2018 (12) TMI 985 - AT - Income Tax

Assessee's Appeal Allowed for Fresh Adjudication

The Tribunal allowed the appeal of the assessee for statistical purposes, directing a fresh adjudication by the AO. The Tribunal admitted additional ... Admission of additional evidence - Erroneous claim of cost of improvement - not in consistence with the copy of the sale deed filed - assessee claimed sum in the return of income as cost of improvement, was actually cost incurred in relation to acquisition of the plot of the land - Held that:- As decided in TEXT HUNDRED INDIA PVT. LTD. case [2013 (6) TMI 72 - DELHI HIGH COURT] Tribunal may admit additional evidences if the same are necessary to do substantial justice in the matter. In the instant case before us the assessee has produced original copies of the agreement to show the willingness to prosecute the appeal. We are of the opinion that if there is some truth in the story of the assessee of the agreement for sale of plots and subsequent settlement for payment to the proposed buyers, the assessee must get chance to prove its innocence and the issue must be decided after due verification and genuineness of the evidences furnished by the assessee as additional evidences. Accordingly, we admit the above additional evidences filed by the assessee. In view of the additional evidences filed vis-à-vis earlier explanation of cost of improvement, we feel it appropriate to restore the issue in dispute involved in the appeal to the file of the Ld. Assessing Officer for deciding afresh - Decided in favour of assessee for statistical purposes. Issues Involved:1. Addition of Rs. 56,37,567 to the total income of the assessee on account of erroneous claim of Cost of Improvement under 'Income From Capital Gain'.2. Admission of additional evidence under Rule 29 of ITAT Rules.Detailed Analysis:Issue 1: Addition of Rs. 56,37,567 to the Total Income of the AssesseeThe assessee filed a return of income disclosing Rs. 1,75,680. During scrutiny, the Assessing Officer (AO) observed that the assessee sold a plot for Rs. 50 Lacs, but the stamp valuation was Rs. 79,85,000. The assessee claimed a capital loss of Rs. 12,128, which included a cost of improvement of Rs. 38,79,730. However, the AO found inconsistencies in the cost of improvement claimed and the sale deed, which only accounted for Rs. 4,63,610 as the cost of construction. The AO requested documentary evidence for the claimed cost of improvement, but none was provided. Consequently, the AO allowed only Rs. 4,63,610 and added Rs. 56,37,567 to the income.The assessee appealed to the CIT(A) but failed to comply with multiple opportunities for hearings. The CIT(A) upheld the AO's addition, noting the lack of evidence and deeming the claim of Rs. 34,16,120 as non-genuine and a self-serving statement to reduce tax liability. The CIT(A) emphasized that such heavy expenditure for improvement on a plot purchased for Rs. 6,81,884 was not justified and unsupported by any details or evidence.Issue 2: Admission of Additional Evidence under Rule 29 of ITAT RulesThe assessee, in the second round of proceedings, presented a new explanation that the Rs. 38,79,730 claimed as cost of improvement was actually incurred in relation to the acquisition of the plot. The assessee provided additional documents, including agreements and settlement deeds with buyers, and receipts as evidence.The Tribunal considered the assessee's application under Rule 29 of ITAT Rules, which allows for additional evidence if necessary for substantial justice. The Tribunal noted that the assessee, being a housewife, was not well-versed with income tax proceedings, and the earlier counsel failed to inquire about supporting evidence.The Tribunal admitted the additional evidence, recognizing the need for proper adjudication and substantial justice. The Tribunal directed the AO to verify the additional evidence, including forensic investigation of the agreements and settlement deeds, verification of the source of payment, and income shown by the buyers. The AO was instructed to provide the results of all inquiries to the assessee and offer sufficient opportunity for rebuttal and cross-examination.Conclusion:The Tribunal restored the issue to the AO for fresh adjudication, emphasizing the need for thorough verification of the additional evidence provided by the assessee. The appeal was allowed for statistical purposes, ensuring the assessee gets a fair chance to substantiate the claim with proper evidence.Final Decision:The appeal of the assessee is allowed for statistical purposes, with directions for detailed verification and investigation by the AO to ensure justice and proper adjudication of the matter.