Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “G” DELHI
Before: SHRI SAKTIJIT DEY & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order of the Commissioner of Income Tax (Appeals)-XVII, New Delhi [‘CIT(A)’ in short] dated 12.07.2019 arising from the assessment order dated 25.12.2018 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2016-17.
Briefly stated, the assessee sold one immovable property for Rs.9,25,00,000/- during the year under consideration which is stated to be acquired/constructed prior to 01.04.1981. For the purposes of calculation of Long Term Capital Gain, the assessee adopted the cost of acquisition of land and building as per valuation determined by the registered valuer. The assessee inter alia also claimed cost of improvement at Rs.1,80,000/- and Rs.2 lac attributable to F.Y. 1982 and 1983 respectively while computing the Long Term Capital Gains. The indexed cost of such cost of improvement was worked out to Rs.37,65,123/- for deduction. The Assessing Officer on inquiry from the assessee in the course of the assessment found that the aforesaid claim towards cost of improvement is not supported by any documentary evidence. The Assessing Officer accordingly observed that the cost of improvement claimed with a view to reduce tax liabilities. The Assessing Officer thus denied the cost of improvement so claimed for the purposes of determination of taxable Long Term Capital Gains.
Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) however also could not see any merit in the claim of the assessee and thus declined to interfere with the action of the Assessing Officer. The relevant operative paragraph of the order of the CIT(A) is reproduced hereunder:
“5.1 During the year under consideration appellant has sold immovable property for Rs. 9,25,00,000/-. For the purpose of calculation of long term capital gain appellant has taken the value of land and building as per valuation by a registered valuer. Apart from this the appellant has taken the value of construction of property at Rs. 3,48,300/- and taken cost of improvement at Rs. 1,80,000/- and Rs. 2,00,000/- during year 1982 and 1983 respectively while computing long term capital gains. The AO has asked the appellant to furnish documentary evidence in support of her claim but she has not furnished any evidence in support of cost of improvement. Thus, AO has computed the long term capital gain after reducing the indexed cost of improvement/construction at Rs.
37,65,123/- and long term capital gain worked out at Rs. 1,52,69,692/- which resulted addition of Rs. 39,29,287/-.
5.2 During the course of appellate proceedings appellant has submitted that she has claimed deduction of Rs. 1,80,000/- in 1982 and Rs. 2,00,000/- in 1983 being improvement/construction carried out in the building. The expenditure helped to increased the age of building. The AO did not allow the expenditure in calculation of LTCG for want of documentary proof. In support of her contention appellant has filed an affidavit that improvement was carried out by his brother with his own resources in the year 1982 and 1983. Her brother is an NRI and construction was looked after by her. The extensive improvement of the said property was carried out by her brother during period 1982/1983. Such improvement was undertaken to maintain the property after the period of merely 28 years at a cost of Rs. 1,80,000/- in 1981 and Rs. 2,00,000/- in 1982 is quite reasonable.
5.3 I have considered the facts of the case, finding of the AO and submissions of the appellant. The appellant has claimed cost of improvement at Rs. 1,80,000/- and Rs. 2,00,000/- in the year 1982 and 1983 respectively and indexed cost of improvement for both the year at Rs. 39,29,288/-. The AO has asked the appellant to furnish documentary evidence in support of cost of improvement but appellant failed to furnish any documentary evidence. During the course of appellate proceedings the appellant has filed the affidavit stating that property which was constructed in 1950 and improvement has taken place 35 years back, the cost of improvement is quite reasonable and should be accepted. The contention of the appellant is not acceptable as she has not brought any documentary evidence on record in support of cost of construction and source of cost of improvement. She has tried to justify the cost of improvement on the basis of the affidavit claiming that cost of improvement was incurred by her brother and no documentary evidence with her. In the absence of any evidence only on the basis of the affidavit contention of the appellant could not be accepted and AO is justified in recomputing long term capital gain after excluding the cost of improvement and addition made by the AO at Rs. 39,29,287/- on account of LTCG is hereby confirmed.”
Further aggrieved, the assessee preferred appeal before the Tribunal.
We have heard the rival submissions. The assessee has tried to support the claim towards cost of improvement of Rs.1,80,000/- and Rs.2,00,000/- purportedly incurred in F.Y. 1982 and 1983 respectively by way of affidavit. On inquiry, from the bench, it was however admitted that other than affidavit, the assessee does not possess any other direct or indirect supporting evidence. The only case of the assessee is that the cost of improvement has taken place 35 years back and that too incurred by his brother, and therefore, the assessee is not in a position to corroborate the claim. The assessee mainly relies upon the doctrine of preponderance. 6. 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. 7. 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’. In the instant case, the affidavit filed by the assessee bears only the verification that it has been sworn on oath and contents of the affidavit is correct but without giving source of knowledge or information. Such bald verification makes the impugned affidavit meaningless and valueless. The nature and source of knowledge is not found to be disclosed with sufficient particularity rendering it a piece of paper carrying no probative value and thus liable to be rejected. 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. We thus see no reason to interfere with the order of the CIT(A). 6. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 07/06/2022.