Case Law Details

Case Name : Gyan Chand Agarwal Vs Addl. CIT (ITAT Jaipur)
Appeal Number : ITA No. 266/JP/2017
Date of Judgement/Order : 10/07/2017
Related Assessment Year : 10/07/2017
Courts : All ITAT (5380) ITAT Jaipur (108)

Gyan Chand Agarwal Vs Addl. CIT (ITAT Jaipur)

The issue in this ground is whether the sale consideration of the land belonging to Shri Sultan Meena can be taxed in the hands of the assessee, who is admittedly Power of Attorney holder of Shri Sultan Meena. There is no dispute with regard to the fact that, Shri Sultan Meena is recorded owner in the land in question. There is also no dispute with regard to the fact that, there is no evidence on record suggesting that the Power of Attorney to Shri Sultan Meena was executed by the assessee by paying consideration of the land. The Authorities below doubted about the transaction on the basis that the assessee failed to produce Shri Sultan Meena to prove that the sale consideration so received was handed over to the said Shri Sultan Meena and also in the absence of any receipt by the owner of the land, stating that the assessee acted merely an agent. Admittedly, the revenue has not brought out any material suggesting that the assessee received this consideration as the owner of the land. As per the sale deed enclosed at page 46 of the Paper Book, it is stated that the owner of the land wished to sale the land for personal and family needs. It is recorded in the sale deed that the attorney holder received a sum of Rs. 269,37,000 as a Power of Attorney of the owner of the land. This fact is remained undisputed.

Present case even if it is assumed that the assessee has received money and not handed over the same to the land owner such receipt is a liability not an income so far the assessee is concerned. Since, the Revenue has not brought any material on record suggesting that this power of attorney was executed in lieu of a consideration. In the absence of such material, purely, on the basis of presumption and suspicion tax liability cannot be fastened on such receipt on the assessee.

Brokerage and commission income earned by assessee engaged in the field of real estate was to be taxed as business income and not as income from other sources. 

Assessee has given details of the persons from whom he received Brokerage including one Shri Sultan Meena in respect of whom the assessee had acted as power of attorney holder. The facts are identical as were in the earlier years; the assessee has placed copy of the Assessment Order pertaining to the assessment year 2008-09 and 2009-10 in the Paper Book Page No. 68 to 72, both the years, the assessee has shown income from Brokerage. In both the years the income of the assessee in respect of brokerage is accepted by the Department, we find that assessing officer has not made any inquiry from the persons from whom the assessee had received brokerage/commission. Under these facts, the assessing officer was not justified in rejecting the claim of the assessee of earning brokerage/commission. Therefore, we direct the assessing officer to treat the same as business receipt of the assessee and allow the expenditure made thereon. Hence, we deleted the addition made by the assessing officer by treating the brokerage receipts as income from other sources and disallowing the expenditure incurred thereon. Hence, the net profit declared at Rs. 5,77,816.65 be treated as net profit from business of brokerage.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This Appeal by the assessee is directed against the order of learned Commissioner (Appeals), Ajmer, dated 10-1-2017 pertaining to assessment year 2010-11. The Assessee has raised the following grounds of appeal :–

1. On the facts and in the circumstances of the case and in law the learned Commissioner (Appeals) erred in confirming the action and finding of learned assessing officer regarding :–

> Treating the income of Rs. 7,50,000 under the head as “income from other sources” a against the receipts earned from brokerage income and declared under the head of “business & profession”.

> Disallowing the expenses of Rs. 1,76,583 claimed out of business receipts.

2. On the facts and in the circumstances of the case and in law the learned Commissioner (Appeals) erred in confirming the action and finding of learned assessing officer regarding :–

> Treating the land sold on behalf of Shri Sultan Meena as owned by the assessee without considering the fact that the assessee earned only brokerage on this transaction and without brining any material on record with regard to the ownership of the said land to the assessee.

> Treating the sale consideration of Rs. 2,69,37,000 of land of Shri Sultan Meena as income of the assessee under the head “income from other sources” without appreciating the fact in judicial perception that the assessee has acted in the capacity of power of attorney and the assessee was not owner of the land which is apparent from the registered sale deed and even otherwise also if the assessee is treated is owner of the land then also profit is assessable under the head “Capital Gain” no under “Income from other sources’”.

3. The assessse prays for leave to add, to amend, to deleted, or modify the all of any ground of appeal on or before the hearing of appeal.”

2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 22-3-2013. While framing the assessment the assessing officer made disallowance of expenditure of Rs. 1,76,583 treated the sale consideration of agricultural land admeasuring 5.27 hectares comprised of Khasra No. 534, 535, 536, 537, 538, 541, 542 and 546 situated in the Revenue Area of Village Jai Singh Pura Bas District Jaipur, Rasjasthan, as income from other sources. Aggrieved by this, the assessee preferred an appeal before learned Commissioner (Appeals), who after considering the submissions also affirmed the view of the assessing officer.

3. Now, the assessee had filed the present appeal before this Tribunal.

4. At the time of hearing, the learned Counsel for the assessee submitted that ground no. 1 is also related to ground no. 2, therefore, he wish to make argument in respect of ground no. 2, first. The learned Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the learned Counsel for the assessee on this ground are as under :–

3.3 Submission of Assessee

(i) The assessee has filed complete details :–

The assessee has filed all the requisite details/information vide letter dated 17-10-2012 (PB pg 23-27), dated 4-2-2013 (PB pg 28-30) dated 25-2-13 (PB pg 31-35) dated 27-2-2013 (PB pg 36) and dated 18-3-2013 (PB pg 37-39). The assessee has discharged his onus and proved that the impugned property was owned by Shri Sultan Meena and he has acted as an agent of Shri Sultan Meena in sale transaction of the impugned property. The assessee has earned only brokerage income in the transaction and nothing more. The details filed by the assessee/explanation given by the assessee from time to time was as under :–

(i) Copy of power of attorney dated 20-1-2007 Executed by Shri Sultan Meena in favour of assessee copy at PB page 40-45. This power of attorney is also signed by two independent witness and the assessing officer did not make any inquiry from the witnesses.

(ii) Copy of revenue records of the land which shows the ownership of the land vested with Shri Sultan Meena copy at PB page 53-65

(iii) Copy of sale deed vide letter dated 4-2-2013 copy at PB page 46-52 wherein the status of the assessee in transaction was an agent of Shri Sultan Meena. This sale deed was also signed by two witnesses. No any inquiry was made by assessing officer from the purchaser of the land and witnesses.

The assessee has submitted detailed reply from time to time as under :–

Vide letter dated 25-2-2013

“Personal Presence of Shri Sultan Meena

The assessee has no regular dealing with Shri Sultan Meena and present where about of Shri Sultan Meena is not known to the assessee, therefore the assessee is not able to produce Shri Sultan Meena before your honour. It is relevant to mention here that the assessee make arrangement for sale of land of Shri Sultan Meena situated at Village Jaisinghpura Bass, Bhakrota, Patwar Halka Jaisinghpura, Teh. Sananer, Distt. Jaipur and in lieu of that the assessee got commission from Shri Sultan Meena. Since Shri Sultan Meena was not able to go to registrar office, therefore he gave power of attorney to assessee and the assessee singed the sales deed of land of Shri Sultan Meena in the capacity of his power of attorney holder and the same fact is mentioned on the registry.”

Vide letter dated 18-3-2013

“Sale of land.

With regard to your query as per para 3 of the notice in respect of transaction of land of Shri Sultana Meena, all the requisite details/information has already been filed vide letter dated 27-2-2013, 4-2-2013 and 26-10-2012. The assessee has already discharged his onus of establishing property owned by Shri Sultana Meena and on sale transaction of this property through us, the assessee has earned income from Commission/Brokerage, which has been duly disclosed in the return of income.

Without prejudice to our above submission your honor has not brought any material on record to establish that the assessee has received amount of Rs. 2,97,95,240 in respect of sale transaction of the said land. Mere non production of Shri Sultana Meena, automatically the assessee does not become owner of the said property. Therefore, liability of capital gain tax cannot be fixed on the assessee. As earlier submitted the main source of income of the assessee is Commission/Brokerage from arranging purchase/sale of real estate in the hands of other clients and not in own account. If the department fails to trace the original person, the income from such transaction in the form of capital gain cannot be recovered from the brokerage/commission agent.

We hope you will find the above details/information in order and we will be more grateful to furnish more details/information, if so required, immediately.

(ii) The addition was made in the hands of assessee without bringing any evidence or positive material :–

The learned assessing officer rejected the evidence submitted by assessee and assessed the entire sale proceed of the land as income of the assessee on surmises, conjectures ad suspicion. The department has no material to show that the assessee was the owner of the land or the assessee was beneficial owner of the entire sale proceed of the land. The learned assessing officer has not made any inquiry from the witnesses who signed as witness in power of attorney and registered sale deed. The registered sale deed, power of attorney and revenue records under Rajasthan Land Revenue Act are evidence, all which shows the owner of the land was Shri Sultan Meena and the assessee acted as an agent of principle. The assessing officer merely disbelieved the explanation/statements given by the assessee and has converted good proof into no proof. Hon’ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Benerjee v. CIT (1963) 49 ITR 112 (SC); 120 observed that the Inocme Tax Department cannot by merely rejecting unreasonably a good explanation, convert good “proof into no proof”. Hon’ble Supreme Court in the case of Uma Charan Shaw & Bros Co v. CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof. Hon’ble Punjab & Harayana High Court in the case of CIT v. Anupam Kapoor (2008) 299 ITR 179 (P &H) also held that suspicion, howsoever strong cannot take the place of legal proof.

(III) The contention of the learned assessing officer that the stated power of attorney was executed on 20-1-2007 in which the land is shown to be agricultural whereas the said land stood converted to residential in 2005

The learned assessing officer mentioned in Para 4.2 of his order that the power of attorney document dated 20-1-2007 produced by the assessee pertained to agricultural land whereas the JDA records showed that vide order dated 16-9-2006 of JDA, the said land has been converted into residential land under section 90(b) of the Rajasthan Land Revenue Act 1956. This finding has no bearing on the ownership of the land and status of the assessee in the deal as agent of Shri Sultan Meena. The power of attorney is for the same land which was sold by the assessee as an agent of Shri Sultan Meena. The khasra Nos mentioned in Power of attorney are 535, 536, 537, 538, 541, 542, 546, and 534 (PB page 41) and the same Khasra numbers are mentioned in the registered sale deed (PB pg 47). Further, this power of attorney has been accepted by the Registration Authority and allowed the assessee to execute the sale deed for and on behalf of Shri Sultan Meena then how the learned assessing officer can reject and brushed aside this power of attorney. In the registered sale deed the status of the assessee is clearly mentioned that the assessee was acting as power of attorney holder of Shri Sulatan Meena and real and beneficial owner of the land is Shri Sultan Meena.

(iii) Personal Presence of Shri Sultan Meena

It is an admitted fact that the notice issued by the department to Shri Sultan Meena was served. Therefore, the identity of Shri Sultan Meena is not in doubt. The assessee has no statutory powers to enforce the attendance of any person. The department has been vested with vast powers by the legislation. The department can use its powers and make necessary inquiries to unearth the truth. The department can make inquiry from the Shri Sultan Meena. It is the assessing officer’s statutory duty to enforce attendance of a witness if the evidence is material. If power to called the witness and examine him are not exercised judicially than the addition cannot be made. Reliance is placed on the following decisions.

(1) Nathu Ram Premchand v. CIT (1963) 49 ITR 561 (All);

(2) E.M.C. Works P Ltd. v. ITO (1963) 49 ITR 650 (All)

(iv) Sale consideration was received in cash :–

It is admitted fact that Shri Sultan Meena is an agriculturist and this also proved from the Revenue Records of the land. It is common practice that the most of agriculturist receives the payment in cash. Further the law of land does not prohibit to sale of the agricultural land in cash.

(v) The assessee failed to prove that the sale consideration of Rs. 2,69,37,000 was passed to Shri Sultan Meena

Since the land in question was owned by Shri Sultan Meena therefore the assessee could not retain the money of Shri Sultan Meena, Had the money was not given to Shri Sultan Meena, he would have filed the complaint in Police and other courts against the assessee. There exist no such cases against the assessee this alone prove that Shri Sultan Meena has received his money against sale of the land.

There is no finding of the learned assessing officer that the assessee has utilized the money received from sale of land owned by Shri Sultan Meena for his benefit. No such utilization was found in the hands of the assessee.

Even for sake of the argument if it is presumed that the money was not returned to Shri Sultan Meena and kept by the assessee then it becomes liability of the assessee not he income of the assessee. Therefore on this ground also the sale proceeds of the land cannot be assessed as income of the assessee.

(vi) The modus operandi discussed in para (viii) at page 9 of assessment order is based on surmises and conjectures without having material :–

The learned assessing officer under the guise of the modus operandi of the sale of SC/ST land wants to say that the assessee was the real owner of the land which he purchased under agreement to sale and power of attorney. First of all the onus The onus was on the department to prove that the apparent is not real and the said onus was not discharged. Reliance is placed on following decisions :–

(I) Sree Meenakshi Mills Ltd. v. CIT (1957) 31 ITR 28 SC;

(II) CIT v. S.P. Jain (1973) 87 ITR 370

(III) Rai Bahadur Mohan Singh Oberoi v. CIT (1973) 88 ITR 53 SC,

(IV) CIT v. Daulat Ram Rawatmull 87 ITR 349 (SC),

(V) Jayanti Lal Patel v. Astt CIT (1998) 233 ITR 588 (Raj);

Further, there is no finding of learned assessing officer that when this property was purchased by the assessee and at what cost and where is the agreement of sale. In fact the learned assessing officer has suspected and drawn an analogy. Even the learned assessing officer himself has not accepted this analogy in completion of assessment since the cost of the land has not been deducted while computing the income.

(ix) Power of attorney executed in favour of assessee does not make the assessee owner of the property

The land owner executed the power of attorney in favour of the assessee. The land owner has not transferred the ownership of the land in favour of the assessee. Hon’ble Supreme Court in the case of Suraj Lamp and Industries (P) Ltd. v. State of Haryana (2012) 340 ITR 1, has held that :–

“Scope of Power of Attorney

13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee…”

(x) The learned assessing officer blowing hot and cold in same stream as he himself suggested action in the case of Shri Sultan Meena

After completion of assessment of the assessee the learned assessing officer vide letter No Add.CIT/R-6/JPR/2013-14/289, dt. 15-5-2013 directed to ITO ward 7(2) Jaipur to assess the capital gain arising from sale of this land in the hands of Shri Sultan Meena, the owner of the land. The copy of the said letter is placed at PB page 66 to 67. This letter clearly shows that the department itself is treating Shri Sultan Meena as real and beneficial owner of the sale consideration of the land. This proves that the learned assessing officer has assessed the income in the hands of this assessee merely on suspicion, surmises and conjectures And without having material.

(xi) Hon’ble Madras High Court in the case of CIT v. Shri C Sugumaran Tax case (Appeal) No 840 of 2014 Order, dt. 3-11-2014 in (Tax Case (Appeal) No. 840 of 2014, dt. 3-11-2014) has considered the issue of taxability in the hands of power of attorney holder.

In this case the assessing officer took the view that it is the assessee (the power of attorney holder) sold the property. The assessee/power of attorney holder contested the assessment of capital gains at his hands by pleading that he had acted only as a power of attorney holder of the actual owner Mr. Viswanathan, which plea was rejected by the assessing officer and the total income was computed at Rs. 61,25,290 resulting in the demand of tax at Rs. 16,94,560. Aggrieved by the said order of the assessing officer, the assessee has filed an appeal before the Commissioner (Appeals), who rejected the plea of the assessee, thereby dismissed the appeal. As against the said order, the assessee filed an appeal before the Income Tax Appellate Tribunal. The Tribunal placing reliance on the various clauses in the power of attorney, held that the recital contained in the power of attorney does not show that any consideration was paid to the actual owner and the assessee had acted merely as an agent. The Tribunal also gave a finding that there was no supporting evidence to disbelieve the claim of the assessee. The Tribunal was of the view that the assessee could not be treated as owner of the property sold on 23-10-2008 and therefore there was no question of computing capital gains in the hands of the assessee. Accordingly, the Tribunal allowed the appeal filed by the assesee. As against the said order of the Tribunal, the revenue filed appeal before Hon’ble High Court. Hon’ble High Court confirmed the order of Tribunal. The relevant finding of Hon’ble High Court is as under :–

“11. In the present case we find that there is no transfer to or enabling enjoyment of property in favour of the assessee in any manner and therefore, sub-clause (vi) of section 2(47) of the Income Tax Act does not get attracted. Clause 21 of the power of attorney, which has been already referred to supra, clearly reveals that no consideration was received from the power agent for appointing him as power of attorney. It also emphasised therein that the property right has not been handed over to the power agent. We are, therefore, unable to accept the plea of the Revenue that there was an element of transfer or enabling enjoyment in favour of the assessee. The letter of the land owner subsequently issued does not come to the aid of the Department. It is the duty of the power of attorney holder to deliver the amount received for the purpose of transfer of property. Therefore, no fault could be found on the part of the assessee. Assuming that he had delivered certain sum to the land owner, it is but the lawful duty of the power of attorney to deliver payment to the land owner. The sale to Dr.Meera Bai is also for the same value. Hence, nothing turns on the letter of the erstwhile owner, in favour of the Department.

12. We, therefore, now proceed to analyse the meaning behind Circular No. 495, dt. 22-9-1987. The interpretation of the circular as put forward by Sri.T.Ravikumar, learned standing counsel appearing for the Revenue, we are not in agreement. The provisions of sub-clause (vi) of section 2(47) of the Income Tax Act make it clear that the transaction, which has the effect of transferring or enabling the enjoyment of immovable property alone would come within the ambit of transfer. The circular reads something more into the provision. We are not inclined to accept such an interpretation. The circular also states that the legal ownership would continue with the transferor; but the property rights if it is transferred by way of power of attorney would come within the ambit of sub-clause (vi) of section 2(47) of the Income Tax Act. Assuming we accept the intention behind the circular, then there should be an element of transfer or enabling enjoyment of property right as stated in paragraph 11.2 of the circular by the power of attorney holder.

13. We find no such recital in the power of attorney as extracted by the Tribunal and referred to by us. On the contrary, the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment. It is not the case of the Department that the power of attorney is sham. If they accept the power of attorney is valid, then the plea of capital gains at the hands of the assessee has no legs to stand. Accordingly, we find no merits in this Tax Case (Appeal).

(xii) On the similar facts and circumstances coordinating bench of Hon’ble ITAT Jaipur has decided the issue in the case of Shri Suraj Narain Khatoria, v. ITO in ITA No 1043/JP/2011 Assessment year 2008-09 Order, dt. 27-5-2013 in favour of assessee. The findings of Hon’ble ITAT in this case was as under :–

“11. We have heard parties with reference to material on record. Shri Bharat Singh, S/o. Shri Moti Singh and Shri Vijay Pal Singh, S/o. Shri Bharat Singh Choudhary by a registered power of attorney dated 13-11-2006 appointed Shri Suraj Narayan, son of Shri Narain Singh Khatoria as their power of attorney in respect of 0.30 hect. of agricultural land situated in khasra No. 13 at village Bhakrota for getting the revenue record corrected in that respect and after getting its mutation in their name, sell this land to any person on their behalf and his acts were binding on them. The said power of attorney was executed on Non-Judicial Stamp paper of Rs. 500. However, the registering authority adopted value at Rs. 13.80 lacs and for stamp duty purposes and charged stamp duty of Rs. 27,600 thereon. The said power of attorney is found laid on record at assessee’s paper book pages 22-23.

12. The admitted fact is that the appellant after correction of revenue record and recording the said land measuring 0.30 hect. in the name of Shri Bharat Singh and Shri Vijay Pal Singh, sold the same to Smt. Radha Devi Khatoria vide sale deed dated 19-12-2007 placed at assessee’s paper book pages 49 to 54. The said sale deed has been executed by the appellant in his capacity as a power of attorney of Shri Bharat Singh and Shri Vijay Pal Singh for a sale consideration of Rs. 4.11 lacs. Smt. Radha Devi Khatoria happens to be wife of the appellant. The enquiries conducted by the assessing officer reveals that Shri Suraj Narain Khatoria, the appellant has not returned or made payment of the aforesaid sale consideration of Rs. 4.11 lacs to Shri Bharat Singh and Shri Vijay Pal Singh as the same is stated to have been denied categorically by them, but appellant’s case is that the said payment stood made to Smt. Manju Yadav as is evidenced by the sale deed executed by the appellant. For such a controversy, the remedy lies somewhere else. The Sub-Registrar, in this case has adopted value of this property at Rs. 42 lacs for stamp duty purposes, which has been treated as sale consideration by the assessing officer.

13. Perusal of the sale deed dated 19-12-2007 at page 50 of the assessee’s paper book, it is revealed that said Shri Suraj Narain did not execute the sale deed as an owner of the aforesaid land measuring 0.30 hect.. He executed sale deed in his capacity as a power of attorney holder only wherein he had only a delegated right. This right was not independent right of the appellant. There is also no reliable material or documentary evidence on record to show that the said Shri Suraj Narain, the appellant before us had purchased the aforesaid land from any of its earlier owners before transferring the same in the name of Smt. Radha Devi Khatoria through sale deed dated 19-12-2007 as a power of attorney holder. It is a different matter that the sale consideration received by him on behalf of the previous owners was not paid or returned to them immediately after execution of sale deed or even up to the time of enquiries made by the assessing officer. The appellant, thus, being neither owner nor a deemed owner of the said capital asset, the said capital asset cannot be taken as property of the appellant. The sale consideration of the aforesaid land, therefore, could not be a subject matter of transfer of his own capital asset. The Income Tax Department has also not assessed him as a representative assessee or an agent of the said Shri Bharat Singh and Shri Vijay Pal Singh and as such question of making assessment of income from capital gains by application of provisions of section 50-C of the Act adopting full value of consideration at Rs. 42 lacs in his hands, is neither justified nor called for. The authorities below, therefore, have erred in bringing to tax the income from capital gains in his hand though the same may be a subject matter of taxation in the hands of the real owners. In this view of the matter, the addition so made being unjust and uncalled for, the same is directed to be deleted.”

Therefore, liability of tax cannot be fixed on the assessee and the income from the sale of land cannot be added in the assessee’s income. The humble assessee prays your honor kindly set aside the orders of lower authorities and delete the addition made by learned assessing officer and confirmed by learned Commissioner (Appeals).”

4.1 On the contrary, learned Departmental Representatives opposed the submissions and supported the order of the authorities below.

4.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The learned Commissioner (Appeals) has decided this issue by holding as under :–

“6.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submission carefully. It is seen that the appellant had obtained power of attorney from Shri Sultan Meena on 20-1-2007. The power of attorney was for the agriculture land owned by Shri Sultan Meena but the said land was already converted as residential land in 2005. The appellant has not produced Shri Sultan Meena to prove that the sale was affected by the appellant only on behalf of Shri Sultan Meena and the sale consideration received by him as power of attorney holder was handed over to Shri Sultan Meena. There is no other evidence to substantiate the contention of the appellant that the sales consideration view that no prudent person will execute power of attorney in favour of any unknown person unless he receives the appropriate consideration for giving the power of attorney. Shri Sultan Meena has not shown the sale transaction effected by the appellant as power of attorney holder of Shri Sultan Meena, in his return of income, if any, filed by him, which also shows that the sale was effected by the appellant for himself only and the consideration for obtaining the power of attorney in his favour was already paid by him to Shri Sultan Meena at the time of obtaining the power of attorney in his favour. Hence, I am of the view that the income of Rs. 269,37,000 is the income of the appellant and the assessing officer has rightly taxed the income in the hands of the appellant. Accordingly, the addition of Rs. 2,69,73,000 made by the assessing officer is confirmed. The ground of appeal is dismissed.”

4.3 The only issue in this ground is whether the sale consideration of the land belonging to Shri Sultan Meena can be taxed in the hands of the assessee, who is admittedly Power of Attorney holder of Shri Sultan Meena. There is no dispute with regard to the fact that, Shri Sultan Meena is recorded owner in the land in question. There is also no dispute with regard to the fact that, there is no evidence on record suggesting that the Power of Attorney to Shri Sultan Meena was executed by the assessee by paying consideration of the land. The Authorities below doubted about the transaction on the basis that the assessee failed to produce Shri Sultan Meena to prove that the sale consideration so received was handed over to the said Shri Sultan Meena and also in the absence of any receipt by the owner of the land, stating that the assessee acted merely an agent. Admittedly, the revenue has not brought out any material suggesting that the assessee received this consideration as the owner of the land. As per the sale deed enclosed at page 46 of the Paper Book, it is stated that the owner of the land wished to sale the land for personal and family needs. It is recorded in the sale deed that the attorney holder received a sum of Rs. 269,37,000 as a Power of Attorney of the owner of the land. This fact is remained undisputed.

4.4 We have given our thoughtful consideration to the facts of the present case even if it is assumed that the assessee has received money and not handed over the same to the land owner such receipt is a liability not an income so far the assessee is concerned. Since, the Revenue has not brought any material on record suggesting that this power of attorney was executed in lieu of a consideration. In the absence of such material, purely, on the basis of presumption and suspicion tax liability cannot be fastened on such receipt on the assessee. During the course of hearing learned Counsel for the assessee has placed reliance on the judgment of the Hon’ble Madras High Court in the case of CIT v. C. Sugumaran, dt. 3-11-2014 in Tax Case (Appeal) No. 840 of 2014. The Hon’ble High court, under the identical facts decided the issue of tax liability qua the attorney holder as under :–

“ 12. We, therefore, now proceed to analyse the meaning behind Circular No. 495, dt. 22-9-1987. The interpretation of the circular as put forward by Sri t. Ravikumar, learned Standing counsel appearing for the Revenue, we are not in agreement. The provisions of sub-clause (vi) of section 2(47) of the Income Tax Act make it clear that the transaction, which has the effect of transferring or enabling the enjoyment of immovable property alone would come within the ambit of transfer. The circular reads something more into the provisions. We are not inclined to accept such an interpretation. The circular also states that the legal ownership would continue with the transferor, but the property rights it is transferred by way of power of attorney would come within the ambit of sub-clause (vi) of section 2(47) of the Income Tax Act. Assuming we accept the intention behind the circular, then there should be an element of transfer or enabling enjoying of property right a stated in paragraph 11.2 of the circular by the power of attorney holder.

13. We find no such recital in the power of attorney as extracted by the Tribunal and referred to by us. On the contrary, the terms of the power of attorney clearly show that property rights has not been transferred to the power of attorney holder and there is also no provision for enabling enjoyment. It is not the case of the Department that the power of attorney is sham. If they accept the power of attorney is valid, then the plea of capital gains that the hands of the assessee has no legs to stand. Accordingly, we find no merits in this Tax Case (Appeal).

The Revenue has not brought any contrary binding precedents. The assessee has also placed reliance on the judgment of the Hon’ble Supreme Court in the case of Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra (2004 (8) SCC 614), wherein the Hon’ble Supreme Court has held that a power of attorney is not an instrument of transfer in regard to any right, title or interest in any immovable property. The power of attorney is a creation of an agency whereby the grantor authorizes the grantee to do acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done and by him.

The coordinate Bench of this Tribunal in the case of Shri Suraj Narain v. ITO in ITA No. 1043/JP/2011, under the identical facts decided the similar issue as under :–

“12. The admitted fact is that the appellant after correction of revenue record and recording the said land measuring 0.30 hect. In the name of Shri Bharat Singh and Shri Vijay Pal Singh, sold the same to Smt. Radha Khatoria vide sale deed dated 19-12-2007 placed at assessee’s paper book pages 49 to 54. The said sale deed has been executed by the appellant in his capacity as a power of attorney of Shri Bharate Singh and Shri Vijay Pal Singh for asale consideration of Rs. 4.11 Lacs. Smt. Radha Devi Khatoria happens to be wife of the appellant. The enquiries conducted by the assessing officer reveals that Shri Suraj Narain Khatoria, the appellant has not returned or made payment of the aforesaid sale consideration of Rs. 4.11 lacs to Shri Bharate Singh and Shri Vijay Pal Singh as the same is stated to have been denied categorically by them, but appellant’s cae is that the said payment stood made to Smt. Manju Yadav as is evidenced by the sale deed executed by the appellant. For such a controversy, the remedy lies somewhere else. The sub-Registrar, in this case has adopted value of this property at Rs. 42 lacs for stamp duty purposes, which has been treated as sale consideration by the assessing officer.

13. Perusal of the sale deed dated 19-12-2007 at page 50 of the assessee’s paper book, it is revealed that said Shri Suraj Narain did not execute the sale deed as an owner of the aforesaid land measuring 0.30 hect. He executed sale deed in his capacity as a power of attorney holder only wherein he had only a delegated right. This right was not independent right of the appellant. There is also no reliable material or documentary evidence on record to show that the said Shri Surja Narain, the appellant before s had purchased the aforesaid land from any of its earlier owners before transferring the same in the name of Smt. Radha Devi Khatoria through sale deed dated 19-12-2007 as a power of attorney holder. It is a different matter that the sake consideration received by him on behalf of the previous owners was not paid or returned to them immediately after execution of sale deed or even up to the time of enquiries made by the assessing officer. The appellant, thus, being neither owner nor a deemed owner of the said capital asset, the said capital asset cannot be taken as property o the appellant. The sale consideration of the aforesaid land, therefore, could not be a subject matter of transfer of hi own capital asset. The Income Tax Department has also not assessed him as representatives assessee or an agent of the said shri Bharat Singh and Shri Vijay Pal Singh and as such question of making assessment of income from capital gains by application of provisions of section 50-C of the Act adopting he full value of consideration of Rs. 42 lacs in his hands, is neither justified nor called for. The authorities below, therefore, have erred in bringing to tax the income from capital gains in his hand though the same may be a subject matter of taxation in the hands of the real owners. In this view of the mater, the addition so made being unjust and uncalled for, the same is directed to be deleted.”

4.5 In view of the above binding precedents, on the issue under consideration. We are unable to sustain the finding of the learned Commissioner (Appeals). Hence, the assessing officer is directed to delete the addition however, he is free to take action against the real owners as per law. The ground no. 2 of the assessee’s appeal is allowed.

5. Now, we take up ground no. 1, i.e., against treating the income of Rs. 7,50,000 as under the head as “income from other sources” as against the receipts earned from brokerage income and declared under the head of “business & profession” and disallowing the expenses thereon claimed at Rs. 1,76,583 claimed to have been incurred on business receipts.

5.1 The learned Counsel for the assessee reiterated the submissions as made in the written submission. The learned Counsel submitted that the assessee is maintaining proper book of accounts. The books of accounts are not rejected. The assessee has given the complete details on the individuals from whom he had charged brokerage commission. The assessing officer has rejected the claim on the ground that specific particular of land was not given and payments received in cash are not verifiable. learned Counsel submitted that the assessee had given all the information with regard to the location of land under transaction and the name of transacting parties. It was submitted before the assessing officer that enquiries from State Land Revenue Authorities of the concerned area could be made to ascertain ownership of land in that locality during the relevant period. He submitted that, the assessee has been working in the field of real estate from past many years and declaring income from brokerage and commission from such business which has been duly accepted by the department and the Assessment was made under section 143(3) in respect of the assessment year 2008-09 & 09-10.

5.2 On the contrary, the learned Departmental Representatives opposed the submissions and submitted that the assessing officer observed that the assessee has claimed income of Brokerage. He had simply given the name of the persons, no other details were given by the assessee. Under these facts, the assessing officer was justified in rejecting the claim of earning of income from brokerage.

5.3 We have heard the rival contentions, perused the material available on record. We find that, there is no dispute with regard to the fact that assessee has been declaring from Brokerage/Commissioner on sale of land. During the year under consideration the claim of the assessee was rejected on the ground that the assessee failed to prove with any cogent evidence that he actually carried out such business since the receipt are in cash no TDS has been made by the payer.

5.4 We find that the assessee has given details of the persons from whom he received Brokerage including one Shri Sultan Meena in respect of whom the assessee had acted as power of attorney holder. The facts are identical as were in the earlier years; the assessee has placed copy of the Assessment Order pertaining to the assessment year 2008-09 and 2009-10 in the Paper Book Page No. 68 to 72, both the years, the assessee has shown income from Brokerage. In both the years the income of the assessee in respect of brokerage is accepted by the Department, we find that assessing officer has not made any inquiry from the persons from whom the assessee had received brokerage/commission. Under these facts, the assessing officer was not justified in rejecting the claim of the assessee of earning brokerage/commission. Therefore, we direct the assessing officer to treat the same as business receipt of the assessee and allow the expenditure made thereon. Hence, we deleted the addition made by the assessing officer by treating the brokerage receipts as income from other sources and disallowing the expenditure incurred thereon. Hence, the net profit declared at Rs. 5,77,816.65 be treated as net profit from business of brokerage. Thus, this ground of assessee’s appeal is also allowed.

6. In the result, Appeal of the assessee in ITA No. 266/JP/2017 is allowed.

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