9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 1190 - AT - Income TaxRevision u/s 263 - Claim of cost of improvement - variance in the stands of the two sides, the assessee and the builder - HELD THAT - Factors such as enquiry with the owners regarding the flooring, etc., and, equally, the nature and uniformity of the difference between the two sets of flats/duplexes, etc. would only complete the enquiry, establishing, completely missing, whether the stated modification was actually carried out and, if so, at the assessee s instance, justifying payment of additional sum by him, at whatever value, to the Builder. Again, while the assessee claims marble flooring only in the bed rooms , the report says of it being in all the rooms. What does that mean Has the Builder, in benevolence, provided marble even where not sought by the assessee? The inspection by the inspector, i.e., assuming so, is, thus, worthless and, in any case, farcical, if not a pretense. The said report which does not concern the cost aspect is to be, thus, at the highest, ignored, and, in the least, considered a sham document. That is, to be, either way, rubbished. Coming back to our earlier observation of the Builder having in fact, rather than confirming, refuted the assessee s stand as to the payment thereto being toward cost of improvement. To clarify matters, there was in fact no enquiry by the AO with the Builder. AO notes a complete variance in the stands of the two sides, the assessee and the builder, and yet chooses to ignore the same, stating (in the ON) the same to be rather a reason for re-examination in the case of the Builder. The same is incomprehensible as, firstly, it is his prime duty to consider the validity of the claims of the assessee wholly un-evidenced and, two, the avoidance of tax, if any, is, as would be apparent from the foregoing, in the assessee s case. Assessee has reported receipt of ₹ 45 lacs by cheque/s, as against ₹ 40 lacs stated by the Builder, toward cash component of the consideration on transfer of land. But, then, the same would stand to be confirmed with reference to the latters books and, where accounted, as it, being by cheque/s, would presumably be, does not result in/lead to any loss of revenue. As such, the AO seeking, on the contrary, a re-examination of the Builders case, is perverse and, in any case, itself proves the need for verification to resolve the contradicting claims of the parties. Non-examination of the sale deeds by the AO, stated to be incorrect by Shri Purohit - There is a tacit admission of the relevance of the said deeds, as well as their examination by the assessing authority. He, however, could not exhibit their production in the assessment proceedings, much less their examination. Even as much as a letter or communication, i.e., in reply to the queries/requisition dated 16.3.2015, has not been brought on record. How could, one wonders, the direction by the ld. Pr. CIT for their production and examination by the AO, under the circumstances, be regarded as unjustified or not valid in law. The assessee s case is, in view of the foregoing, both, wholly unproved and wholly unexamined, i.e., qua the two aspects referred to by the ld. Pr. CIT. To say, therefore, that the AO has taken a possible, reasonable view in the matter, is, under the circumstances, a complete misstatement on facts. He has, in our view, acted with haste and without due application of mind, accepting the assessee s version, wholly unsubstantiated, without as much as causing its substantiation, much less verification thereof and, in fact, on one aspect, in face of contrary evidence/material. - Decided against assessee.
Issues Involved
1. Allowance of the assessee’s claim of cost of improvement without proper inquiry. 2. Non-insistence on the production of sale deeds for verification of the stated sale values. Issue-wise Detailed Analysis Allowance of the Assessee’s Claim of Cost of Improvement Without Proper Inquiry The Principal Commissioner of Income Tax (Pr. CIT) objected to the allowance of the assessee’s claim of ?30 lacs as the cost of improvement under Section 48 of the Income Tax Act, 1961. The Pr. CIT argued that the Assessing Officer (AO) allowed this claim without proper inquiry. The assessee contended that the AO had conducted due inquiry, including physical verification by an Inspector, which confirmed the assessee’s submissions. However, the Tribunal observed a complete lack of transparency regarding the inquiry process. There was no record of any query or material substantiating the claim, and the Inspector’s report was unsigned and vague. The Tribunal noted that the Builder had a different version of the payment, claiming it was compensation for stoppage of work, not for cost of improvement. This conflicting evidence necessitated further inquiry, which the AO failed to conduct. Non-insistence on the Production of Sale Deeds for Verification of Stated Sale Values The Pr. CIT’s second objection was that the AO did not insist on the production of sale deeds for the seven flats sold by the assessee during the year. The assessee argued that the sale deeds were submitted and examined during the assessment proceedings. However, the Tribunal found no evidence of their production or examination in the assessment records. The Tribunal upheld the Pr. CIT’s direction for the AO to conduct a proper inquiry and verify the sale deeds. Conclusion The Tribunal concluded that the AO acted with haste and without due application of mind in accepting the assessee’s claims without proper substantiation or verification. The Tribunal found no reason to interfere with the Pr. CIT’s order, directing the AO to pass a suitable order after making proper inquiries and allowing the assessee a proper opportunity to present his case. The assessee’s appeal was dismissed.
|
