Appeal dismissed on Income Tax Act sections 147/148. Cost disallowance upheld, but section 68 addition deleted.

The appeal challenging the initiation of proceedings under sections 147/148 of the Income Tax Act was dismissed by the Tribunal, which found that the Assessing Officer had valid grounds based on tangible information regarding undisclosed property sale. The disallowance of cost of improvement and brokerage expenses for calculating capital gains was upheld due to lack of verifiable evidence. However, the addition under section 68 was deleted as the affidavits submitted by the appellant were deemed sufficient proof, leading to partial allowance of the appeal by the ITAT Jaipur.

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Issues:
1. Challenge to initiation of proceedings under section 147/148 of the Income Tax Act.
2. Disallowance of cost of improvement and brokerage expenses while calculating short term capital gain.
3. Sustenance of addition under section 68 of the Act.

Issue 1: Challenge to Initiation of Proceedings under Section 147/148:
The appeal contested the initiation of proceedings under section 147/148 of the Income Tax Act, arguing that the Assessing Officer (AO) lacked proper satisfaction and relied solely on AIR information. The appellant contended that the AO misrepresented facts and obtained approval mechanically. The appellant cited legal precedents to support their claim. The Tribunal held that the AO had sufficient grounds to initiate proceedings based on tangible information regarding the sale of property not disclosed in the return of income. The Tribunal dismissed the appeal, stating that the reasons for escapement of income were valid, and the approval from higher authorities was appropriate.

Issue 2: Disallowance of Cost of Improvement and Brokerage Expenses:
The appellant challenged the disallowance of expenses incurred for property improvement and brokerage while calculating capital gains. The appellant argued that the improvement costs were essential and the brokerage was a standard market practice. The Tribunal noted the lack of evidence supporting these claims. It emphasized the need for verifiable evidence to substantiate such expenses. As the appellant failed to provide adequate proof, the Tribunal upheld the disallowance of both cost of improvement and brokerage expenses.

Issue 3: Sustenance of Addition under Section 68:
The appellant contested the addition under section 68 of the Act, claiming that as no regular books of accounts were maintained, the provision did not apply. The appellant submitted affidavits from individuals confirming the amounts received, arguing that these constituted self-speaking evidence. The Tribunal acknowledged the affidavits as sufficient proof, noting the absence of contradictory evidence. Consequently, the Tribunal deleted the addition sustained by the CIT(A) under section 68. The Tribunal partially allowed the appeal, overturning the addition based on the affidavits.

This detailed analysis of the judgment provides insights into the legal reasoning and outcomes related to each issue raised in the appeal before the Appellate Tribunal ITAT Jaipur.

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