that assessee is also a vendor, proceedings u/s. 147 were initiated for bringing it to tax the capital gains in the said transaction. During the course of assessment proceedings, assessee submitted that she has signed only as a consenting party at the instance of buyer and entire consideration was received by her brother, Shri Karim Nawaz Alladin. AO, however, did not agree and relied on the ‘agreement of sale cum General Power of Attorney’ (treating it as sale deed) to hold that assessee was stated to be owner of 1/3rd of the property and accordingly, invoking the provisions of Section 50C, determined the capital gains at Rs. 1,31,53,067/- in the hands of assessee, being 1/3rd of the capital gains in the transaction.
5. Before the Ld.CIT(A), assessee filed an affidavit from Shri Karim Nawaz Alladin owning up the total transaction and confirming that assessee did not receive any portion of the sale consideration. It was also informed that the subject property was matter of dispute in Suit in O.S. No. 844 of 2007 and pending that dispute, her brother Shri Karim Nawaz Alladin sold the property to M/s. Sunrise Builders & Developers for a consideration of Rs. 84,58,000/- and the agreement of sale included her name as a vendor at the instance of buyer to avoid further legal disputes from the family. She also affirmed that she did not receive any consideration nor claimed any title to the property nor she has any title against her brother. Ld.CIT(A) referred to the narrations in the deed to confirm the AO’s opinion that assessee entered the transaction as a vendor and not as a confirming party and dismissed the appeal. Hence the present appeal.
6. Assessee has raised the following grounds:
“1. The Learned Commissioner of Income Tax (Appeals) erred in holding the assessee as liable for capital gains though she has not received any sale consideration.
2. The Commissioner of Income Tax (Appeals) ought to have considered the affidavit filed by the seller as well as the assessee stating facts of the case, regarding the sale transaction”.
6.1. Assessee also raised further additional grounds as under:
“The levy of capital gains in the hands of the appellant does not survive in the light of the fact that the appellant has been adjudicated as not having transferable title to the property by decree in O.S. No. 844 of 2007 dated 06-03-2015”.
7. Ld. Counsel referring to the facts of the case submitted that assessee has signed on the ‘agreement of sale cum GPA’ on a disputed property. It was further submitted that she has not received any money and her brother has received some consideration which she is not aware. Referring to the agreement of sale, it was further submitted that it is only an agreement of sale but not a sale deed as mentioned by the AO and CIT(A). It was the contention that transfer by way of General Power of Attorney has not been approved by the Hon’ble Supreme Court and accordingly, the agreement of sale cum Irrevocable General Power of Attorney has no legal sanctity. Further, it was submitted that the property was in dispute in the proceedings before the 1st Additional Court, Ranga Reddy District in O.S. No. 844 of 2007. It was submitted that this case was decreed by the orders of 3rd Additional District Judge, Ranga Reddy District on 06-03-2015, wherein it was held that the parties do not have any title to the impugned property as the property was in possession of Hyderabad Water Works Department from 1975 on wards and accordingly, the ownership itself was not established. Therefore, the capital gains cannot be brought to tax. It was requested that the matter may be remitted to the file of AO as the orders of the Hon’ble Court have been issued subsequently and these are not before the AO. It was further submitted that assessee has not received any consideration and if any gains is to be assessed, the same may be assessed in the hands of Shri Karim Nawaz Alladin.
8. Ld.DR, however, relied on the orders of the authorities to submit that assessee has been shown as 1/3rd owner of the property, accordingly, the capital gains have been assessed in her hands.
9. We have considered the rival contentions and perused the documents placed on record. What the assessee has entered into is not a ‘sale deed’ as considered by the AO and CIT(A) but only an ‘agreement of sale cum Irrevocable General Power of Attorney’ for a property, which the Hon’ble Court has held that these three parties have no ownership rights or title and now property was/is in the possession of Hyderabad Water Works Department for a long period. Without establishing that the assessee has title to the property and also without any sale deed of the transaction, the agreement of sale registered may not give rise to transfer of rights in a particular property, particularly in view of the fact that the Hon’ble Supreme Court did not approve the transfer of property by way of GPA. In these circumstances, the very basis for levy of capital gains is in doubt. However, the order of the court has been pronounced subsequently and there may be further contentions on the issue between the parties. Therefore, it is better if AO examines the issue afresh, in the light of the orders of the Hon’ble Court on the issue and also the fact is that it is only an agreement of sale not a sale deed.
10. Apart from the legality of the transaction, assessee is also contending that she has not received any consideration in the transaction even though her name is mentioned. It is on record that her brother has given an affidavit that she has not received the consideration. Para ‘H’ in page 3 of the registered agreement of sale also indicate that :
Whereas during the life time of Smt. Bilkiz Alladin, along with the Vendors, she had entered into an agreement with the Vendee for sale of the said property. Accordingly, the Vendee had paid substantial amount to them towards part of sale consideration. However, initially due to her ill health and later the death of Smt. Bilkiz Alladin, the sale transaction could not be completed.
As seen from this, the consideration was also stated to have been received by Smt. Bilkiz Alladin. How much of the money has been received by Smt Bilkiz Alladin or/ and assessee’s brother and whether assessee has received any consideration in the transaction has not been examined by the AO at all. Just because her name was mentioned as a vendor, 1/3rd of the capital gains have been brought to tax in her hands, without examining whether she had any title to the property and whether she had received any consideration.
10.1. Now, that the title itself is disputed, we are of the opinion that the orders passed by the AO and CIT(A) are to be set aside and the entire matter is to be restored to the file of AO to examine afresh and determine whether assessee has any title to the property and whether she has received any consideration. AO is free to examine all the aspects and determine it afresh on the facts of the case and as per the provisions of law. With these directions, the orders of the authorities are set aside and the entire issue is restored to the file of AO for fresh consideration. Assessee should be given due opportunity to make the submissions/ presentation of facts.
11. In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 17th November, 2017
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