Tribunal overturns tax ruling, includes intermediary payments in acquisition cost.
Shri Vishal Aggarwal Versus Pr. Commissioner of Income Tax Office, Noida
Shri Vishal Aggarwal Versus Pr. Commissioner of Income Tax Office, Noida - TMI
Issues Involved:1. Cost of acquisition of the property.
2. Verification of the source of repayment of the loan.
Summary:Issue 1: Cost of Acquisition of the PropertyThe Principal Commissioner of Income Tax (PCIT) issued a notice u/s 263, questioning the cost of acquisition claimed by the assessee as Rs. 62,40,000/- instead of Rs. 42,12,550/- as per the sale deed. The assessee argued that the property was purchased from Mrs. Sangita Gupta, who paid the builder, M/s. Supertech Construction Pvt. Ltd., and the payment of Rs. 62,40,000/- was made through banking channels. The PCIT, however, was not convinced and directed the Assessing Officer (AO) to re-compute the short-term capital gain based on the sale deed value. The Tribunal noted that the cost of acquisition includes all amounts paid to intermediaries with enforceable interests, not just the sale deed value. The Tribunal concluded that the AO had made sufficient inquiries and was justified in considering the agreement to sell between Mrs. Sangita Gupta and the assessee to determine the cost of acquisition. Therefore, the PCIT's order was set aside.
Issue 2: Verification of Source of Repayment of LoanThe PCIT also questioned the source of repayment of a Rs. 40 lakhs loan from IDBI, which the assessee claimed was repaid by him alone without any contribution from his wife. The Tribunal found that the PCIT had expanded the scope of inquiry beyond the initial reasons for reopening the assessment, which was alleged escapement of income under the head of capital gain. The Tribunal held that the AO had made relevant and sufficient inquiries on this issue as well.
Conclusion:The Tribunal allowed the assessee's appeal, setting aside the PCIT's order u/s 263, and upheld the AO's original assessment. The Tribunal emphasized that the AO had conducted meaningful investigations and that the PCIT's broader inquiries were unwarranted. The order was pronounced on 20th March 2023.