VICKI ELECTRONICS,MUMBAI vs. INCOME TAX OFFICER-31(3)()5), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL
“F” BENCH MUMBAI

BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER &
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Vicki Electronics, Gala
No. 23, Back side
Sidhpura Industrial
Estate, Off. S.V. Road,
Goregaon (W), Mumbai
– 400062. Vs. Income Tax Officer
31(3)(5), Bandra Kurla
Complex,
Mumbai –400051
PAN/GIR No. AAAFV0824B
(Applicant)
(Respondent)

Assessee by None
Revenue by Ms. Nidhi Agarwal, Sr. DR

सुनवाई क तारीख/Date of Hearing
14.01.2025
घोषणा क तारीख/Date of Pronouncement
25.02.2025

आदेश / ORDER

PER SANDEEP GOSAIN, JM:

The present appeal has been filed by the assessee challenging the impugned order dated 08.02.2024, passed u/s 250 of the IT Act, 1961 (‘the Act’), by the Learned
Commissioner of Income Tax (Appeals) / National Faceless
Appeal Centre, Delhi (‘Ld. CIT(A)’), for the assessment year
2014-15. The grounds of the appeal are as under:
“1. The Ld. CIT (A), NFAC, Delhi [hereinafter referred to as "the CIT (A)"] erred in law and on facts in 2
upholding a disallowance of Rs. 30,13,025/- in respect of repairs to the Appellant's Building.
2 The CIT (A) erred in law and on facts in not considering favourable Remand Report of the Assessing
Officer while upholding the aforesaid disallowance of Rs. 30,13,025/-.
3. The CIT (A) erred in law and on facts in upholding the action of the Assessing Officer of referring the valuation of land and building to the District Valuation
Officer ("the DVO") without forming his opinion for such reference and further erred in rejecting valuation made by the Registered Valuer, on behalf of the Appellant, without assessing any cogent reasons.
4. The CIT (A) erred in upholding the Computation of STCG of Rs. 2,04,10,667/- made by the Assessing
Officer in respect of sale of building as against the computation of STCG of Rs. 87,27,632/- offered by the Appellant.
5. The CIT (A) erred in upholding the Computation of LTCG of Rs. 53,63,098/- made by the Assessing Officer in respect of sale of land as against the NIL amount offered by the Appellant in respect of sale of land.
6. The CIT (A) erred in law and on facts in overlooking the fact that the Assessing Officer did not follow the mandate of section 55A of the Act r.w.s. 16A of the Wealth Tax Act, 1957. 7. The CIT (A) erred in law and on facts in overlooking the fact that the DVO violated the provisions of section 55A of the Act r.w.s. 16A of the Wealth Tax Act, 1957 as also the principles of natural

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justice while valuing the Appellant's immovable property.
8. The CIT (A) erred in law and on facts in overlooking the fact that the DVO made the valuation of immovable property without following the accepted principles of valuation, which is self - explanatory and self - evident on the face of his valuation report.
9. The CIT (A) erred in law and on facts in upholding the Assessing Officer's action of not allowing deduction in respect of purchase of the new shop costing Rs.
86,70,OOO/- while working out short term capital gain on sale of building under section 50 of the Act.”
2. At the time of hearing, none appeared on behalf of the assessee when the case was called repeatedly. Neither any application for seeking adjournment has been filed. From the perusal of the court file. We noticed that this is the seventh opportunity and even on the last date of hearing the bench had given last opportunity to the assessee but still nobody appeared on behalf of the assessee, which shows that assessee is not interested in pursuing the present appeal. On the other hand, Ld.DR present in the court is ready with the arguments and therefore we have decided to proceed with the hearing of the case, ex parte.
3. The brief facts of the case are that the assessee was manufacturing electrical wires and cables. During the year, assessee had sold land and building therefore, after conducting enquiries and providing opportunity of hearing

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AO passed order of assessment on 29 December 2016 under section 143(3) of the IT Act, thereby making additions under the head, long-term and short-term capital gain.
4. Aggrieved by the said order assessee had preferred an appeal before the Ld. CIT(A), but the same was dismissed.
5. Aggrieved by the order of Ld. CIT(A), assessee has preferred the present appeal before us on the grounds mentioned hereinabove.
6. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the additions made by Ld.AO and upheld by Ld. CIT(A). Therefore we have decided to take up and dispose of all the grounds through the present consolidated order.
7. After hearing Ld.DR, perusing the documents placed on record and the orders passed by the revenue authorities. we found that all the grounds raised by the assessee were dealt with by Ld. CIT(A) in its orders and the operative portion of the order of Ld. CIT(A) is contained in para number 9 to para number 16 of its order and the same is reproduced here in below:
“Decision:-
9. I have gone through the assessment order and the submissions made by the AR of the appellant. The facts of the case are that during the impugned AY the appellant had sold an immovable property which 5
consisted of land which was acquired from MHADA and building constructed thereon. The contention of the appellant was thatthe appellant had closed the business due to global slum in 2008. The appellant had sold the immovable property situated at 92C,
Govt. Industrial estate, Kandhivali West to M/s
Endosys
Healthcare
India
Pvt.
Ltd for a total consideration of Rs.3.64,50.000/- (Rs.2,28,34,500/- for building and Rs.1,36,15,500/- for land) The AO has made verification of various claims of the appellant with reference to short term and long term capital gain offered to tax and after due verification and after obtaining the report of the DVO reworked the short term capital gain and long term capital gain. By virtue of the same total income was assessed at Rs.1,82.28.280/-as against total income returned of Rs.11,82,160/-, Aggrieved by the said addition, the appellant is in appeal and has raised 09 grounds which are adjudicated as under-
10. Ground no.1 & 9 is general in nature and hence, not adjudicated,
11. Ground no.2 is relating to not giving proper opportunity of being heard to the appellant and gross violation of principles of natural justice. As seen from the assessment order, the AO has given sufficient time and opportunity after the notice u/s.143(2) of the Act was issued on 28.08.2015. The assessment has been completed on 29.12.2016. The AO has also issued show cause notice dated 13.12.2016 in respect of purchase and sale of properties. The appellant has complied with the said show cause notice on 23.12.2016 giving the details. Hence. there was no denial of natural justice. The AO has given sufficient

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time and opportunity to the appellant. Hence, there is no merit in this ground and accordingly. Ground no. 2
is dismissed.
12. Ground no.3 is relating to the repair expenses incurred by the appellant in cash amounting to Rs.30,13,035/- which was claimed as cost of improvement in working STCG on sale of property.
According to the AO, when he called for the details of cost of improvement incurred by the appellant, the appellant filed few copies of cash/credit memo which were not proper invoices having VAT/Sales tax Nos.
Therefore, the genuineness of the said bills was not proved by the appellant The appellant even failed to prove the payment proof through bank statement or cash book. As the appellant failed to substantiate the claim through proper documentary evidences, the AO rejected the claim of the appellant towards the cost of improvement claimed to have been incurred by the appellant amounting to Rs.30,13,035/-
12.1 During the appellate proceedings, the appellant submitted that as the building was in bad shape, the appellant was advised to undertake major work to improve the condition of the building for which the expenses were incurred in cash. It was further submitted that the RCC building with 4500 sq. ft. was 15 years old with ground and 1 st floor and unless it was repaired and painted, selling the same was difficult. Hence. it was claimed that building material dealers and the other parties do not have theVAT registrations and bank accounts for which expenses were incurred in cash and all expenses incurred are less than Rs 20.000/- and hence, provisions of Section 40A(3) of the Act are not attracted.

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12.2 The AO in his remand report dated 25.05.2018
stated that he summoned 05 parties who were claimed to have done the renovation work. They admitted that they did the work for the appellant but did not give any details as to the exact nature of work carried on by them with the help of any drawings etc. The appellant is based in Mumbai and not in any rural area to claim that building material is available only with the vendors who do not have VAT/Sales tax
Registration. In Mumbai, most of the transactions are carried on through banking channels and it is incorrect on the part of the appellant to claim that the vendors do not have the bank accounts. Further, the appellant has violated the provisions of Section 40A(3) of the Act as well as the details of expenditure claimed show that all the expenses are more than Rs.20,000/-and hence, should have been incurred through account pay cheques or drafts. As the appellant has not complied with the provisions of Section 40A(3) of the Act, the expenditure incurred is not allowable as deduction.
Moreover, the appellant is a firm maintaining the books of accounts. The expenditure incurred on renovation of the building should have been added to the cost of the asset in the Balance Sheet which was also not done. Thus, the appellant has not complied with any of the evidences which can prove the genuineness of expenditure which was incurred.
Firstly, the appellant has incurred the expenditure in cash, the appellant has not shown the withdrawals of cash from its bank account, the bills produced do not have any VAT/Sales tax Registration, the parties produced though confirmed that they did the work for the appellant but did not prove with documentary evidence what exactly work was done with any drawings etc. Therefore, the renovation expenditure

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claimed by the appellant is in the nature of afterthought and the facts do not show that the said expenditure was genuine. Hence, the disallowance of renovation expenditure made by the AO is found to be correct and accordingly, sustained. Ground no.3 is dismissed.
13. Ground no.4 & 5 are relating to referring the valuation of the property sold to District Valuation
Officer(DVO) and accepting his report and ignoring the report of the Approved Government Valuer. The facts of the case are that the appellant had sold land and factory building during the impugned AY. In the computation of the total income, the appellant bifurcated the sale price of land and offered it as LTCG and sale price of building was offered as STCG being a depreciable asset. As the land was purchased prior to 01.04.1981, the appellant obtained the valuation report of the said land from the Approved Government
Valuer which was valued at Rs. 14,50,800/-.
13.1 During the assessment proceedings, the AO referred the valuation of the said land to the DVO who vide report dated 28.12.2016 valued the land at Rs.8,78,850/-The appellant is disputing the valuation done by the DVO. The appellant now is disputing the comparative instances taken by the DVO to value the land belonging to the appellant. The two instances taken by the DVO are at Malad which is about 3-4 Kms from the land belonging to the appellant and the other being at Kandivali East which is about 5 Kms from the appellant's land. The DVO has taken the comparative sales instances in the distance of 4-5 Kms and which are in the limits of Municipal Corporation of Mumbai.
However, the registered valuer of the appellant has not 9
referred to any sale instances while valuing the land of the appellant. The DVO is the authorised and technically competent officer of the department for valuation of immovable assets. The reports submitted by the DVO are binding on the AD. Hence, in view of the fact that DVO has prepared the report on the basis of comparative instances in vicinity of 4 to 5 Kms in the Municipal limits, the valuation done by the DVO is found to be on proper and technical footing and therefore, the same is upheld. The AO's reference to DVO is also upheld as the AO is not competent to examine, the valuer's report. Thus, ground no.4 & 5
are dismissed as without merit.
14. Ground no.6 & 7 are relating to not considering the purchase of new shop in commercial complex amounting to Rs.86,70,000/- as the shop in question was not registered with the Sub-