Duraisamy Victor Vs ITO (ITAT Chennai)
Money Received as Power of Attorney Holder Cannot Become the Agent’s Unexplained Income: Chennai ITAT Deletes ₹1.91 Crore Addition
When a power of attorney holder collects money for the owners of a property and passes it on at their direction, can the entire amount be taxed as his own unexplained money under section 69A? The Chennai Tribunal answered this question in favour of the assessee after tracing the transaction through the purchasers, the property owners and the ultimate recipient. It also deleted a separate addition for ₹66 lakh of cash deposits, holding that the assessee had explained their sources.
The two additions together amounted to ₹1.91 crore.
The property transaction and the ₹1.25 crore addition
The assessee, Duraisamy Victor, carried on business as a general commission agent under the name Victory Traders. For AY 2017–18, he declared income of approximately ₹22.32 lakh. His assessment was reopened after the Department received information that he had collected ₹1.25 crore in cash from three persons in connection with a property transaction. It had also noticed ₹66 lakh deposited in his bank account.
The assessee explained that he held a registered General Power of Attorney dated 17 April 1996 from the owners of land at Kodambakkam, Chennai. The power of attorney expressly authorised him to receive sale advances and consideration on the owners’ behalf, issue receipts and account to them. It also recorded that he had paid no consideration for obtaining the power of attorney.
