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Facts
The appellant sold an immovable property for Rs. 80,00,000/- and did not file a regular return. The AO initiated reassessment proceedings under section 147 and assessed the total income at Rs. 74,45,515/-, disallowing claims for cost of improvement and acquisition. The CIT(A) confirmed the AO's action.
Held
The Tribunal noted that the appellant failed to provide evidence for the fair market value of the property as on 01.04.2000 and the cost of improvement before the lower authorities. The appellant also did not file a registered valuer's report during assessment or before the CIT(A), and only produced one before the Tribunal.
Key Issues
The primary issue is determining the fair market value of the property as of 01.04.2000 and the validity of the AO's disallowance of claims for cost of improvement and acquisition due to lack of evidence.
Sections Cited
139(1), 147, 148, 55(2)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 10.06.2024 for Assessment Year (AY) 2016-17.
Brief facts of the case are that the appellant is an individual. No regular return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act) was not filed by the appellant. The Income Tax Officer, Ward-1(1), Thiruvananthapuram (hereinafter called "the AO"), based on the information that the Remya Vikraman Nair Rema Devi appellant sold immovable property for a consideration of Rs. 80,00,000/- during the previous year relevant to AY 2016-17, formed an opinion that income escaped assessment to tax within the meaning of section 147 of the Act. Accordingly, issued notice u/s. 148 of the Act on 31.03.2023. In response to the notice u/s. 148 the appellant filed return of income on 21.04.2023 declaring total income of Rs. 5,54,485/-. Against the said return of income, the assessment was completed by the AO at a total income of Rs. 74,45,515/-. While doing so, the AO had assessed the entire sale consideration received on sale of immovable property as reduced by the income returned without allowing cost of improvement claimed of Rs. 14,50,000/- and cost of acquisition and fair market value as on 01.06.2016 of Rs. 16,00,000/- for the failure of the assessee to prove that the property was inherited from her father as well as to prove the fair market value as on 01.04.2000.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. The matter ws adjourned four times. Therefore, we proceeded to dispose of the appeal on merits after hearing the learned Sr. DR. Remya Vikraman Nair Rema Devi 6. The sole issue that arises for our determination is what is the fair market value of the property as on 01.04.2000? On a mere reading of the assessment order it would reveal that the AO denied the claim for deduction of indexed cost of acquisition as the appellant allegedly failed to prove that the property was actually inherited from her father and fair market value of the property as on 01.04.2000 was Rs. 2,00,00/- per cent. Similarly, the AO also denied the benefit of cost of improvement of Rs. 14,50,000/- claimed to have been incurred on land leveling – Rs. 3,50,000/-, construction of compound wall – 3,50,000/- and construction of small building – Rs.14,50,000/- for alleged failure of the appellant to substantiate the above claim. Even before the CIT(A) no evidence was filed. In the circumstance, the CIT(A) had dismissed the appeal.
The issue in the present appeal is identical to the case of Smt. Vimala Hariharan dated 13.05.2025, which is decided by this Tribunal, to which one of us is the author, took a view as under: - “6. We heard the rival submissions and perused the material available on record. The issue that arises for my consideration is with regard to the adoption of FMV of the property sold as on 01.04.1981 for the purpose of computing the cost of acquisition in terms of provisions of sec.55(2) of the Act. The appellant adopted the FMV of the property ITA No.275/Coch/2024. Vimala Hariharan. 4 sold as on 01.04.1981 at Rs.2 lakh per cent based on the decision of the Cochin Bench of the Tribunal in the case of Cochin Bakery (supra), whereas the AO had adopted the FMV of the property as on 01.04.1981 based on the sale instances in the same locality furnished by the SRO. It is an Remya Vikraman Nair Rema Devi admitted fact that the appellant had not filed valuation report by a registered valuer during the course of assessment proceedings or before the CIT(A). It is only before this Tribunal, the appellant had filed the Valuer’s report from Er.Gangadharan K.T., Ernakulam. No doubt, ITAT is not a right forum to decide on the issue of valuation of the immovable property, but it can only go into the correctness or otherwise of the due process adopted by the assessing authority to arrive at the valuation. In this regard, reference can be made to the decision of the Hon’ble Calcutta High Court in the case of Namita Sarkar v. CIT (2005) 275 ITR 590 (Cal.). In the absence of any valuation report by Registered Valuer in support of the value adopted by the appellant, we are of the considered opinion that the AO was justified in adopting the FMV based on the sale instance in the same locality as furnished by the SRO, in the absence of any other evidences. In this regard, reference can be made to the decision of the Hon’ble Madras High Court in the case of CIT v. J.V.K.Rao (2002) 258 ITR 90 (Mad.). Since the valuation report was furnished before the Tribunal for the first time, we do not find any merit in the appeal filed by the assessee.”
In view of the above decision, we do not find any reason to interfere with the orders of the learned lower authorities.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 31st July, 2025.