JANARTHANAN GAJALAKSHMI,SALEM vs. DCIT, CIRCLE-1(1), SALEM
आयकर अपीलीय अिधकरण, ’बी’ Ɋायपीठ, चेɄई
IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI
ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ के समƗ
Before Shri S.S. Viswanethra Ravi, Judicial Member &
Shri Amitabh Shukla, Accountant Member
आयकर अपील सं./I.T.A. No.1968/Chny/2025
िनधाŊरण वषŊ/Assessment Year: 2016-17
Janarthanan Gajalakshmi,
3-16-B, Bharathi Nagar, Vellakalpatty,
Salem 636 014. [PAN:BOJPG0239M]
Vs. The Deputy Commissioner of Income Tax,
Circle 1(1),
Salem.
(अपीलाथŎ/Appellant)
(ŮȑथŎ/Respondent)
अपीलाथŎ की ओर से / Appellant by :
Shri S. Sridhar, Advocate (Erode)
ŮȑथŎ की ओर से/Respondent by :
Ms. Samatha M. Mullamudi, JCIT
सुनवाई की तारीख/ Date of hearing :
08.10.2025
घोषणा की तारीख /Date of Pronouncement
:
12.11.2025
आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 19.06.2025 passed by the ld. Commissioner of Income Tax
(Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17. 2. Ground Nos. 1 to 3 raised by the assessee is general in nature and requires no adjudication.
The ld. AR Shri S. Sridhar, Advocate requested to take up first Ground Nos. 4, 6 & 7 as these are relating to one issue challenging the I.T.A. No.1968/Chny/25 2 action of the ld. CIT(A) in confirming the view of the Assessing Officer in making the addition on account of development expenses.
We note that the assessee claimed expenditure of ₹.69,82,270/- on account of cost of improvement. The ld. AR contended that the assessee incurred such expenditure for construction of compound wall of length 638 feet, fixing of gate, filling up of earth for 12 feet depression and digging of new bore-well. The Assessing Officer was of the opinion that the assessee had purchased the said property on 15.10.2015 and the Google image as on 12.07.2015 i.e., 3 months before the purchase and images on the date of purchase on 15.10.2015 and the images as on 21.11.2018 are all one and the same and no expenditure incurred for construction of compound wall, filling of earth of 12 feet deep and digging of bore-well. The Assessing Officer reproduced the said Google images taken on 12.07.2015, 15.10.2015 and 21.11.2018 in pages 10, 11 & 12 of the assessment order. Further, in order to verify the genuineness of expenditure claimed by the assessee, the Assessing officer issued summon under section 131 of the Act to the buyers of the said property. According to the Assessing Officer Dr. Arun Rao, his wife Dr. Rashmi Rao and their son Dr. Ashwin Rao purchased a vacant land of 26,900 sq.ft. from the assessee vide 2 documents registered on 26.10.2015 and I.T.A. No.1968/Chny/25 3 28.10.2015. Accordingly, the Assessing Officer examined Dr. Arun Rao on 20.12.2018 placed at pages 13, 14 & 15 of the assessment order. On perusal of the said statement, we note that the said Dr. Arun Rao clearly stated that there was no depression of 12 feet in the site, there is no drainage work done, either before purchase or after the purchase. Further, he stated that there was existing compound wall with old gate before purchase and no new compound wall and new gate constructed. Further, no bore-well was done by the assessee, but a bore-well was dug at their-own cost. By the above statement, it is clearly establishes that the claim of the assessee in filling of the earth with 12 feet deep, construction of wall and gate, drainage & digging of bore-well is not correct. Before us, the ld. AR vehemently contested that the Google images cannot be considered as admissible evidence under section 65B of the Act. Further no opportunity for the assessee was given by the Assessing Officer and also the ld. CIT(A) to cross examine the said purchaser Dr. Arun Rao.
The ld. DR Ms. Samatha M. Mullamudi, JCIT drew our attention to para 16.1 of the assessment order and contended that the Assessing Officer has given ample opportunities for cross examination of Dr. Arun Rao. Further, the assessee and her representative did not appear for cross examination and waived the same. Therefore, we find no force in I.T.A. No.1968/Chny/25 4 the argument of the ld. AR in contending the addition is bad in law for not giving cross examination of Dr. Arun Rao. Further, the Assessing also given an opportunity to produce T.K. Rajaganapathy and Y. Jothy for examination in support of assessee’s claim of development expenses paid to them, but, however, the assessee failed to produce those person before the Assessing for examination, which evident from para 16, 16.1, 16.2 & 16.3 of the assessment order, which clearly shows that the assessee failed to produce the said witnesses before the Assessing Officer. The ld. CIT(A) discussed the issue in page 28 & 29 of the impugned order, wherein, he upheld the order of the Assessing Officer. The relevant portion is reproduced herein below for better understanding: 6. Decision
I have gone through the facts of the case, the assessment order and the submission of the appellant. In this case, the AO has worked meticulously in making additions of Rs.69,82,270/- towards cost of improvement of the property and Rs.2,17,530/-towards brokerage payment. He has proceeded scientifically by making use of modern technology in the form of Google
Earth Pro computer programme. He has simultaneously recorded statements in respect of the purchasers of the property and the brokerage payees. The finding of enquiries at each stage of the proceeding were placed before the appellant to give her a reasonable opportunity to explain her case. The appellant, on the other hand, could not produce proper documentation of the expenses and could not rebut the findings of the AO.
Although eight persons were mentioned to be brokerage payees, only three of them could be produced before the AO for examination. There was no document in respect of the expenses incurred towards cost of improvement and brokerage and all expenses were made out in cash. The purchasers did not support the claim of the appellant and the AO even offered cross examination of the purchasers by the appellant which could not take place due to the sudden death of the father of Dr. Arun Rao. Eventually, the appellant did not insist for cross examination of the purchasers. As regards, expenses on development expenses the appellant only produced only
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notarised affidavit from two persons namely TK Rajaganapathy and Y.
Jothy, who declared having received considerations of Rs.34,02,270/- and Rs.35,80,000/- respectively. These persons were not produced before the AO for examination. Above all, the entire work of filling up a depression in the site which is 12 ft deep, constructing a new compound wall of length 630 ft.
fixing a new gate, digging a new borewell and construction of a drainage system, all of these in a span of 11 days between purchase on 15.10.2015
and sales on 26.10.2015 seems not to be feasible. In the perspective, the addition by way of disallowance towards cost of improvement/development expenses and brokerage expenses have been rightly made by the AO.
On perusal of the above and considering the arguments of the ld. AR and the ld. DR, we note that the after examining the issue in detail, having no evidence brought on record by the assessee and basing on the statement of the purchaser, for non-production of witnesses and non- production of evidences for the expenditure, the Assessing Officer proceeded to disallow the expenditure claim of the assessee. Therefore, we agree with the ld. DR in stating that the Assessing Officer meticulously done the assessment in seeking for evidences, examination of the purchaser and by giving sufficient opportunities to the assessee for production of witnesses. The assessee could not produce any evidence in this regard and therefore, we find no infirmity in the order of the ld. CIT(A). Be that as it may, the ld. AR alternatively requested to remand the matter to the file of the Assessing Officer for limited purposes of affording opportunity to the assessee for cross examination of Dr. Arun Rao. It is noted at para 16.1 of the assessment order that the Assessing Officer observed that the assessee did not insist on cross examination of Dr.
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Arun Rao and waived the same. It is further noted that the said purchaser
Dr. Arun Rao did not appear for the cross examination on appointed date i.e., on 27.12.2018 by stating that his father by name Dr. K.N. Rao passed away at the age of 90 years. Therefore, it is clear the said cross examination did not happen, not for the absence of the assessee, but, for the absence of purchaser i.e., Dr. Arun Rao, who is to be cross examined. Therefore, we do not agree with the Assessing Officer’s finding that the assessee did not insist for cross examination and waived the same. Thus, considering the submissions of the ld. AR, we deem it proper to remand the matter to the file of the Assessing Officer only for limited purpose of cross examination of Dr. P. Arun Rao. Thus, ground Nos. 4, 6
& 7 raised by the assessee are allowed for statistical purposes.
Ground No. 8 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the order of the Assessing Officer in rejecting the claim of brokerage expenses.
We note that the assessee claimed brokerage amounts were paid to 8 persons and filed notarized affidavit of 8 persons before the Assessing officer. According to the Assessing Officer, the assessee could bale to produce only 3 persons out of said 8 persons. Further, the said 3 persons were stated that they are in the business of real estate brokerage
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and receiving brokerage amount of ₹.2,50,000/- each from the assessee, but, however, contradicted that they have not received any other brokerage whatsoever during the entire year and no return of income filed. Further, they also stated that they do not know who is M.V.
Sellamuthu (HUF) and so they have not received any money from the said person. The Assessing Officer doubted the statement of said 3
persons regarding their inconsistencies in saying that brokerage received, but, not received any other brokerage during the entire year. The ld.
CIT(A), vide para 6 confirmed the order of the Assessing Officer in disallowing the brokerage expenses claimed by the assessee for not bringing on record concrete evidences.
On perusal of the above with the arguments of the ld. AR and the ld. DR, we find contradiction statement of 3 persons who appeared before the Assessing Officer, which is evident from para 17 of the assessment order. Therefore, we find no infirmity in the order of the ld. CIT(A) in confirming the view of the Assessing Officer in disbelieving the statement of the said 3 persons. Further, as discussed above, the assessee has given list of 8 persons, out of which, only 3 persons appeared before the Assessing Officer and rest of 5 persons not appeared during the course of assessment proceedings. Therefore, we agree with the reasons
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recorded by the ld. CIT(A) in para 6 in confirming the order of the Assessing Officer. Be that as it may, the ld. AR alternatively requested to remand the matter to the file of the Assessing Officer by stating that the assessee is now ready to produce remaining 5 persons for examination by the Assessing Officer on account of payment of commission.
Admittedly, para 17 of the assessment order, clearly shows that the assessee claimed that commission payment was made to 8 persons, out of which 3 only appeared before the Assessing Officer. Therefore, in the interest of justice, considering the submissions of the ld. AR, we deem it proper to remand the matter to the file of the Assessing Officer for his examination of remaining 5 persons. The assessee shall co-operate with the Assessing Officer by producing said 5 persons and shall not seek any adjournment. Thus, ground No. 8 raised by the assessee is allowed for statistical purposes.
Ground No. 5 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the order of the Assessing Officer regarding the difference between the stamp duty value and sale consideration.
We note that the Assessing Officer discussed the said issue in para 18 of the assessment order, wherein, he clearly observed that the Sub-