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This appeal by the assessee is directed against the order of CIT(A), Mysore, dated 19.03.2015 for Assessment Year 2010-11.
2. Briefly stated, the facts of the case are as under:-
2.1 The assessee, a student doing her Ph.D, filed her return of income for Assessment Year 2010-11 on 30.09.2010 declaring income of Rs.1,88,350/-. She is a GPA holder for her father Shri. Rachaiah who was in judicial custody. The case was selected for scrutiny. In the course of assessment proceedings, the Assessing Officer (AO) called for, inter alia, the bank accounts and on examination thereof observed that there were cash deposits to the extent of Rs.16,80,500/- made in her Bank account with Corporation Bank, Vijayanagar Branch, Mysore. The assessee explained that the aforesaid cash deposits in her Bank account represent the cash component of the consideration received for sale of her father’s immovable property. It was submitted that the father of the
assessee was in judicial custody and the assessee had sold the property which was in the name of the father by taking GPA from her father. It was further submitted that amounts totaling to Rs.77 lakhs was received in cheque and Rs.16,80,500/- was received in cash and the entire amount was deposited in Banks. The AO, however, did not accept the explanation put forth by the assessee and treated the cash deposit amounting to Rs.16,80,500/- as “unexplained investment” in the hands of the assessee and brought the same to tax in the assessee’s hands. The assessment was accordingly completed under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) vide order dated 31.12.2012.
2.2 Aggrieved by the order of assessment dated 31.12.2012 for Assessment Year 2010-11, the assessee carried the matter in appeal to CIT(A), Mysore. Before the CIT(A), the assessee reiterated the submissions put forth before the AO. The assessee also admittedly placed on record a copy of the Return of Income filed by he father on 31.03.2013, wherein the entire sale consideration of Rs.93,80,500/- (i.e., Rs.77,00,000/- + Rs.16,80,500/-) received on sale of immoveable property was shown; which included the cash component of Rs.16,80,500/-. The CIT(A), however, rejected the assessee’s contentions and upheld the addition made by the AO; observing that filing of the return of income by the assessee’s father is an afterthought and that the assessee could not substantiate with evidence the receipt of on-money in the sale transaction of immovable property.
3.1 Aggrieved by the order of the CIT(A)-Mysore dated 19.03.2015 for Assessment Year 2010-11, the assessee has filed this appeal before the Tribunal, wherein she has raised the following grounds:-
1. The learned AO, has failed to provide sufficient opportunity to the Appellant before passing the assessment order under section 143(3) of the Act.
2. The assessment order/ order of the learned Commissioner of Income Tax (Appeals) is erroneous in law and under the facts and circumstances of the case.
3. The learned AO has erred in law and on facts in raising demand of Rs 7,05,530.
4. The learned AO has erred in law and on facts in making addition of Rs 16,80,500 without appreciating the explanations offered by the Appellant.
5. The addition made by the AO as "unexplained investment" is erroneous both under the law and on facts as the Appellant has acted in the capacity of the power of attorney holder and the Appellant was not the owner of the land which is apparent from the registered sale deed and even otherwise the income is assessable under the head "Capital Gain" and not under "Income from other sources". Thus there is a fatal error in characterizing the addition without any basis and is contrary to the provisions of the Act.
6. The learned AO has failed to appreciate that the Appellant acted as a power of attorney holder on behalf of her father who was in judicial custody and the facts related to additions made by the learned AO had nothing to do with her individual capacity.
7. The learned AO has erred in law and on facts in making addition in the hands of the Appellant without appreciating the fact that the Appellant was holder of Power of Attorney and hence acted in the capacity of an agent her father in executing the transfer of immovable property and thus the ed AO has no jurisdiction to subject the Appellant to assessment under Act.
8. The learned AO has erred, in law and in facts, in initiating penalty dings u/s 271(1)(c) of the Act.
3.2 All the grounds raised in this appeal (supra) are in respect of the issue of the addition of Rs.16,80,500/- made towards “undisclosed investment” in the hands of the assessee. In the course of proceedings, the learned AR of the assessee filed a paper book (pages 1 to 59) containing various documents / judicial pronouncements in support of her case, which are duly considered.
3.3.1 In appeal proceedings, the learned AR of the assessee put forth various submissions, the gist of which is as under:-
(i) The assessee in the period under consideration is admittedly a student and therefore has no independent source of income and was therefore incapable of earning any such unexplained income or investment; as alleged.
ii) The father of the assessee Shri. R. Rachaiah was in judicial custody and the assessee had obtained General Power of Attorney (GPA) from her father and sold the property; which fact is borne out from the recitals in the sale deed dated 07.06.2010. As such the sale of the said immovable property was by her father and the income from the sale should be assessed only in the hands of the father.
(iii) It is settled principle that capital gains on sale of property should be considere in the hands of the actual seller and not that of the ‘GPA’ holder.
(iv) The father of the assessee had filed the return of income for Assessment Year 2011-12 showing the total sale consideration; including the cash component of Rs.16,80,500/-. Merely because the assessee’s father is entitled for deduction under section 54 of the Act, the return filed by him cannot be disregarded.
(v) The AO has not raised any issue on assessing the sale consideration received in cheque in the hands of the father and therefore the onmoney / cash component also has to be assessed in the hands of the father.