2023 (4) TMI 686 - AT - Income Tax

Assessment u/s 153C - Addition of Long Term Capital Gains - claim the cost of improvement and indexation cost - HELD THAT - What has been sold by the assessee were merely piece of an open lands and not any constructed property. The assessee in the return of income had claimed the long term capital gain and in the said capital gain, the assessee had claimed the cost of acquisition and cost of improvement with indexation. In our view, the cost of improvement, is required to prove with contemporaneous evidence showing that some construction or improvements were carried out on the plot of land after its original purchase in the year 2004, and before it was sold by the assessee on 21.11.2015. The information contained in the sale deed (including the site plan) clearly shows that what has been sold by the assessee was a vacant piece of plot and not a built up property. To claim the cost of improvement and indexation cost, assessee has to furnish some evidence and in the absence of any evidence or information, then the information contained in the registered sale deed is required to be accepted. Further, the information contained in the registered sale deed relates to the assessee and therefore, we are of the opinion that the Assessing Officer was right in invoking the jurisdiction u/s 153C. Decided against assessee. Denying the benefit of indexation on cost of improvement incurred - There was no reason for the assessee to mention the incorrect extent of construction in the sale document, by virtue of which the assessee had transferred the land and the building if any existing thereon. In view of the above, we do not find any discrepancy in the decision of ld.CIT(A). We may point out that the law of evidence clearly provides that when there is any infirmity between the documents filed by the parties, the contents of the registered document will prevail over the other document. The assessee had failed to demonstrate by any evidence the cost of improvement like bills / vouchers, approval of the local authorities and claim of expenditure claimed in the earlier return of incomes. Assessee is not entitled to the relief claimed in these appeals. Even the case laws relied upon by the assessee are of no help as the facts of those cases are clearly distinguishable. Admittedly, none of the decisions cited supra dealt with the issue of appreciation of evidence of registered sale deed and claim of the cost of improvement and indexation based on the certificate issued by the Civil Engineer. Thus, ground No.3 of the assessee is also dismissed. Accordingly, the appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Validity of the Order under Section 153C read with Section 144 of the Income Tax Act.
2. Denial of the benefit of indexation on the cost of improvement incurred.

Summary:

Ground No. 1:
The first ground raised by the assessee is general in nature and requires no adjudication.

Ground No. 2: Validity of the Order under Section 153C read with Section 144
The assessee argued that the registered sale deed recovered during the search and seizure operation was not an incriminating document and did not pertain to the assessee. The document was public and related to M/s. Optimus Pharma Pvt. Ltd., not the assessee. The assessee relied on various case laws to support this argument.

The Revenue countered that the material seized from the residential premises of Sri D. Srinivasa Reddy was related to M/s. SRD Exports, for which the assessee is the Proprietor. The registered sale deed mentioned the assessee's name and was used to claim long-term capital gain and indexation cost. The Revenue argued that the document was rightly relied upon by the Assessing Officer.

The Tribunal examined Section 153C of the Act, which allows the Assessing Officer to proceed against a person if seized documents pertain to them. The Tribunal found that the registered sale deed related to the assessee and showed the property as a vacant plot, contradicting the assessee's claim of construction and improvement. The Tribunal upheld the Assessing Officer's jurisdiction under Section 153C and dismissed this ground.

Ground No. 3: Denial of Indexation on Cost of Improvement
The assessee claimed that the cost of improvements, including construction, was incurred and supported by photographs and a certificate from an Architect. The Revenue argued that the site plans annexed to the sale deed showed no construction, and the assessee failed to provide concrete evidence of the claimed improvements during the assessment proceedings.

The Tribunal noted that the sale deed showed the property as a vacant plot with only a small shed, and no substantial construction was mentioned. The Tribunal agreed with the lower authorities that the assessee failed to provide contemporaneous evidence of improvements. The Tribunal upheld the partial relief granted by the CIT(A) and dismissed the remaining claim for indexation on the cost of improvement.

Decision:
The Tribunal dismissed both appeals and the stay applications filed by the assessee. The order was pronounced in the Open Court on 23rd March 2023.