• Sale deed after twenty years

Dear Sir,
I had bought a flat in 1994 at a cost of 1.25 lakhs. In the same building where my father was staying. Being a defence officer, I was away and I had given my father a general power of attorney to execute purchase /sell property in my name. 
My father without consulting me sold the property to one of the neighbours in 2002 for 8.5 lakhs. The money was received by him in cash over three years presumably.
I have come to know about this transaction recently, when the buyer died and his kin (son) wanted to sell the flat, and found out the sale deed was not registered by both our fathers.
Though the transactions were done without my knowledge I want to honour it as the other family is close to us and now is needy too as they have lost their sole bread earner.
The kin (son) is only 20 years old and studying.

However, the issue is that I do not want to loose any money further in form of capital gains tax as the circle rate now in 2017 is around 30 lakhs. 
Is there away to handle it ?
Can I sell this flat to a third person ( to the person the kin wanted to sell ) and let the money go to his(kins) account directly. And not pay any tax? Will he then be liable to pay income tax?
Can I register the sale deed at the actual amount received by my father in 2004? and pay capital gain tax only on that amount?
Though one of my friend has laughed at the absurdity of idea as no proof exists of the transaction. And adviced me to just take over property and give the amount received, back as a loan taken. I would rather do the morally right thing.
Regards.