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2022 (8) TMI 261 - AT - Income TaxCapital gain computation - Disallowance of expenses incurred for the purposes of selling the land - HELD THAT - As admitted fact on record that the sales consideration offered by the assessee reflected 24 lakhs of expenses incurred on sales. In the computation of capital gain by the A.O., we have noted that the sales consideration has been taken which as per the A.O. himself includes 24 lakhs of the expenses claimed by the Assessee. Thus the inclusion of the assessee of expenses, as part of sales consideration is admission of the fact of having incurred such expenses out of undisclosed sources, and the sale consideration, including these expenses, being accepted by the Revenue, the fact of incurring expenses also stands accepted. The Revenue is therefore precluded from denying the claim of expenses for want of substantiation. We hold therefore that to the extent of expenses incurred which are included as part of sale consideration and which is accepted by the Revenue also assesses claim of expenses is to be allowed. Since the assessee has claimed expenses of Rs.43 lacs, the balance, i.e Rs.19 lacs is only liable to be disallowed for want of substantiation. The disallowance of expenses accordingly is directed to be restricted to the extent of Rs.19 lacs. Addition made to the sale consideration on account of deposits in the bank account of the assessee not included as part of sale consideration to this extent - onus on the legal heir post assessee death - HELD THAT - As the assessee had expired, suspected to be murdered by his family and his daughter was his only legal heir. The daughter claimed to be totally unaware of the financial transactions of her father, the assessee, and it was only his caretaker, Ms.Ritaben, who was constantly with him and claimed to be in know of the facts of the transaction. Revenue has at no point controverted or disputed these facts. Also it was on the basis of the caretakers admissions that the sale consideration received for the sale of impugned two lands was increased from the registered value including therein all cash deposits in bank, both of the assessee and the caretaker, attributable to this transaction, gold biscuits and expenses incurred on the transaction allegedly out of this consideration. The legal heir of the assessee, i.e his daughter having fairly included all possible modes in which consideration was received, as confessed by her fathers caretaker, and she admittedly being totally unaware of this transaction, the legal heir has surely come clean with all the facts. The onus on the legal heir cannot be equated with that on the assessee so as to burden with the onus of evidencing transactions which she was totally unaware of. Moreover considering the fact that the amount sought to be added by the Revenue on account of unexplained cash deposit is too paltry a sum in comparison to the total sale consideration shown by the assessee,in our view no addition of the said unexplained cash deposit is warranted on account of non substantiation. The addition is accordingly directed to be deleted. Addition on account of money paid for settlement of dispute vis a vis the land sold - HELD THAT - CIT(A) has noted facts to the effect that her statement in this regard was not reliable. He noted that the payment was neither made in her presence nor was she aware of the parties involved in it. Her statement that the transaction was recorded in a diary maintained by her and which diary was seized by the Police was found to be false as there was no mention of any diary in the panchnama of the Police. CIT(A) also noted that even the AO did not refer to any diary while making the addition and that in fact when the assessee asked the AO to confirm whether he had examined any such diary seized by the Police, the AO did not respond. These factual findings of the Ld.CIT(A) have not been controverted by the ld. D.R. before us. We have also noted that Mr.Adjania who was the alleged recipient of the settlement amount as per the caretaker, denied receiving any such amount though he admitted to the existence of the dispute and stated that he had only been refunded his advance of Rs.8 lacs, given to the assessee for purchasing the land. CIT(A), we hold has rightly held that except for the statement of the caretaker there was no other evidence with the AO to corroborate the payment of Rs.5 crores for settlement of dispute. And the statement being contradictory and unreliable, the addition, we hold, has been rightly held by the Ld.CIT(A) to be not sustainable. Indexation of the cost of acquisition being taken from F.Y 1981-82 as done by the assessee as opposed to from 08-09 taken by the A.O. - HELD THAT - D.R. was unable to controvert the factual findings of the ld. CIT(A) that the assessee had acquired the land from his late brother on succession, who in turn had owned it since 1966. This fact has not been disputed by the A.O. also. We have noted that the Ld.CIT(A) has relied upon the decision of the jurisdictional High Court in the case of Rajesh Vithalbhai Patel 2013 (7) TMI 413 - GUJARAT HIGH COURT for the proposition that on succession, as per law, the cost of acquisition is to be taken as that to the previous owner and holding of the property also accordingly to be taken from the date when held by the previous owner.The Ld.DR was unable to distinguish the said decision before us nor did he point out any contrary decision of the Hon ble jurisdictional High Court or the Hon ble apex court on the issue - no reason to interfere in the order of the ld. CIT(A) allowing indexation of cost of acquisition from 1981-82. Fair market value of the land in question as computed by the D.V.O - determination of the cost of acquisition of the asset sold which the assessee had taken as per value determined by the registered valuer, while the AO relied upon valuation done by the DVO - HELD THAT - No infirmity in the order of the L.d CIT(A). Valuation undeniably is only a fair estimation of the value of land as on a particular date. And the same is determined by various different methods, considering value at which comparable lands were sold on that date, or considering municipal rates of lands on such dates. It involves a lot of assumptions and estimations. Therefore there is bound to be difference in valuation between two different valuers, which could be for many reasons and a difference of 8% is surely immaterial to cast doubts on the veracity of any particular valuation. This difference can safely be attributed to different methodologies, assumptions and estimations resorted to and in such cases the difference can be safely ignored and it can be said that both the valuations arrive at the same cost of acquisition. We therefore uphold the order of the Ld.CIT(A) rejecting the valuation of cost of acquisition of the lands sold on the basis of valuation by the DVO.
Issues Involved:
1. Disallowance of expenses claimed by the assessee. 2. Addition of unexplained cash deposits to the sale consideration. 3. Deletion of addition of Rs. 5 crore to the sale consideration. 4. Determination of the indexed cost of acquisition. 5. Consideration of the fair market value of the land as computed by the DVO. Detailed Analysis: 1. Disallowance of Expenses Claimed by the Assessee: The assessee claimed expenses of Rs. 43 lakhs for brokerage and other expenses in connection with the sale of land. The AO disallowed the entire amount due to lack of evidence, and the CIT(A) upheld this disallowance. The assessee contended that Rs. 24 lakhs of the claimed expenses were already included in the sale consideration. The Tribunal noted that the sale consideration of Rs. 6,53,62,045/- included Rs. 24 lakhs as expenses incurred for the sale, which was accepted by the Revenue. Therefore, the Tribunal directed that the disallowance be restricted to Rs. 19 lakhs, the balance amount not substantiated by evidence. 2. Addition of Unexplained Cash Deposits to the Sale Consideration: The AO added Rs. 5 lakhs to the sale consideration, claiming it was unexplained cash deposited in the bank accounts not included in the sale consideration. The Tribunal found the AO's findings vague and general, with no specific evidence showing that the deposits were not included in the sale consideration. Considering the total sale consideration disclosed by the assessee and the circumstances of the case, the Tribunal deleted the addition of Rs. 5 lakhs. 3. Deletion of Addition of Rs. 5 Crore to the Sale Consideration: The AO added Rs. 5 crore to the sale consideration based on the caretaker's statement, alleging it was paid for an out-of-court settlement. The CIT(A) found no material evidence supporting this addition, noting contradictions in the caretaker's statements and the absence of any corroborative evidence. The Tribunal upheld the CIT(A)'s decision, stating that the addition was not sustainable based solely on the unreliable statement of the caretaker. 4. Determination of the Indexed Cost of Acquisition: The AO indexed the cost of acquisition from 2008-09, the year the assessee inherited the land. The assessee argued for indexation from 1981-82, based on the previous owner's holding period. The CIT(A) agreed with the assessee, citing Section 49(1) of the Act and relevant case law, which allows the cost of acquisition to be taken from the previous owner's holding period. The Tribunal upheld this decision, noting the AO did not dispute the facts and the Revenue failed to provide any contrary legal precedent. 5. Consideration of the Fair Market Value of the Land as Computed by the DVO: The AO substituted the assessee's valuation of the land with that determined by the DVO, which was 8.24% lower. The CIT(A) allowed the assessee's valuation, noting the negligible difference between the two valuations. The Tribunal upheld this decision, stating that valuation differences due to different methodologies and assumptions are common and an 8% difference is immaterial. Conclusion: The Tribunal partly allowed the appeal of the assessee by restricting the disallowance of expenses to Rs. 19 lakhs and deleting the addition of Rs. 5 lakhs for unexplained cash deposits. It upheld the CIT(A)'s deletion of the Rs. 5 crore addition and the determination of the indexed cost of acquisition from 1981-82. The Tribunal also upheld the CIT(A)'s acceptance of the assessee's valuation of the land over the DVO's valuation. The Revenue's appeal was dismissed in its entirety.
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