ESHWARAPRASAD,TIRUVALLUR vs. ITO, WARD-1,, CHENNAI

ITA 2071/CHNY/2026Status: DisposedITAT Chennai28 September 2026AY 2015-165 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 11,44,779/- made by the AO and confirmed by the CIT(A) was not justified. Regarding the amount of Rs. 4,29,000/- claimed for expenditure with contractor Mr. Loganathan, the Tribunal noted that the contractor's confirmation was on record, and neither the AO nor the CIT(A) had examined the contractor or brought any adverse material on record to doubt the confirmation. The Tribunal found no steps taken by the authorities below to examine the contractor. Therefore, the addition in respect of Rs. 4,29,000/- was deemed unjustified. Furthermore, the Tribunal found no evidence brought on record against the assessee for not incurring the amount of Rs. 11,44,779/-. Consequently, the order of the CIT(A) was set aside, and the grounds raised by the assessee were allowed. The appeal of the assessee was allowed.

What were the facts?

The assessee, an individual, initially did not file a return of income for Assessment Year 2015-16. Following a notice from the Assessing Officer (AO) on March 31, 2022, a return was filed declaring a total income of Rs. 15,99,621/-. The AO added Rs. 11,44,779/-, disallowing the claim for cost of improvement due to lack of documentary evidence. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who confirmed the AO's addition. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT) with a delay of 44 days, which was condoned. The appeal challenges the CIT(A)'s confirmation of the AO's order regarding the cost of improvement.

What were the issues?

1. Whether the addition of Rs. 11,44,779/- by the AO, confirmed by the CIT(A), on account of disallowance of the claim for cost of improvement for the Assessment Year 2015-16, is justified in the facts and circumstances of the case? Assessee's contentions: The assessee argued that the expenditure was incurred approximately ten years prior to the AO's notice, explaining the lack of bills/vouchers. For the expenditure of Rs. 4,29,000/- with a contractor named Mr. Loganathan, the assessee submitted a confirmation letter. The assessee also stated that the AO and CIT(A) failed to examine the local contractor whose confirmation was on record and did not bring any adverse material on record to doubt the confirmation. Revenue's contentions: The revenue, through the AO and confirmed by the CIT(A), disallowed the cost of improvement for not being substantiated with proper documentary evidence. The CIT(A) noted that the contractor was not a registered contractor and performed small works, and that the confirmation letter did not provide details regarding the nature, quality, quantity of work, or payments made/received.

Which sections of the Income-tax Act were involved?

Section 68

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Before: Shri Inturi Rama Rao & Shri S.S. Viswanethra Ravi

Hearing: 30.07.2026Pronounced: 28.09.2026

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 22.12.2025 passed by the ld. Commissioner of Income Tax (Appeal), NFAC, Delhi for the assessment year 2015-16. 2. We find that this appeal was filed with a delay of 44 days. The assessee filed an affidavit accompanied by a petition explaining the reasons. On perusal of the same and upon hearing both the parties, we

2 I.T.A. N

The order continues below.

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