TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1294
X X X X Extracts X X X X
X X X X Extracts X X X X
....registered value and substituting valuation without referring valuation to the District Valuation Officer (DV). 2. The ld. CIT(A) grossly erred on facts in confirming addition of Rs. 3,05,400/-, being short term capital gain on sale of NA land situated at Block No. 1165, Village: Chhatral (in which Appellant held 1/3 share) by taking gross cost of purchase at Rs. 21,46,300/- instead of correct cost of purchase of Rs. 23,08,800/- and rejecting gross cost of improvement and gross cost of transfer aggregating to Rs. 7,75,000/-. 3. The ld. CIT(A) grossly erred in law and on facts in confirming the assessment u/s. 143(3) r.w.s. 147 without service of notice u/s. 14392) of the Act hence assessment framed u/s. 143(3) r.w.s. 147 is bad in law. 4. Appellant craves leave to add to, alter, amend, modify, substitute, change any of the grounds as and when the occasion may arise." 3. The brief facts of the case are that the assessment in the case of the assessee, Shri Harshadkumar Hargovandas Patel, for A.Y. 2013-14 was reopened under section 148 of the Income Tax Act, 1961 (Act), on the basis of information in the Annual Information Report (AIR) that the assessee, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were written in the same handwriting, they were lacking in essential details such as PAN, TIN, or service tax numbers, and apparently were self- prepared. The assessee failed to furnish confirmations or income-tax details of the concerned parties and also did not produce them for verification. The CIT(A) thus held that the onus to prove the genuineness of such expenditure lay upon the assessee, and having failed to do so, the disallowance made by the Assessing Officer was justified. 3.3 Further, while framing the assessment, the Assessing Officer made a disallowance of Rs. 3,05,400/- towards cost of improvement and expenditure claimed while computing Short-Term Capital Gain on another property sold for Rs. 50,00,000/-. The Assessing Officer noted that the assessee had produced handwritten bills to support the claim, but all were found to be in the same handwriting and pertained to a period prior to the date of acquisition of the property. The assessee failed to produce any confirmations or independent evidence. The CIT(A) held that since the assessee could not establish the genuineness of the claim, the Assessing Officer was justified in disallowing the same. Accordingly, Ground....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... held that the Assessing Officer cannot disregard a registered valuer's report without making a reference to the DVO. Accordingly, the Counsel urged that the addition made on account of alleged understatement of FMV deserves to be deleted on this short legal ground itself. With regard to the claim of cost of improvement of Rs. 12,50,000/-, the Counsel submitted that the assessee had furnished complete details and supporting bills before the Assessing Officer, which are recorded at pages 13 to 16 of the assessment order and at pages 173 to 181 of the paper book. The bills contained the names and addresses of the contractors and workers who carried out the improvement work. However, the Assessing Officer, without issuing any notices under section 133(6) or summons under section 131 to verify the genuineness of the transactions, summarily disallowed the entire claim merely on the basis of suspicion. The Counsel for the assessee submitted that such an approach is contrary to the settled principle that suspicion, however strong, cannot take the place of evidence. The Counsel pointed out that no adverse material was brought on record by the Assessing Officer to doubt the veracity of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation of such a huge cost of acquisition taken by the assessee. Further, the assessee could not produce any corroborative evidence to justify cost of improvement or transfer cost as well. Accordingly, it was submitted that the there is no infirmity in the order of Ld. CIT (Appeals) so as to call for any interference. 7. We have heard the rival contentions and perused the material on record. The dispute in the present case primarily relates to the determination of the fair market value (FMV) of the land as on 01.04.1981 adopted by the assessee for the purpose of computing Long-Term Capital Gain. The assessee had adopted the FMV based on the valuation report of a registered valuer, whereas the Assessing Officer, without referring the matter to the Departmental Valuation Officer (DVO), determined the FMV based on certain sale instances obtained from the Sub-Registrar's Office. The assessee has consistently contended that the Assessing Officer, not being a technical expert in valuation matters, could not have rejected the registered valuer's report without seeking an expert opinion from the DVO as envisaged under section 55A of the Act. But at the same time, we are view that the va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h consideration and the appeal of the assessee is allowed for statistical purposes. Ground Number 2: CIT(Appeals) erred in confirming addition of Rs. 3,05,400/- being short term capital gains: 11. The brief facts in relation to this ground of appeal are that during the course of assessment proceedings, the Assessing Officer noticed from the Individual Transaction Statement (ITS) that the assessee, along with two co- owners, had sold a non-agricultural land situated at Chhatral, Block No. 1165, admeasuring 3345 sq. meters, for a total sale consideration of Rs. 50,00,000/- vide sale deed dated 23.07.2012. The property had been purchased earlier on 17.05.2011 for Rs. 21,00,000/- along with two others, and additional amounts of Rs. 25,000/- and Rs. 21,300/- were paid towards stamp duty and registration charges respectively. Thus, the total cost of acquisition was taken at Rs. 21,46,300/-. Based on these figures, the Assessing Officer worked out the total short-term capital gain at Rs. 28,53,700/-, out of which the assessee's share, being one-third, came to Rs. 9,51,234/-. The Assessing Officer issued a show cause notice asking the assessee to explain why this amount should not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d no independent or verifiable documents were produced to establish that the alleged development work was actually carried out on the said land. The CIT(Appeals) agreed with the findings of the Assessing Officer that the assessee had not discharged the onus of proving that the expenses claimed were genuine. Considering these facts and the lack of supporting evidence, the CIT(Appeals) held that there was no reason to interfere with the decision of the Assessing Officer and accordingly dismissed the assessee's ground of appeal relating to the disallowance of cost of improvement and transfer expenses amounting to Rs. 3,05,400/-. 13. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 14. Before us, the Counsel for the assessee submitted that the Assessing Officer had wrongly made an addition of Rs. 3,05,400/- in respect of Short- Term Capital Gain by disallowing the assessee's claim of expenditure of the same amount incurred towards improvement and transfer of the property. The Counsel submitted that during the course of assessment proceedings, the assessee had duly furnished all relevant details and supporting docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te the claim further. In summary, the Counsel for the assessee submitted that the disallowance of Rs. 3,05,400/- made by the Assessing Officer and confirmed by the CIT(A) is not justified either on facts or in law. The expenditure claimed was genuine, duly supported by evidence, and incurred wholly and exclusively for the purpose of improvement and transfer of the property. Since no contrary material has been brought on record by the Department and the addition has been made merely on suspicion, the same deserves to be deleted in the interest of justice. 15. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. 16. We have heard the rival contentions and perused the material on record. The issue under consideration relates to the addition of Rs. 3,05,400/- made by the Assessing Officer in respect of Short-Term Capital Gain by disallowing the assessee's claim of expenditure towards cost of improvement and transfer expenses. The Assessing Officer rejected the claim mainly on the ground that the bills furnished by the assessee were handwritten, lacked necessary details, and pertained to a period....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assessee is being disposed in light of Grounds of Appeal argued before us. 19. In the combined result, the appeal of the assessee is allowed for statistical purposes. Now we shall come to assessee's appeal in ITA No. 125/Ahd/2023 (A.Y. 2013-14) 20. The assessee has raised the following grounds of appeal: "1. The ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi grossly erred in law and on facts in confirming addition of Rs. 5,85,632/- u/s. 50C of the Income Tax Act, made by Income Tax Officer, Ward: 4, Mehsana vide order u/s. 154 and that too without referring valuation to the District Valuation Officer (DVO). 2. Appellant craves leave to add to, alter, amend, modify, substitute, change any of the grounds as and when the occasion may arise." 21. The brief facts of the case are that the assessment in the case of the assessee for Assessment Year 2013-14 was reopened under section 148 of the Act based on information available in the Annual Information Report (AIR). In response to the notice, the assessee filed his return of income on 07.12.2018 declaring total income of Rs. 6,45,830/-. The assessment was thereafter c....