2023 (1) TMI 971 - AT - Income Tax

Inherited Property Cost Indexation: Tribunal's Ruling Emphasizes Proper Evidence Verification

Shri Santosh Kumar Suri Versus ACIT, Circle 40 (1) New Delhi And ACIT, Circle : 40 (1) New Delhi. Versus Shri Santosh Kumar Suri

Shri Santosh Kumar Suri Versus ACIT, Circle 40 (1) New Delhi And ACIT, Circle : 40 (1) New Delhi. Versus Shri Santosh Kumar Suri - TMI Issues:1. Additional evidence admitted without opportunity to AO.2. Allowance of claim of cost of improvement without documentary evidence.3. Indexation of cost of improvement and acquisition for inherited property.Analysis:Issue 1: Additional evidence admitted without opportunity to AO- The Revenue contended that the Assessee submitted additional evidence before the CIT (Appeals) without giving the Assessing Officer (AO) a chance to review it.- The additional evidence included copies of cost of improvement year-wise, which the Revenue argued should have been reviewed by the AO.- The Assessee's counsel, however, claimed that no additional evidence was directly filed before the CIT (Appeals) and that the matter should be sent back to the AO for verification of the cost of improvement.- The Tribunal found that the AO had asked for documentary evidence regarding the cost of improvement, which the Assessee failed to provide. Consequently, the Tribunal decided to send the matter back to the AO for proper verification.Issue 2: Allowance of claim of cost of improvement without documentary evidence- The Assessee's appeal focused on the indexation of cost of improvement and acquisition for inherited property.- The Assessee argued that the indexed cost of acquisition should be based on the year the previous owner acquired the asset, not the year the Assessee acquired it.- Citing relevant court decisions, the Assessee's counsel supported their argument, emphasizing that indexation should be allowed based on the year of acquisition by the previous owner or the year of inheritance.- The Tribunal, in line with the decisions referenced, directed the AO to allow indexation to the Assessee considering the principles established in those judgments.Conclusion:- The Tribunal allowed the Revenue's appeal for statistical purposes and partially allowed the Assessee's appeal regarding the indexation of cost of improvement and acquisition for inherited property.- The decision highlighted the importance of proper verification of evidence and adherence to legal principles in determining the cost of improvement and acquisition for tax purposes in cases of inherited property.