TaxTMI 
TaxTMI 
2026 (6) TMI 979
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....re being taken up and disposed of vide a consolidated order. We shall first take up the quantum appeal filed by the assessee in ITA No. 1401/Hyd/2025, wherein the impugned order has been assailed on the following grounds of appeal: "1. The order of the learned Commissioner of Income Tax (A) is not correct either on facts or in law and in both. 2. The Learned CIT(A) is not justified in upholding the reassessment made u/s 147 r.w.s. 144/144B ignoring the fact that the return of income filed by the appellant on 16.07.2018 in response to notice u/s 142(1) was a valid return, which had already been processed u/s 143(1) on 26.08.2019, and could not have been treated as invalid merely on the basis of a CBDT circular. 3. The Learned CIT(A) failed to appreciate that once the return was duly processed u/s 143(1) and notice u/s 143(2) was issued initiating limited scrutiny for cash deposits, the proceedings stood validly commenced and treating such return as "invalid" subsequently is contrary to law and unsustainable. 4. The Learned CIT(A) failed to appreciate the fact that the reassessment proceedings initiated u/s 147 based on notice u/s 148 dated 31.01.2....
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....der section 147 of the Act. Notice under section 148 of the Act, dated 31/01/2020, was issued and duly served upon the assessee. However, the assessee failed to comply with the notice and did not furnish her return of income within the stipulated time period. 4. As is discernible from the record, the AO issued notices under section 142(1) of the Act, but the same were not complied with by the assessee. However, the assessee filed replies online on 23/03/2021 and 25/03/2021, wherein she filed her computation of income for AY 2016-17 and AY 2017- 18, a copy of the bank statement, and the reply in respect of the cash transactions carried out in the year 2016. The assessee in her aforesaid replies had stated that the cash deposit of Rs. 10,35,000/- was sourced, viz., (i) out of her past savings: Rs. 30,000/-; (ii) out of cash withdrawals made from her bank account on 24/10/2016: Rs. 9,55,000/-; and (iii) cash withdrawals made from her bank account on 05/10/2016: Rs. 50,000/-. 5. The AO, while framing the assessment, called upon the assessee to furnish a copy of the sale deed and purchase deed in respect of the property that was sold by her during the year under consideration. Als....
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....nter alia, disclosed "Long term capital gain" (LTCG) of Rs. 71,641/- from the sale of house property. On perusal of the record, it was observed that the assessee had claimed the "cost of improvement" of Rs. 3,82,000/-, based on which a deduction of the "indexed cost of improvement" of Rs. 10,08,803/- (share of the assessee being 50%) was claimed. The AO called upon the assessee to place on record a copy of the purchase deed and sale deed along with documentary evidence supporting her claim of deduction towards "cost of improvement". However, as the assessee failed to furnish the requisite details, the AO rejected the improvement cost deduction sought in the return of income. Thereafter, the AO recomputed the assessee's 50% share in the capital gains arising from the transfer of the aforesaid property at Rs. 5,76,043/-, i.e., after declining her claim for deduction of cost of improvement. 9. The AO vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 28/09/2021, based on his aforesaid deliberations, recomputed the income of the assessee at Rs. 22,43,725/-. 10. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success. ....
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....ch could safely be gathered on perusal of the respective purchase and sale deeds. The Ld. AR submitted that in the backdrop of the aforesaid factual position, there was no justification for the AO to have declined the assessee's claim for deduction of cost of improvement pertaining to the construction of the subject property. The Ld. AR to buttress his contention had taken us through a translated summary of the contents of the aforementioned purchase and sale deeds (supported by the vernacular copies of the respective registered deeds). The Ld. AR submitted that based on the aforesaid facts, the claim of the assessee for deduction of "cost of improvement" was well in order and has wrongly been rejected by the authorities below. However, the Ld. AR, on being queried about the ground of appeal No.6 raised by him, submitted that no contentions were being advanced qua the said addition which had been assailed by the CIT(A). 15. Per contra, Shri Vamshi Krishna, Learned Senior Departmental Representative (for short, "Ld. Sr-DR"), relied upon the orders of the authorities below. 16. We have given thoughtful consideration to the contentions advanced by the Learned Authorised Represen....
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....o notice under section 148 of the Act, dated 31/01/2020, was served upon the assessee, we find no substance in the same. We say so, for the reason that as the assessee had participated in the assessment proceedings and not raised any objection regarding the service of the notice issued under section 148 of the Act, therefore, as per section 292BB of the Act, the same shall be deemed to have been validly served upon her. We thus find no substance in the said contention of the Ld. AR and reject the same. 19. Appropos the ld. AR's contention that the AO had grossly erred in law and facts of the case in treating the cash deposits of Rs. 10 lakhs made by the assessee in her bank account as having been sourced out of her unexplained money under section 69A of the Act, we find substance in the same. We say so, for the reason that it is a matter of an admitted fact that the assessee had on 15/09/2016 and 24/10/2016 made cash withdrawals of Rs. 2 lakhs and Rs. 9,55,000/- from her bank account No. 91065521158 with Andhra Pragati Grameena Bank, District Anantapur. In our view, the aforesaid cash withdrawals made by the assessee can safely be held to be available with her to explain the cas....
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....09/11/1997 to 27/05/2016. At the same time, we may herein observe that as the assessee had only placed on record vernacular copies of the registered sale deeds, therefore, in all fairness and in the interest of justice, we deem it fit to set aside the matter to the file of the AO for verifying the veracity of the aforesaid claim of the assessee and redecide the issue. In case the claim of the assessee of having constructed a residential house as against the Mud House purchased on 09/11/1997 is found to be in order, then the AO, after taking cognizance of the material placed by the assessee before him, shall determine the investment made by the assessee towards the construction of the said residential property and accordingly allow her claim for deduction of the "indexed cost of improvement" to the said extent. 21. As the Ld. AR has not raised any contention regarding the addition of Rs. 3,40,500/- made by the AO under section 69A of the Act; the same is dismissed as not pressed. 22. Resultantly, the appeal filed by the assessee in ITA No. 1401/Hyd/2025 is partly allowed in terms of our aforesaid observations. ITA No.1402 & 1403/Hyd/2025 AY: 2017-18 23. We shall now d....