What did the Tribunal hold?

The tribunal allowed brokerage and incidental expenses, and the entire cost of improvement for AY 2009-10, considering the difficulty in furnishing old evidence. For the current year's cost of improvement, a 50% disallowance was deemed reasonable.

The assessee's appeal was filed with a delay of 250 days, which was condoned by the tribunal. The assessee claimed selling and incidental expenses, and cost of improvement, but these were disallowed by the AO and confirmed by the CIT(A) due to lack of evidence.

What were the issues?

The key issues were the allowability of selling/incidental expenses and cost of improvement without sufficient documentary evidence, and the reasonableness of disallowances made by the lower authorities.

Abdul Kalam Azad Naina Moh Am E D vs ITO | ITAT Chennai 2026

Before: SHRI SS VISWANETHRA RAVI & SHRI GAGAN GOYAL

Hearing: 05.08.2026

आयकरअपीलीयअिधकरण, ’ए’ �ायपीठ,चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ीयसयसिव�ने�रिव, �ाियकसद�एवं�ी गगन गोयल, लेखा सद�के सम� BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No. 682/Chny/2026 िनधा�रणवष�/Assessment Year: 2017-18 Abdul Kalam Azad Naina Mohamed, Vs. Income Tax Officer, No.7/56A, E Type SIDCO Nagar, Non Corporate Ward -10(3), 3rd Main Road, Villivakkam, Chennai – Chennai. 600 049. [PAN: AWXPN-6705-E] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ�कीओरसे/ Appellant by : Mr. T. Vasudevan, Advocate ��थ�कीओरसे/Respondentby Ms. Anshu Sharawat, Addl.CIT : सुनवाईकीतारीख/Date of hearing : 05.08.2026 घोषणाकीतारीख /Date ofPronouncement 07.08.2026 : आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appealfiled by the assesseeis directed against the order dated 12.03.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18.

2 ITA No. 682/Chny/2026 2. We find that this appeal was filed with a delay of 250 days. The assessee filed an affidavit explaining the reasons to condone the said delay. On perusal of the same and upon hearing both the parties, we find the reasons stated by the assessee are bonafide which really prevented the assessee in filing the appeal in time. Thus, delay of 250 days condoned.

At the outset, ld.AR, Mr. T. Vasudevan, Advocate, placed on record chart containing the particulars of claim of assessee and disallowance made by the AO. He submits with reference to selling expenses and incidental expenses to an extent of Rs.1,50,000/- and Rs.10,000/- respectively are reasonable to claim as per market indexation. He argued that the AO disallowed said amounts for non- submission of proof and drew our attention to the page no.4 of the assessment order. The ld.CIT(A) without considering the submissions of the assessee confirmed the order of the AO. He argued the order of the ld.CIT(A) is not justified in rejecting the claim of brokerage and sundry expenses without appreciating the commercial reality that brokerage is a normal, unavoidable cost in any property transaction. He prayed to allow the same. Further, he drew our attention to the

3 ITA No. 682/Chny/2026 cost of improvement incurred in FY 2008-09 (AY 2009-10) to an extent of Rs.11,08,029/- and he argued vehemently that the AO and ld.CIT(A) arbitrarily disallowed the same without considering that it is very difficult to furnish the evidences which were incurred in FY 2008-09. The ld.AR expressed his inability to furnish evidences in this regard supporting the claim of the assessee. He prayed to allow the entire cost of improvement as the assessee purchased the pre-used flat, wherein it requires improvement to make it as habitable condition. Further, the cost of improvement incurred for the year under consideration is to an extent of Rs.8,80,961/-, wherein the AO disallowed the same for want of evidences. The ld.AR argued that the assessee made efforts to get the evidences, but however not able to furnish the same. He prayed to confirm a reasonable disallowance on estimation basis.

The ld.DR, Ms. Anshu Sharawat, Addl.CIT, vehemently opposed the same. She argued that when the assessee incurred expenses towards brokerage and incidental expenses the assessee should have obtained correct proof of evidence. Further, she argued that the assessee failed to furnish the evidence before both the parties and

4 ITA No. 682/Chny/2026 even before the Tribunal and prayed to reject the arguments of ld.AR. Further, with reference to cost of improvement incurred in FY 2008-09 and 2016-17 (AY 2009-10 & 2017-18), the assessee failed to bring on record any evidence in view of the expenses incurred and the AO and the ld.CIT(A) rightly rejected the same. She prayed to reject the arguments of the ld.AR in giving full allowance for AY 2008-09 and reasonable estimation for the year under consideration.

Having heard both the parties and on perusal of records we note that we find force in the arguments of the ld.AR it is market indexation in commercial reality incurring expenditure towards brokerage and sundry expenses while dealing with real estate property. Therefore, we accept the arguments of the ld.AR in allowing the brokerage and incidental expenses to an extent of Rs.1,50,000/- and Rs.10,000/- respectively and accordingly the order of the ld.CIT(A) is not justified to this effect. Further, with reference to cost of improvement incurred in FY 2008-09 (AY 2009-10), we find force in the arguments of the ld.AR that since the financial year is 20 years old, it is very difficult to retain the documentary evidence as the case may be. Therefore, we accept the arguments of the ld.AR and hold the order of the ld.CIT(A) is not

5 ITA No. 682/Chny/2026 justified in confirming the order of the AO in disallowing cost of improvement for FY 2008-09 (AY 2009-10) and it is deleted. Further, with reference to cost of improvement for the year under consideration taking into account the arguments of the ld.AR in estimating disallowance at 50% on total disallowance of Rs.8,80,961/- i.e. Rs.4,40,480/- is reasonable and it is confirmed. Thus, grounds raised by the assessee in this regard are allowed in part.

In the result, appeal of the assessee is partly allowed. Order pronounced on 07thAugust, 2026 at Chennai. Sd/- Sd/- (गगन गोयल) (यसयसिव�ने�रिव) (GAGAN GOYAL) (SS VISWANETHRA RAVI) लेखा सद�य/Accountant Member �याियकसद�य/ Judicial Member

Chennai, Dated: 07.08.2026 JPV आदेशकी�ितिलिपअ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकरआयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय�ितिनिध/DR & 5. गाड�फाईल/GF

Digitally signed by PRASANNA PRASANNA VANI JETTY VANI JETTY Date: 2026.08.10 15:44:29 +05'30'

ABDUL KALAM AZAD NAINA MOH AM E D,CHENNAI vs. ITO, WARD-4, TIRUNELVELI

What did the Tribunal hold?

What were the facts?

What were the issues?

Latest GST High Court judgments