2012 (9) TMI 315 - AT - Income Tax

Long term capital gain - dispute regarding computation of fair market value (fmv)as on 01.04.1981 - assessee contending rate of Rs.50/- per sq. ft against Rs.36/- per sq. ft adopted by Revenue - Held that - Adoption of the rate by the AO and subsequent reduction of the same by the CIT(A), cannot be sustained, in view of the relevant documentary evidence filed by the assessee in the form of report from the registered valuer and a comparable case. Therefore, impugned rate shown by the assessee is founded, on relevant documentary evidence - Decided in favor of assessee Non-consideration of cost of improvement in building in AY 88-89 and 89-90 - Revenue contended non-furnishing of evidence by assessee in support of same - Held that - Assessee merely referred to certain pages of the diary, which cannot be construed as credible and reliable evidence. The submission made by the assessee is not plausible and in the absence of cogent and corroborative evidences, the same cannot be accepted. Needless to say that the onus to prove the incurring of expenditure, on renovation squarely lies on the assessee and the assessee has miserably failed, to prove the factum of incurring of the expenses - Decided against assessee Addition u/s 68 - Cash deposits in bank accounts - Held that - From records it is evident that deposit has been made from the withdrawals made from the banks. Therefore, CIT(A) rightly deleted the addition made on this ground - Decided in favor of assessee.

Summary

Issues:
1. Estimation of fair market value of land as on 01/04/1981
2. Consideration of cost of improvement in building for assessment years 1988-89 and 1989-90
3. Addition of cash deposits in the assessee's account with banks

Estimation of fair market value of land as on 01/04/1981:
The assessee appealed against the CIT(A)'s order estimating the fair market value of land at Rs.36/- per sq. ft. instead of Rs.50/- per sq. ft. claimed by the assessee. The Assessing Officer had adopted Rs.22/- per sq. ft. based on DM Circle Rate, while the CIT(A) justified Rs.36/- per sq. ft. as fair and reasonable. The CIT(A) directed the computation of long term capital gain at the revised rate. The ITAT found the assessee's rate well-founded on the valuation report and comparable case, allowing the assessee's appeal. The Revenue's appeal on the rate issue was dismissed.

Consideration of cost of improvement in building for assessment years 1988-89 and 1989-90:
The assessee contended that the CIT(A) erred in not considering the cost of improvement in the building for the said assessment years. The AR cited diary pages to support renovation claims, but the Assessing Officer and CIT(A) found no credible evidence. The ITAT upheld the lower authorities' findings, emphasizing the onus on the assessee to prove renovation expenses. Consequently, the assessee's appeal on this issue was dismissed partially.

Addition of cash deposits in the assessee's account with banks:
The Revenue challenged the deletion of Rs.7,00,000/- on account of cash deposits in the assessee's bank accounts. The CIT(A) had ruled in favor of the assessee, considering the cash flow statement and bank account evidence provided. The ITAT analyzed the evidence presented by the AR, demonstrating withdrawals and subsequent deposits in different banks. As the assessee provided a reasonable explanation supported by evidence, the ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this issue.

In conclusion, the ITAT partially allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the importance of credible evidence and reasonable explanations in tax assessments.