What did the Tribunal hold?

The Tribunal admitted the additional evidence, noting it went to the root of the issue. In the interest of natural justice, the appeal was remitted back to the AO for fresh consideration.

The assessee declared income from sale of immovable property, but the AO treated the cost of acquisition as Nil due to lack of documents. The CIT(A) confirmed this addition. The assessee filed additional evidence before the ITAT.

What were the issues?

Whether the cost of acquisition of immovable property can be considered Nil without proper documentary evidence, and if additional evidence can be admitted at the appellate stage.

Shri Ganasekaran Varatharajan vs ITO | ITAT Chennai 2026

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S

For Respondent: Ms. Pushpa Hemachand, Sr.AR

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s.250 of the Income Tax Act, 1961 (in short "the Act") dated 07.08.2025 for Assessment Year (AY) 2021-22.

The assessee is an individual and a technician by profession. The assessee filed a return of income for AY 2021-22 on 31.03.2022 declaring total income of Rs.4,73,360/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O noticed that the

ITA No.2109/Chny/2026 Shri Gunasekaran Varatharajan :- 2 -:

assessee has made cash deposits in the bank account and the assessee has sold immovable property during the year under consideration. The AO called on the assessee to furnish the details pertaining to the same. The A.O accepted the explanation provided by the assessee towards cash deposits. With regard to the Long Term Capital Gains (LTCG) declared by the assessee, the A.O considered the cost of acquisition as Nil for the reason that the assessee has not submitted any relevant documents with regard to property being acquired from father on settlement and with regard to the cost incurred towards improvement/construction incurred by the assessee. Accordingly, the A.O arrived at assessed income at Rs.39,27,204/-. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) confirmed the addition made by the A.O for the same reason that the assessee has not furnished any documentary evidences. The assessee is in appeal before the Tribunal against the order of the CIT(A).

There is a delay of 166 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC), we condone the delay in filing the appeal and admit the appeal for adjudication.

We have heard the parties, and perused the material available on record. Before us, the Ld. Authorized Representative (AR) of the assessee submitted additional evidences along with petition under Rule 29. The Ld. AR further submitted that the assessee was under lot of financial constrains

ITA No.2109/Chny/2026 Shri Gunasekaran Varatharajan :- 3 -:

and was completely occupied in closure of the loan obligations relating to certain property. The Ld. AR also submitted that due to that said reason the assessee could not collate the necessary details in support of the cost of acquisition and other costs incurred by the assessee as called for by the lower authorities. Accordingly, the ld. AR prayed for admission of additional evidence and an opportunity before the lower authorities. On perusal of the additional evidences now submitted by the assessee, we notice that the assessee has submitted the settlement deed, father's sale deed, the sale deed entered into by the assessee, the encumbrance certificate, property tax receipt, valuation report, loan related documents etc. In our considered view, the additional evidences now submitted by the assessee goes to the route of the impugned issue of cost of acquisition being considered as Nil by the lower authorities. Therefore, the proper adjudication of impugned issue, we admit the additional evidences now submitted by the assessee. As already stated the assessee has not submitted any of the relevant documents before the lower authorities and the main reason for the denial of deduction towards cost of acquisition is that the assessee has not submitted supporting documents. Considering the overall facts and circumstances of the case and in the interests of natural justice, we are inclined to give one more opportunity to the assessee. Accordingly, we remit the appeal back to the AO to consider the claim of the assessee towards cost of acquisition afresh in the light of the additional evidences now submitted by the assessee. The AO is further directed to call for any other details as may be required to decide the issue in accordance with law. The assessee is directed to furnish the relevant details in support of the claim of deduction towards cost of acquisition without seeking unnecessary adjournments and cooperate with assessment proceedings. It is ordered accordingly.

ITA No.2109/Chny/2026 Shri Gunasekaran Varatharajan :- 4 -:

Further, we also levy a cost of Rs.5,000/- (Five thousand only) in the appeal since considerable time and efforts have been spent by the Exchequer and for the reason that the assessee being delinquent before the lower authorities. The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and produce the receipt before the A.O.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 11th day of August, 2026 at Chennai.

Sd/- Sd/- (एबी टी. वक�) (पदमावती यस) (ABY. T. Varkey) (Padmavathy.S) लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य �याियक �याियक सद�य �याियक �याियक सद�य सद�य / Judicial Member सद�य चे�नई/Chennai, �दनांक/Dated: 11th August, 2026. EDN, Sr. P.S

Digitally signed by EJTADA DURGA आदेश क� �ितिल�प अ�े�षत/Copy to: EJTADA DURGA NARESH 1. अपीलाथ�/Appellant NARESH Date: 2026.08.13 12:31:58 +05'30' 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

SHRI GANASEKARAN VARATHARAJAN,CHENNAI vs. ITO, CHENNAI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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