2015 (6) TMI 456 - AT - Income Tax

ITAT Upholds CIT (A) Decisions on Property Valuation, Cash Credits, Cost Disallowance

ITO Versus Shri Upender Kumar Gupta

ITO Versus Shri Upender Kumar Gupta - TMI Issues:1. Valuation of property for capital gains computation under sections 50C(2) and 50C(3) of the Income-tax Act, 1961.2. Addition of unexplained cash credits.3. Disallowance of cost of improvement on properties sold.Issue 1 - Valuation of Property for Capital Gains:The appeal revolved around whether the CIT (A) was justified in directing the Assessing Officer to refer the property for valuation to the DVO under sections 50C(2) and 50C(3) of the Income-tax Act, 1961. The Assessing Officer had added an amount to the capital gains based on circle rate valuation, which was contested by the assessee. The CIT (A) found that the AO had not followed the complete provisions of section 50C(2) and directed the valuation to the DVO. The ITAT upheld the CIT (A)'s decision, citing legal precedents and the assessee's objections to the circle rate valuation, leading to the rejection of grounds no.1 & 2.Issue 2 - Addition of Unexplained Cash Credits:The Assessing Officer added a sum as unexplained cash credits under section 68 of the Income Tax Act, based on cash deposits in the assessee's bank account. However, the CIT (A) deleted this addition, noting that the cash deposits were explained in the cash flow statement supported by bank statements and sale deeds. The ITAT concurred with the CIT (A)'s decision, emphasizing the proper justification for the deletion of the addition, resulting in the rejection of grounds no. 3, 4 & 5.Issue 3 - Disallowance of Cost of Improvement:Regarding the disallowance of 50% of the claimed cost of improvement on properties sold, the Assessing Officer disallowed the amount due to insufficient evidence provided by the assessee. However, the CIT (A) overturned this decision, stating that the disallowance was unjustified without valid reasons. The ITAT supported the CIT (A)'s decision, highlighting the confirmation of expenses and the recorded statement of the concerned individual, leading to the rejection of ground no. 6.In conclusion, the ITAT dismissed the revenue's appeal on all grounds, upholding the CIT (A)'s decisions on the valuation of property for capital gains, addition of unexplained cash credits, and disallowance of the cost of improvement. The judgment provided detailed analysis and legal reasoning for each issue, resulting in the rejection of the revenue's appeal.