Loading judgment…
Facts
The assessee, an individual, did not file an income tax return for AY 2018-19. The AO noted sale of property, remittances, and interest income. Despite notices, the assessee failed to provide details for remittances and capital gains, leading to additions as unexplained income and short-term capital gains.
Held
The Tribunal held that the assessee failed to substantiate claims for cost of acquisition and brokerage with documentary evidence. No additional evidence was brought on record before the Tribunal to justify claims beyond what was determined by the DRP/AO.
Key Issues
Whether the assessee's claims for cost of acquisition and brokerage for the sale of immovable property are substantiated with documentary evidence, and whether the additions made by the AO on account of unexplained remittances and capital gains are justified.
Sections Cited
147, 148, 143(2), 142(1), 69, 115BBE, 144C(1), 144C(13)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the final assessment order dated 06.01.2025 passed by the Income Tax Officer, International Taxation Ward 2(1), Chennai under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961 [“Act” in short] for the assessment year 2018-19.
When the appeal was taken up for hearing on 24.07.2025, we find no representation on behalf of the assessee. However, we find paper book consisting 168 pages and written submissions of P. Rajagopalan & Co., but, however, no power of attorney filed showing authorization of M/s. P. Rajagopalan & Co. by the assessee to file the said paper book and written submissions. Further, the notice issued by this Tribunal to the assessee returned unserved with an endorsement “left”. Therefore, the paper book as well as written submissions filed by M/s. P. Rajagopalan & Co. are not considered. Thus, the assessee called absent and set exparte and we proceed to decide the appeal on merits after hearing the ld. DR basing on the material available on record.
Brief facts relating to the case are that the assessee is an individual and did not file return of income for the assessment year under consideration. However, as per the information available with the Department, the Assessing Officer noted that the assessee sold immovable property for ₹.1,30,00,000/-, made remittances to the tune of ₹.2,59,49,000/- and also earned interest income of ₹.35,013/- during the FY 2017-18. Accordingly, the Assessing Officer issued notice under section 148 of the Act on 04.04.2022. In response to the notice, the assessee filed return of income under section 148 of the Act with a returned income of ₹.35,013/-. Notice under section 143(2) of the Act was issued on 01.02.2023 and subsequently, notices under section 142(1) of 3 the Act were also issued requiring the assessee to furnish details called for. However, the assessee failed to comply with the notices issued. The Assessing Officer issued a show cause notice on 02.02.2024. However, the assessee did not furnish any details/explanations to substantiate sources for remittances and details of capital gains made by him. As per the information available with the department, the Assessing Officer noted that the assessee has made remittances of ₹.2,59,49,000/- during the year under consideration. The assessee was asked to furnish the sources of these remittances with documentary evidences. However, the assessee failed to comply with the notices issued. Therefore the sources of these remittances remained unexplained. Show cause notice was also issued on 02.02.2024 but the assessee did not respond. Therefore, in absence of any details, the Assessing Officer treated the amount of remittances to the tune of ₹.2,59,49,000/- as unexplained money under section 69 r.w.s. 115BBE of the Act. Further, the Assessing Officer noted that the assessee sold an immovable property for ₹.65,00,000/- which has been reported twice. As per return of income furnished by the assessee, the assessee has claimed indexed cost of acquisition for ₹.80,31,968/- and expenditure of ₹.1,30,000/- on sale of this property. However, the assessee failed to substantiate his claim with any kind of documentary evidences. Therefore, the assessee was asked to explain this transaction with documentary evidences for any deduction for cost of acquisition/improvement, if any, claimed by the assessee vide notices issued u/s 142(1) on various dates. However, the assessee failed to comply with the notices issued. The Assessing Officer issued a show- cause notice on 02.02.2024, but, the assessee did not respond. Therefore, in absence of any details in respect of cost of acquisition, holding period etc., the Assessing Officer treated the entire sale consideration of immovable property of ₹.65,00,000/- as short-term capital gains in the hands of the assessee for the year under consideration. Accordingly, the Assessing Officer proposed draft assessment order dated 18.03.2024 under section 144C(1) of the Act.
The assessee filed objections before the Dispute Resolution Panel on 17.04.2024 with other details. Since the assessee filed details and documents before DRP which were not filed before the AO, the DRP called for remand report from the AO on 18.10.2024. On examinations of documents furnished by the assessee before the DRP and during remand proceedings, the assessee explained the sources of remittances with documentary evidences. Further, the assessee has claimed indexed cost of acquisition for ₹.80,31,967/- and brokerage on sale of the property for ₹.1,30,000/-. However, as per the copy of Agreement for Sale of Land, Development and Construction dated 07.07.2004, the total cost of the property was ₹.27,26,250/-. Further, the assessee once again failed to furnish any kind of documentary evidence to substantiate his claim of payment of brokerage for ₹.1,30,000/-. As per the directions of the DRP, the Assessing Officer computed the long term capital gains at ₹.5,69,344/- and brought to tax and completed the assessment under section 147 r.w.s. 144C(13) of the Act dated 06.01.2025. Aggrieved by the assessment order, the assessee preferred an appeal before the ITAT.
Heard the ld. DR and perused the material available on record. We find the assessee is challenging the order of the Assessing Officer in substantiating the claim of cost of acquisition and payment of brokerage in the facts and circumstances of the case.
The ld. DR submits that the assessee did not file any details in respect of capital gains before the Assessing Officer and accordingly, the TPO passed draft order under section 144C(1) of the Act proposing to assess total income of the assessee at ₹.3,24,84,013/- as against the returned income of ₹.35,013/-. The said draft order was challenged before the DRP. The assessee filed details relating to long term capital gains before the DRP. Having not filed before the AO/TPO, the DRP sought remand report from the AO/TPO. The TPO filed remand report on 6 18.11.2024. On perusal of page 6 of the DRP order, we note that the assessee failed to substantiate his claim of cost of acquisition with documentary evidence and also payment of brokerage. Even after considering 2nd remand report, at page 10 of the DRP order, the Panel observed that the assessee failed to substantiate his claim of cost of acquisition with documentary evidence and also payment of brokerage. Accordingly, as per directions of the DRP, the Assessing Officer determined long term capital gain to an extent of ₹.5,69,344/- as against the addition on account of short term capital gain amounting to ₹.65,000/- as proposed in the draft assessment order. We find the Assessing Officer has given benefit of indexed cost of acquisition for land and building and accordingly determined long term capital gain at ₹.5,69,344/-, which clearly shows that the DRP/Assessing Officer considered the details as furnished by the assessee during course of assessment proceedings and relevant para 6 of the assessment order is reproduced hereinbelow: 6. The assessee filed objections before the Dispute Resolution Panel on 17.04.2024 with other details. Since the assessee filed details and documents before DRP which were not filed before the AO, the DRP called for remand report from the AO on 18.10.2024. On examinations of documents furnished buy the assessee before the DRP, it was seen that the assessee once again failed to substantiate his claim of cost of acquisition with documentary evidences. Accordingly, remand report was furnished on 18.11.2024. However, the assessee requested for one more opportunity fo file additional documents. Therefore, the case was once again referred to this office and remand report was called for by the DRP on 27.11.2024. On perusal of details furnished by the assessee, it was seen that the assessee explained the sources of remittances with documentary evidences. Further, the assessee has claimed indexed cost of acquisition for ₹.80,31,967/- and brokerage on sale of the property for 1,30,000/-. However, as per the copy of Agreement for Sale of Land, Development and Construction dated 07.07.2024, total cost of the property was ₹.27,26,250/-. Further, the assessee once again failed to furnish any kind of documentary evidence to substantiate his claim of payment of brokerage for ₹.1,30,000/- Consequently, long term capital gain on sale of immovable property under consideration was computed as under: Sale consideration ₹. 65,00,000/- Less: Indexed cost of acquisition: ₹. Land 6,10,560*272/133=₹.14,69,667/- Building 21,51,690*272/129=₹.44,60,989/- ₹. 59,30,656/- Long Term Capital Gains ₹. 5,69,344/- 7. Before us, no additional evidence is brought on record to show that the cost of acquisition over and above determined by the DRP/Assessing Officer. Therefore, we find no infirmity in the order of the Assessing Officer in determining long term capital gains to an extent of ₹.5,69,344/- and we are completely agree with the reasons recorded by the Assessing Officer in para 6 of the impugned order. Thus, the grounds raised by the assessee are dismissed.