TaxTMI 
TaxTMI 
2012 (4) TMI 756
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.... 84,43,660 which included the cost of a site purchased on 18.5.2006 amounting to Rs. 49,23,330 and advance of Rs. 35,20,300 paid towards construction of house property. The Assessing Officer completed the assessment by an order under section 143(3) on 29.12.2008 determining the income of the assessee at Rs. 60,15,011. Aggrieved by the order of assessment, the assessee went in appeal before the CIT(A) who by order dt.26.10.2010 allowed the assessee partial relief whereby the income of the assessee was revised to Rs. 41,10,892. The assessee is now in appeal before us. 3.0 The assessee originally filed grounds of appeal dt.4.2.2011 and subsequently filed revised grounds of appeal on 28.2.2012 which are as under (since they were not numbered, they have been numbered in seriatim) : " 1. The Assessing Officer erred in determining the total income at Rs. 54,94,225 as against Rs. 25,73,876 declared in the return. 2. The Hon'ble CIT(A) erred in confirming the disallowance made by Assessing Officer of a sum of Rs. 9 lakhs incurred through one Sri D. Shivakumar for purchase of wood and making doors frame, window frames, shutters, kitchen cabinets for the new residenti....
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....hase of materials and expenses of Rs. 4,79,500 up to 31.3.2007 and Rs. 11,45,894 incurred during 1.4.2007 to 30.8.2008 i.e. incurred within the stipulated period of 3 years in determining the cost of construction for the purpose of arriving at Long Term Capital Gains is not in conformity with law and facts of the case and hence may be deleted and justice rendered. 10. The Assessing Officer and Hon'ble CIT(A) ought to have considered various decisions cited in support of the claims, to determine the cost of construction. For these and other grounds that may be urged at the time of hearing, the appeal may be allowed and justice rendered." 4.1 The grounds of appeal at S.No.1 is general in nature and hence no adjudication is called for thereon. 4.2 In the course of hearing of the appeal, the learned Authorised Representative submitted that the ground of appeal at S.No.6 is not being pressed as the assessee intend to file a rectification application before the CIT(A). This ground is accordingly dismissed. 4.3 The grounds of appeal at S.Nos.7 to 10 were not argued in the course of hearing and are hence not adjudicated upon. 5.1 Disallowance of Rs. 9 lakh....
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..... In Answers to question Nos.6 and 7 of the statement, Shri D. Shivakumar, brother-in-law of the assessee stated that he had got cots, sofa set, divan, dining set and other furnitures made for the assessee through carpenters known to him and for these works received Rs. 9 lakhs. The learned Departmental Representative strongly countered the learned Authorised Representative's claim that the Assessing Officer made the disallowance of Rs. 9 lakhs without giving the assessee opportunity of hearing or to cross-examine Shri Shivakumar. She pointed out that in para 7 of the assessment order immediately after recording the statement on 5.12.2008 itself, the Assessing Officer by way of a letter sent to the assessee, asked him to respond to the statement of Shri Shivakumar and to which the assessee replied. She also drew our attention to the fact that the A.O.had also noted that there were no documentary proof or bills produced for verification for this work carried out by Shri D. Shivakumar for the assessee; that Rs. 6 lakhs paid to Shri Shivakumar was on 3.11.2005 which is almost six months before the assessee purchased the residential site on 18.5.2006. The learned Authorised Representat....
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....8.11.2008 by Shri D. Shivakumar is being disregarded for the reason that there is no proof that it was filed before Assessing Officer or CIT(A) and also because it is merely a self-serving document bereft of any corroborative evidence. We find that in coming to the decision to make the disallowance of Rs. 9 lakhs being expenditure incurred for household furniture and not related to construction of the residential house, the Assessing Officer has very succinctly laid down the reasons for his finding in para 8 of the order of assessment which are as under : " a. The witness Sri Shivakumar in his statement recorded under section 131 under oath on 5.12.2008 stated very clearly that he had received the amount for making cot, furnitures etc. The submission by the assessee that Sri D. Shivakumar had actually carried out the work of making doors and frames are unsubstantiated. Further, the assessee's submission that payment made towards furniture is also included in construction activity is beyond the meaning of 'amount spent towards building residential house.' b. The assessee has claimed that these amounts have been paid on the following dates : i) 28.01.06 Can....
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....e by the Assessing Officer and confirmed by the learned CIT(A). The assessee's grounds mentioned as S.Nos.2 to 4 accordingly dismissed. 6.1 In the grounds of appeal mentioned at S.No.5, the assessee challenges the CIT(A)'s action in allowing only Rs. 4,10,000 out of Rs. 10,20,355 being expenditure incurred for labour charges and purchases of material for construction of residential building. It was submitted by the learned Authorised Representative that the assessee incurred expenditure amounting to Rs. 16,20,300 towards labour charges and material purchase through one Arunkumar. He further stated that as bills for such expenditure were produced only to the extent of Rs. 5,99,945 before the Assessing Officer, he allowed this claim and disallowed the balance expenditure of Rs. 10,20,355 as they were not supported by bills. It is submitted that in appeal, the learned CIT(A) in para 7.4(iii) on pages 7 and 8 of his order has held that -- " (iii) In view of the documentary evidence produced convincingly to the Assessing Officer regarding the completion of the residential building, which implied that the appellant had necessarily incurred materials and labour expenses essent....