2024 (8) TMI 1012 - AT - Income Tax

Disallowance of Deduction u/s 48 - indexed cost of acquisition claimed denied for a reason that the assessee has not furnished any documentary evidences supporting the claim of the deduction - CIT(A) has denied admitting the additional evidence - HELD THAT - From the perusal of the dates on which the notices were issued it is observed that the same are issued during the Covid period and therefore, in our considered view there is a reasonable cause for the assessee for not appearing before the AO. From the perusal of the Paper Book submitted before us, we noticed that the assessee has submitted before the CIT(A) an affidavit from the seller of the property to the assessee, copy of receipt acknowledging the consideration received from the assessee by the seller, copy of society transfer documents in favour of the assessee, copy of letter of transfer of tenement issued by MHADA in favour of the assessee, and the share certificate issued by the Society in favour of the assessee. The assessee has submitted these documents before the CIT(A) in order to substantiate the claim of the indexed cost of acquisition. CIT(A) has denied admitting the additional evidence stating that the same should have submitted before the AO. Considering the fact that the notices were issued by the AO during Covid period and that the assessee has submitted all the relevant documents to substantiate the claim of deduction, in our considered view it is just and proper to give one more opportunity to the assessee to evidence the claim made before the AO. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Denial of deduction under section 48 of the Income Tax Act by the Assessing Officer.
2. Rejection of additional evidence by the CIT(A) in support of the claim of cost of acquisition.
3. Appeal against the CIT(A)'s decision and request for admission of additional evidence.
4. Consideration of documentary evidence and remittance of the issue back to the Assessing Officer by the Tribunal.

Issue 1: Denial of deduction under section 48:
The appellant, an individual, filed the return for AY 2018-19 declaring a total income with Long Term Capital Gain (LTCG). The Assessing Officer (AO) denied the deduction claimed as index cost of acquisition under section 48 due to lack of documentary evidence supporting the claim. The AO concluded the assessment without the deduction, amounting to Rs. 31,29,204.

Issue 2: Rejection of additional evidence by CIT(A):
The appellant appealed before the CIT(A) submitting documentary evidence in support of the cost of acquisition and applied for admission of additional evidence under section 46A of the Income Tax Rules. However, the CIT(A) upheld the AO's decision, stating that the additional evidence could have been submitted during the assessment stage and did not meet the conditions for admission under rule 46A.

Issue 3: Appeal and request for admission of additional evidence:
The appellant, aggrieved by the CIT(A)'s decision, approached the Tribunal. The appellant's representative argued that the appellant couldn't appear before the AO due to Covid-19 related issues. Relevant documents supporting the cost of acquisition were submitted before the CIT(A) but were not admitted as additional evidence. The appellant contended that the claim was genuine and supported by documentary evidence.

Issue 4: Consideration of documentary evidence and remittance to AO:
The Tribunal reviewed the case and observed that the notices from the AO were issued during the Covid period, providing a reasonable cause for the appellant's non-appearance. The Tribunal examined the documents submitted before the CIT(A) and found them sufficient to substantiate the claim of indexed cost of acquisition. In the interest of natural justice, the Tribunal remitted the issue back to the AO to verify the documentary evidence and allow the claim in accordance with the law, ensuring the appellant is given a reasonable opportunity to be heard.

This judgment highlights the importance of providing documentary evidence to support claims, the discretion of authorities in admitting additional evidence, and the consideration of circumstances such as the Covid-19 pandemic in assessing non-compliance. The decision of the Tribunal emphasizes the principles of natural justice and fair play by granting the appellant another opportunity to substantiate their claim before the Assessing Officer.