SRINIVASMURTHY KRISHNAMURTI COLLAM,UNITED STATE vs. ASSISTANT COMMISSIONER, DELHI

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ITITA 156/DEL/2026Status: DisposedITAT Delhi07 September 2026AY 2016-174 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO had not fully complied with the categorical directions of the DRP. The assessee had provided necessary documentary evidence, including booking confirmation letters, purchase deeds, payment receipts, and possession letters, to substantiate the cost of acquisition. The DRP had specifically observed that rejecting the cost of acquisition despite the availability of these documents was unsustainable in law. The Tribunal found that the AO, despite these directions, determined LTCG without giving the full benefit of the cost of acquisition and cost of indexation. Consequently, the Tribunal set aside the impugned assessment order. The matter was remitted back to the AO for considering the documents furnished by the assessee to substantiate the cost of acquisition and to allow the benefit of cost of indexation before determining LTCG. The AO was directed to give effect to the order within 60 days. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Srinivas Murthy Krishnamurti Collam, a non-resident, appealed against an assessment order dated 23.01.2026 passed by the Assistant Commissioner (AC) under Section 147 r.w.s. 144 of the Income Tax Act, 1961, for Assessment Year 2016-17. The assessee had purchased two flats in Navi Mumbai in 2007 and sold them in AY 2016-17. The AC, in a draft assessment order, did not allow the cost of acquisition and indexation. The assessee's objections to the Dispute Resolution Panel (DRP) were allowed, with the DRP directing the AC to re-examine and re-compute the Long Term Capital Gain (LTCG) by allowing the cost of acquisition supported by documentary evidence. However, the AC passed the final assessment order without fully complying with the DRP's directions, re-computing LTCG at Rs. 43,10,031/-.

What were the issues?

1. Whether the assessment order passed by the Assessing Officer (AO) is liable to be quashed for contravention of the directions issued by the Dispute Resolution Panel (DRP)? (Question of law and fact, turning on Section 147 r.w.s. 144 of the Income Tax Act, 1961). Assessee's contention: The AO failed to comply with the DRP's directions to re-examine and verify the registered agreements for sale, possession letters, etc., and re-compute LTCG by allowing the cost of acquisition supported by documentary evidence. The AO also did not provide the benefit of cost of indexation. Therefore, the assessment order is bad in law and should be quashed. Revenue's contention: The AO has not fully complied with the directions of the DRP. The learned DR prayed for restoring the matter back to the AO for fresh assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI VIKAS AWASTHY & SHRI S RIFAUR RAHMAN

For Respondent: Dr. Shalini Verma, CIT DR

PER VIKAS AWASTHY, JUDICIAL MEMBER:

This appeal by the assessee is directed against the assessment order dated 23.01.2026 passed u/s.147 r.w.s.144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for AY 2016-17.

2.

Shri Ashish Kumar Halder, appearing on behalf of the assessee submits that the assessee is a non-resident since 1996. The assessee in the year 2007 had purchased two adjacent flats i.e. Flat No. A 101 and A 102 in housing Project Arihant Ananya, Plot No.4, Sector 34G, Kharghar, Navi Mumbai with two separate parkings for consideration of Rs.32,16,590/- and Rs.32,47,794/-, respectively. The assessee sold the aforesaid two flats during the period relevant to assessment year 2016-17. The Assessing Officer (AO) while framing the draft assessment

ITITA 156/DEL/2026 SRINIVASMURTHY KRISHNAMURTI COLLAM order dated 31.03.2025 did not give the benefit of cost of acquisition as well as cost of indexation. The assessee filed objections before the Dispute Resolution Panel (DRP). The DRP after examining the facts and documents placed on record observed that rejection of cost of acquisition despite availability of registered agreements, proof of payments and confirmations from builder is unsustainable in law. The DRP directed the AO to re-examine and verify the registered agreements for sale, possession letters, etc. and re-compute Long Term Capital Gain (LTCG) by allowing the cost of acquisition as supported by documentary evidences. The AO without following the directions of the DRP and without giving benefit of cost of indexation re-computed LTCG at Rs.43,10,031/-. The ld. AR submits that the assessment order is passed in contravention to directions of the DRP, therefore, is liable to be quashed. He thus, prayed for quashing the assessment order and deleting the addition.

3.

Dr. Shalini Verma, representing the department fairly stated that the AO has not fully complied with directions of the DRP. The ld. DR prayed for restoring the matter back to the AO for fresh assessment.

4.

Both sides heard, orders of the lower authorities examined. The limited prayer in the instant appeal is that the AO has not complied with directions of the DRP while passing the final assessment order, therefore, the same should be quashed. The facts narrated by the assessee regarding purchase of flats in the year 2007 and sale thereof is not in dispute. The assessee has placed on record copy of booking confirmation letters, purchase deed for Flat No. A 101, purchase deed for Flat No. A 102, copy of ledger accounts of assessee in the books of the builder, copies of receipts vide which the payments were made by the assessee for the two flats, the details of payments for the flats and copies of possession letter of flats. Thus, the necessary documents to determine cost of acquisition were available on record. The DRP after taking cognizance of documents on record observed as under:-

“5.4 The Panel is of the considered view that rejection of the cost of acquisition despite availability of registered agreements, payment proofs and builder confirmations, is unsustainable in law and contrary to the evidentiary record. 5.5 Accordingly, the objections raised by the assessee on this issue are allowed and the Assessing Officer is directed to re-examine and verify the registered Agreements for Sale, possession letters, ledger confirmations from the builder, and payment evidences placed in the paper book, and to recompute the long-term capital gains by allowing the cost of acquisition as supported by documentary evidence, in accordance with law. The Assessing Officer shall pass a reasoned and speaking order in this respect.” 5. Despite categoric directions of the DRP, the AO without examining the documents determined LTCG without giving full benefit of cost of acquisition and cost of indexation.

ITITA 156/DEL/2026 SRINIVASMURTHY KRISHNAMURTI COLLAM 6. The assessee has been forced into protracted litigation by the AO. In our considered opinion it is a fit case for levy of cost on the Department but we are restraining ourselves to do so. The Department should sensitize its officers to follow judicial discipline.

7.

The matter is remitted back to the AO for considering the documents furnished by the assessee to substantiate cost of acquisitions. The AO shall also allow the benefit of cost of indexation before determine LTCG, if any, in accordance with law.

8.

The AO shall give effect to the order of Tribunal within a period of 60 days from the date of receipt of this order.

9.

In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on Wednesday the 02nd day of September, 2026.

Sd/- Sd/- S RIFAUR RAHMAN VIKAS AWASTHY ACCOUNTANT MEMBER JUDICIAL MEMBER

Delhi Dated: 07-September-2026 NV/-

ITITA 156/DEL/2026 SRINIVASMURTHY KRISHNAMURTI COLLAM Copy to: SRINIVASMURTHY KRISHNAMURTI COLLAM, 7201, CHADDSLEY DR, HUNTERSVILLEY, 1 NC, NORTH CAROLINA, 28078, NORTH CAROLINA, UNITED STATES, USA-280780, USA

ASSISTANT COMMISSIONER, CIVIC CENTRE, J.L. NEHRU MARG, NEW 2 DELHI, NEW DELHI-110002, DELHI

3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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