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TMI Blog2024 (5) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... compared to total income - If the value adopted by the Stamp Valuation Authority is considered, it would be Rs. 43,80,219/-. Therefore, the total investment in property as compared to the total income declared by the assessee in her ITR is much higher. It is clear that the AO has not expanded the scope of inquiry under limited scrutiny by CASS. We also find that the enquiry made by the AO are directly on the issue for which the case was selected for limited scrutiny . Therefore, the contention of the Ld.AR that the AO exceeded his jurisdiction in passing the impugned assessment order is not correct, both in law and on facts. The same is therefore dismissed. Computation of capital Gain - Disallowance being expenses towards the additional work undertaken by the assessee in respect of the flat purchased by her for a consideration - Payment of margin money to contractors for additional work are submitted. It is further submitted that the husband of the appellant has neither incurred any cost nor repaid any part of housing loan nor credited the sale consideration in his books of account. He has also not reflected any apart of the capital gains in his ITR. Both the purchase as well as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of DVO has also not been given to us to reconsider the amount of addition made by the AO. Therefore, we sustain the addition made by the AO. Accordingly, this ground of assessee is dismissed. - Shri Pawan Singh, Jidicial Member And Shri Bijayananda Pruseth, Accountant Member For the Appellant : Shri Ramesh Malpani, CA For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order of the Learned Commissioner of Income Tax(Appeals) / National Faceless Appeal Centre, Delhi (for short, CIT(A) u/s 250 of the Income-tax Act, 1961 (for short, the Act ) dated 03.01.2024 for assessment year 2015- 16. Grounds of appeal raised by the assessee are as under:- 1) That on the facts and in the circumstances of the case as well as in law, the ld. CIT(A) has erred in sustaining the addition of Rs. 47,38,280/- made by AO by wrongly denying the deduction of additional cost of construction incurred by the appellant in the flat sold during the year and thereby erred in upholding the assessment of Short Term Capital Gain (STCG) on sale of said flat at Rs. 34,12,167/- as against the short term capital loss (STCL) of Rs. 13,26,113 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed that sources of investment in extra work are from her savings account and bank loan. However, assessee could not prove the existence and genuineness of such extra work. To ascertain the fact, the matter was referred to Departmental Valuation Officer (for short, DVO ). However, till date of passing the assessment order, no report with respect to extra work / furniture work undertaken by the assessee has been submitted. The assessee could not produce the contractors and hence, identity of contractors could not be established by assessee. As the assessee has failed to furnish requisite details regarding extra work of Rs. 47,38,280/-, the same was disallowed being non-genuine work and capital gain arising from sale of the same property was recomputed. Accordingly, as short term capital gain (for short, STCG ) was recomputed at Rs. 34,12,167/- instead of loss of Rs. 13,26,113/- claimed by assessee. 2.1 The AO also added Rs. 3,04,819/- u/s 52(2)(vii)(b)(ii) of the Act in respect of a property purchased at Rs. 7,00,000/- but whose stamp duty value was Rs. 13,09,638/-. The assessee claimed that location of the plot was in a low slum area and there was no street light, road etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 167/- instead of short term capital loss of Rs. 13,26,113/-. The Ld. AR for the assessee also contended that because of the very nature of their work, the contractors are moving persons and they moved from one place to other place or even from one city to another depending on the work they get. Merely because contractors were not found at given address after a gap of time, the work done by them cannot be disbelieved as payments were made through banking channel. To support his submission, Ld. AR for the assessee relied on the following decisions in the case of M/s Royal Builders vs. ACIT in ITA No.2744/AHD/2009 dated 29.12.2011 (affirmed by Hon ble jurisdictional High Court in T.A No.521/2012 dated 28.01.2013) and CIT vs. M.K.Brothers [1987] 163 ITR 249 (Guj). The Ld. AR also submitted that payments were directly made to the contractors by the bank as disbursement of housing loan and this vital evidence proves the extra works carried out by assessee, as bank does not disburse the loan without verification of the purpose for which house building loan was sanctioned. The Ld. AR also submitted that observation of AO regarding field visit of his Inspector to flat revealing no signs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited scrutiny under CASS on two issues, i.e., (i) sale consideration of the property in ITR is less than sale consideration of property reported in AIR and (ii) large investment in property as compared to total income. The AO has made inquiry in respect of sale of property, which was purchased by the assessee in AY 2013-14. The property was sold on 26.08.2014 for a consideration of Rs. 95,00,000/-. It is the claim of the assessee that the purchase value was Rs. 60,87,883/- and she incurred further expenditure of Rs. 47,38,280/- towards additional work. After collecting the evidence and explanation of the assessee, the AO has recomputed STCG on sale of the property at Rs. 34,12,162/- in lieu of short term capital loss of Rs. 13,26,113/- claimed by the assessee. Therefore, this issue is within the scope and ambit of the first issue of the limited scrutiny . 7.1. Regarding second issue of large investment in property as compared to total income, it is seen that the assessee has shown total income of Rs. 6,23,160/-. He has, however, purchased a property at Rs. 13,09,638/- jointly with another co-owner namely Smt. Pushpadevi Maheshkumar Biyani. The share of the assessee comes to Rs. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the findings of the lower authorities and has emphasized that payments were made to the contractors from the savings bank account of the assessee and housing loan sanctioned by the ING Vysya Bank Ltd (now Kotak Mahindra Bank). It is seen from the paper book-II submitted the assessee consisting of 9 pages that the property value was Rs. 1,06,89,078/-. The value of improvement was Rs. 47,80,000/-, the borrower contribution towards margin money was Rs. 21,89,076/- and the home loan amount was Rs. 85,00,000/-. Three payments of Rs. 12,41,800/- each on 23.08.2013 was made by the bank directly to the three contractors. Agreement for additional construction work and evidence for payments of margin money and contractors charge are at pages 16 to 35 of the first paper book. 9. It was, however, seen that the name of Shri Pradeepkumar D Biyani was appearing in the bank statement from which payment of Rs. 12,41,800/- each was given to the three contractors. On being specifically asked by the Bench as to why the payment made by Shri Pradeepkumar D Biyani should be allowed towards cost of additional work, the assessee has submitted a clarification wherein it is stated that the housing loan wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, information was called for from the office of the Sub- Registrar, Athwa, Surat regarding stamp duty value. The market value ascertained by the Stamp Valuation Authority was Rs. 13,09,638/-. Since the difference between the market value and consideration for purchase was Rs. 6,09,638/-, which was more than Rs. 50,000/-, the provisions of sub-clause(b)(ii) of Clause-(vii) of section 56(2) of the Act are clearly attracted. In response to the notice by the AO, the Ld. AR stated that the assessee registered the property by paying full stamp duty as per market value written in the Registrar record. The AO had provided copy of the value action report received from the Sub- Registrar office and he asked the assessee to explain why the difference in the value of Rs. 3,04,819/- (assessee s share) should not be added to the income of the assessee. In reply thereto, the assessee stated that the plot is situated in a slum area of Magdalla Port where workers and milkmen are living. There is no street light, no drainage, no road and no water supply in the area. The plot is also at lower level than normal level. Due to low level of the land, lot of garbage and rain water gets stored i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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