2022 (8) TMI 775 - AT - Income Tax

Long term capital gain computation - Fair market value as on 1.4.81 - Evidence / Poof of cost of improvement incurred after 1.4.1981 - assessee adopted the cost of acquisition of land and building as per valuation determined by the registered valuer - HELD THAT - On perusal of the affidavit, it is not known as to what kind of improvement has been carried out by the brother of the assessee. No particulars whatsoever is available on record in this regard. While it is the claim of the assessee that the improvement has taken place immediately after the cut of date for adoption of fair market value of cost of acquisition as on 01.04.1981, it is equally plausible that such cost, if any, has been incurred prior to the cut of date and thus already taken into account for the purposes of fair market value of cost of acquisition of the property in question. The affidavit is vague and non-descript. It is not clear from affidavit as to what is the basis for affirming the contents on oath. Needless to say, an affidavit should clearly spell out how much is the statement to the deponents knowledge and how much is a statement of his belief based on information and source thereof. The grounds of belief must be stated with sufficient particularity to enable the court/administrating authority to judge whether it would be safe to act on deponents belief . The affidavit filed by the assessee appears to be only a self serving document and no weight can be attached to such standalone paper in the absence of any other material or corroboration about the improvements carried out to support assertions made in this regard. The burden of proof lies on the assessee to produce evidence which is rightly considered unsatisfactory and devoid of any factual basis by the lower authorities. Appeal of the assessee is dismissed.

Summary

Issues:
1. Disallowance of cost of improvement claimed by the assessee for the purpose of determining taxable Long Term Capital Gains.

Detailed Analysis:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) dated 12.07.2019 concerning the assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for AY 2016-17. The assessee sold an immovable property during the relevant year and claimed the cost of improvement at Rs.1,80,000/- and Rs.2,00,000/- for the years 1982 and 1983 respectively while computing Long Term Capital Gains. However, the Assessing Officer found that the claim towards cost of improvement lacked documentary evidence and was aimed at reducing tax liabilities. Consequently, the Assessing Officer denied the claimed cost of improvement for determining taxable Long Term Capital Gains.

The assessee appealed before the CIT(A) challenging the denial of the cost of improvement claim. The CIT(A) upheld the Assessing Officer's decision, stating that the appellant failed to provide documentary evidence to support the claimed cost of improvement. The appellant argued that the improvement was carried out by their brother with his own resources in 1982 and 1983, but only submitted an affidavit as evidence. The CIT(A) found the affidavit insufficient and confirmed the addition made by the Assessing Officer towards Long Term Capital Gains.

Further aggrieved, the assessee appealed before the Tribunal. The Tribunal noted that apart from the affidavit, the assessee did not possess any other supporting evidence for the claimed cost of improvement. The Tribunal found the affidavit vague and lacking in specific details regarding the nature and timing of the improvements. The Tribunal emphasized the importance of providing clear sources of knowledge or belief in an affidavit to establish credibility. As the affidavit provided by the assessee was considered insufficient and self-serving without corroborative evidence, the Tribunal dismissed the appeal, upholding the decision of the CIT(A) to disallow the cost of improvement claimed by the assessee for computing Long Term Capital Gains.

In conclusion, the Tribunal dismissed the appeal of the assessee, emphasizing the necessity of providing concrete evidence to support claims, especially in tax matters where the burden of proof lies on the taxpayer. The judgment underscores the importance of substantiating claims with verifiable documentation to avoid disallowances and ensure accurate determination of tax liabilities.