MOHAMED ABDUL HAMEED MAVED,BENGALURU vs. THE ASSISTANT COMMISSIONER OF INCOME-TAX, INT.CIRCLE-1(2), BENGALURU

The facts of the case are that the assessee had filed the return of income declaring an income of Rs.31,34,190/-. The case was selected for scrutiny. The assessee had income under long-term capital gain by sale of a property during the relevant FY. In the return of income filed, the assessee has computed the long-term capital gains by taking the cost of IT(IT)A No.257/Bang/2022 Mohamed Abdul Hameed Maved, Bangalore

Page 2 of 4 construction at Rs.58,47,629/-. However, during the assessment proceedings the AO has noted that the assessee has not provided any evidence to corroborate this cost of construction. In the absence of any evidence, the AO has re- computed the long-term capital gain taking the cost of construction as NIL and passed the order. Aggrieved by the order of the AO the assessee has filed the present appeal.

The assessee went in appeal before Ld. CIT(A). The Ld. CIT(A) observed that the assessee has claimed a cost of construction of Rs.48,80,821/-. The assessee has submitted purchase bills for pre- engineered mild steel to the extent of Rs.23,32,500/-. (Being 50% of the total of Rs.46,65,000 including the purchase cost of construction incurred by assessee and his brother.) Other than this expenditure proof of Rs.23,32,500/-, the assessee has not been able to produce any evidence in support of any expenditure incurred including labor expenses incurred. The photographs of industrial shed submitted during the course of this hearing are also perused by Ld. CIT(A). The photographs reflect a steel structure built over plain land. The steel pillar structures apparently have RCC footings. The inside and outside of the shed have not been cemented or paved. To this extent assessee is said to have incurred a small amount towards RCC footings and labour charges for the erection of steel structure. To be fair to assessee and the revenue, an estimated amount of Rs.3,00,000/- towards RCC footings and Rs.2,33,250/- towards labour charges for the erection of steel structure was considered by Ld. CIT(A). With this an additional cost of Rs.5,33,250/- was allowed to the assessee in addition to Rs.23,32,500/- by him. The total construction cost is taken at Rs.28,65,750/- and indexation of the same is allowed at Rs.34,33,406/-. This amount is allowed in place of Rs.58,47,629/-

We have heard the rival submissions and perused the materials available on record. Admittedly, assessee filed the Registered Valuer Report before the Ld. CIT(A), which was not made available to AO. The Ld. CIT(A) ought to have called for remand report asking the AO to compare the DVO report with the Registered Valuer Report, which he failed to do so. In view of this, we are inclined to send back the entire issue to the file of AO to compare the Registered Valuer Report with the DVO report and decide issue afresh after giving an opportunity of hearing to the assessee. It is the duty of the assessee to explain the difference between these two reports to the satisfaction of the AO. If the assessee fails to explain the differences,

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 15th Jun, 2022