The Income Tax Appellate Tribunal (ITAT) has clarified that money received by a taxpayer while acting as a power-of-attorney holder does not automatically become his taxable income. According to reports from Mint, the Chennai bench of ITAT deleted a ₹1.25 crore addition in the case of Duraisamy Victor vs ITO on 22 September 2026. The tribunal found that Victor had received the amount on behalf of three property owners under a registered power-of-attorney and subsequently passed it on as an advance for another property purchase.
During July and August 2016, three purchasers paid ₹1.25 crore to Victor in 16 instalments as part of a property transaction. As reported by Mint, Victor explained that he was only acting as an intermediary and subsequently paid corresponding amounts to property owner Nalini Selvaraj as an advance for purchasing her property. The assessing officer treated the ₹1.25 crore as unexplained money under section 69A of the Income Tax Act, but the ITAT disagreed with this assessment.
The ITAT examined the flow of funds and noted that the amounts received from purchasers corresponded with the amounts subsequently paid to Selvaraj. According to Mint, the tribunal also considered the registered power-of-attorney executed in 1996, details of payments received from purchasers, and surrounding property documents. The matching movement of the ₹1.25 crore helped support Victor's claim that the money was not his own, demonstrating the importance of maintaining clear documentary evidence when handling someone else's money.
The ITAT also deleted a separate addition of ₹66 lakh relating to cash deposits in Victor's bank account. As reported by Mint, Victor explained these deposits through current-year earnings, accumulated savings, and ₹37 lakh received from his late brother's estate. The tribunal found that his explanation was supported by available records. The ruling emphasizes that taxpayers handling property money for others must maintain registered powers of attorney, sale agreements, payment instructions, bank statements, and evidence showing onward transfer of funds to establish that the funds did not belong to them personally.
