TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 731
X X X X Extracts X X X X
X X X X Extracts X X X X
.... regard to the cost of improvement claimed by the assessee u/s. 54 of the Income Tax Act, 1961 (hereinafter as "the Act"). The brief facts of the case are that the assessee has purchased a flat at No.3, M.R. Garden, Ideal Homes, No.25, Paruthipattu Village and the following expenditure was incurred for the purpose of renovating the house, as under: 1. Septictank and compound wall construction Rs. 4,50,000/- 2. Replasting Labour work Rs. 6,75,000/- 3. Tiles removing and relaying Rs. 3,50,000/- 4. Plumbing and electrical work Rs. 2,50,000/- 5. Painting work Rs. 3,75,000/- 6. Main door change and carpentry work Rs. 2,00,000/- Total Rs. 23,00,000/- 3. The A.O has asked the assessee bills and vouchers for....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in the excerpts from the assessment order and the submissions of the AR quoted supra as also the discussion aforesaid bolstered by supporting evidence relied on by the rival parties but on a relative and comparative consideration of the same, I am persuaded by the more substantive and meritorious reasoning / substantiation adduced by the AR on the issue at hand. 7. Firstly, the AO appears to have not appreciated the fact that any new buyer of an undisputedly old house will carry out improvements to make the house habitable to his convenience and he should have taken into account this human nature while appreciating the facts to verify for which he should have also been better served to have referred the case to the departmental valuer f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... respects which led the AO to come to the conclusion unilaterally and in an arbitrary manner without any detailed investigation and enquiry and without any cross verification with the assessee / Builder as contended earlier thereby violating the principles of natural justice too and resulting in the addition of Rs. 23,00,000/- to the total income by stating in the assessment order that "the enquiry made with the tenants and neighbours and photos of main door, septic tank, compound wall, tiles etc of the assessee's house and that of the neighbour's house indicate they are identical /because the houses on this street were developed by a builder] Even the handle of the main, door of the assessee's house and the one of the neighbour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee appears to be based on only surmises, conjectures, and presumptions on the basis of which assessment cannot be made without proper evidences collected and also disproving the contention of the appellant and not the Assessing Officer's own imagination which he appears to have done in the instant case. 7.5 It is also not in dispute that the improvement expenses incurred for making the house habitable also qualify for deduction under section 54. The following case law supports this view which fact has not been called into question by the AO either. Nirupama K. Shah vs ITO (2013) 52 (II) ITCL 63 (Mum «B" Trib) 8. Details of improvements made at Plot No. 3, M.R. Garden, Ideal Homes, No.25, Paruthipattu is seen to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for reaching a decision in income tax matters; (i) CIT vs. Smt. Vimalaben Bhagavandhas Patel (1979) 118 ITR 134 (Guj) (ii) Anraj Narain Dass vs CIT (1951) 20 ITR 562 (Punj) (iii) Laxmin Co vs CIT (1959) 37 ITR 461 (All) (iv) Devi Dass Madhav Prasad vs CIT (1967) 63 ITR 356 (All) 9.1 The Income Tax Officer has discretion to take into account the principle of preponderance of probabilities and the facts of a case has to be appreciated in the light of the above legal principles and the facts obtained in an impugned case. 9.2 The assessee in the instant case was and is now working in Mumbai and wanted to have a house for his permanent residence whenever he visits Chennai on vacation and other occasions and being a native of Tamilna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the orders of the authorities below. We find that the case of the assessee is that he is residing at Mumbai and he has purchased an old house at Chennai and subsequently, repairs are carried in the house. The counsel for the assessee has submitted before us that the repairs carried by the assessee long back, five years ago and therefore, he is not able to produce evidence before the A.O. He further submitted that the entire repair works/improvements carried out by his relatives and he is not able to collect the bills and vouchers since he is residing at Mumbai. We have gone through the assessment order and the report of the Inspector. We find that the Inspector has enquired with the neighbours and the neighbours has stated before him that....