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2023 (10) TMI 1239 - AT - Income TaxRevision u/s 263 - As per CIT Allowability of corresponding expenses for the purpose of computing the long term capital gains not taken by AO - HELD THAT - There is not even a single notice by the AO raising specific queries of the details of cost of acquisition/ improvement claimed at the assessee s behest whilst computing his capital gains. We make it clear that the assessee s case before us is that although we are in assessment year 2015-16; however, the impugned expenditure had been incurred from assessment year 1989-90 onwards. That being the case, it was assessee s bounden duty only to file the requisite supportive material during the course of assessment on being put to question by the AO. As admittedly not been done as the facts before us speak for themselves. Faced with the situation, we quote Malabar Industrial Company Ltd 2000 (2) TMI 10 - SUPREME COURT Rampyari Devi Saraogi 1967 (5) TMI 10 - SUPREME COURT , Tara Devi Aggarwal 1972 (11) TMI 2 - SUPREME COURT and Paville Projects Pvt. Ltd 2023 (4) TMI 295 - SUPREME COURT to confirm the learned PCIT s revision directions. Decided against assessee.
Issues involved:
The issues involved in this case are whether the assessment order passed by the learned AO under section 143(3) is erroneous and prejudicial to the interests of the revenue, whether the claimed long-term capital gains and deductions were properly examined, whether the assessee had sufficient evidence for cost of improvement, whether the AO's assessment order was correct in restricting disallowances, whether the submission of details and vouchers for improvement cost were considered, and whether the PCIT's revision directions were justified. Issue 1: Assessment order under section 143(3): The assessee's appeal challenged the Pr. CIT(A)-2, Nagpur's order under section 263(1) of the Income Tax Act, 1961. The PCIT held the AO's assessment order as erroneous and prejudicial to the revenue's interests due to the claimed index cost of improvement not being adequately supported by evidence. The PCIT directed the AO to conduct a proper enquiry and examination, citing the case law of Commissioner of Income Tax vs. Himachal Pradesh Financial Corporation. The revision directions were upheld by the tribunal, dismissing the assessee's arguments that the assessment was not erroneous. Issue 2: Examination of long-term capital gains and deductions: The assessee contended that the AO had properly examined the issue of long-term capital gains and deductions under section 54, supported by show cause notices and documentary evidence. However, the PCIT found that the assessee lacked evidence for the claimed cost of improvement, leading to the disallowance of indexed cost of improvement and under-assessment of income. The tribunal upheld the PCIT's decision, emphasizing the importance of supporting material during assessment proceedings. Issue 3: Evidence for cost of improvement: During the assessment proceedings, the assessee stated that they did not have details or vouchers for the cost of improvement claimed, which was found to be unsupported by other evidence. The PCIT concluded that the lack of evidence for expenses claimed on improvement of the property rendered the assessment order erroneous and prejudicial to the revenue. The tribunal agreed with this assessment, highlighting the necessity of providing supporting material for claimed expenses. Issue 4: Restriction of disallowances: The PCIT noted that the AO had not disallowed the entire indexed cost of improvement, leading to under-assessment of income. The PCIT directed the AO to add back the entire expenses claimed for improvement to the total income of the assessee. The tribunal supported this decision, emphasizing the need for accurate assessment to prevent revenue loss. Issue 5: Consideration of submissions and revision directions: The assessee argued that the AO's assessment was correct and did not cause prejudice to the revenue. However, the PCIT's revision directions were based on the lack of evidence for the claimed expenses on improvement, leading to under-assessment. The tribunal upheld the revision directions, citing relevant case law and confirming the PCIT's decision as fair, judicious, and transparent. Separate Judgment: No separate judgment was delivered by the judges in this case.
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