The Income Tax Appellate Tribunal (ITAT), Jaipur Bench deleted the addition in absence of requisite enquiry and examination.
The notice was issued to the assessee, Devendra Kaur on the basis of the information in his possession that the assessee has sold an immovable property for Rs. 6,00,000/- vide sale deed and adopted value of Rs. 14,75,230/- for registration of sale deed.
In response to notice the assessee filed her return of income declaring total income of Rs. 340/-. During the course of assessment proceedings the assessee filed the copy of sale deed showing sales consideration of Rs. 6,00,000/- in which it is clearly mentioned that she is only General Power of Attorney holder and not the owner of the house property which was allotted by Rajasthan Housing Board, Alwar for consideration of Rs. 2,89,582/- to Tripta Nurpuri, sister of the assessee.
However, the A.O treated Devendra Kaur as the owner of the residential house and ignored the documents furnished for allotment of the house to Tripta Nurpuri by the Rajasthan Housing Board. The Commissioner (Appeals) followed AO’s version in the order and without considering the facts and circumstances of the case that the assessee is not the owner of the house dismissed the appeal. The Commissioner (Appeals) also ignored the taxability of long-term capital gain contained under section 45, which cast liability of tax on the owner of the asset and not any other person who is not the owner of the house property.
The coram of Sandeep Gosain and Vikram Singh Yadav noted that the AO has failed to conduct any enquiry and bring any material or fact to establish that the assessee has initially acquired the property in question at the time of Power of Attorney and subsequently sold the same vide sale deed in the capacity and in her right as an owner of the property.
The ITAT found that while computing capital gains in the hands of the assessee, the AO has allowed the cost of acquisition of Rs 289,582 which was actually the cost of acquisition paid by Tripta Nurpuri at the time of initial allotment way back in the year 1998 which cannot be inferred as cost of acquisition in hands of the assessee as on the date of execution of power of attorney.
Therefore, the Tribunal held that the AO himself was not clear as to the taxability of the transaction in the hands of the assessee in absence of requisite enquiry and examination and said that the addition made by the AO in the hands of the assessee is not warranted and the same is directed to be deleted.