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Facts
The assessee sold a property, claiming indexed cost of improvement which was disallowed by the AO due to insufficient evidence. An additional sum of Rs.17,433/- was also treated as undisclosed income. The CIT(A) dismissed the appeal due to the assessee's failure to furnish necessary supporting evidence.
Held
The Tribunal found that certain documents relevant to the assessee's claim were not examined by the CIT(A). Therefore, the case is remanded back to the CIT(A) for de novo adjudication, allowing the assessee to provide additional evidence for the cost of improvement and the undisclosed income.
Key Issues
Whether the disallowance of indexed cost of improvement and the addition of Rs.17,433/- as undisclosed income were justified given the assessee's claim of new evidence, and if the CIT(A) should have provided further opportunity to present such evidence.
Sections Cited
148
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Before: SHRI INTURI RAMA RAO & SHRI SONJOY SARMA
Assessment Year: 2015-16 Marath Velayudhan Joshy…………………...………………..…..….……….Appellant Marath House, Near North Post office Road, Irinjalakuda, Trichur, Kerala – 680125. [PAN:ASEPJ9480H] vs. ITO, Ward-1(1), Thrissur……..……….....................……........……...…..…..Respondent Appearances by: Shri Niveditha K Kamath, Adv, appeared on behalf of the assessee. Smt. Leena Lal, Snr AR,appeared on behalf of the Revenue. Date of concluding the hearing :June 09, 2025 Date of pronouncing the order :July 22, 2025 ORDER PerSonjoy Sarma, Judicial Member: This appeal by the assessee is directed against the order of the NFAC [hereinafter referred to as ‘CIT(A)] dated 06.12.2024 for the assessment year 2015-16.
At the outset, it is noted that there is a delay of 108 days in filing thepresent appeal before the Tribunal. The assessee has filed a condonationpetition explaining the reasons for such delay. After considering thesubmissions and materials on record, we are satisfied that there wasreasonable cause for the delay in filing the appeal. Accordingly, the delay of108 days is condoned, and the appeal is admitted for adjudication.
Brief facts of the case are that the assessee was a partner in Jas Enterprises, which was engaged in thebusiness of money landing Marath Velayudhan Joshy business during the Assessment Year (AY) 2015-16.The assessee had also received contract income from Evergreen Holidays. In response to the notice issued under Section 148 of the Income-taxAct, 1961, the assessee filed a return of income for AY 2015-16. During theyear under consideration, the assessee had sold a property comprising landpurchased for 40,000 and a house constructed thereon for Rs.28,68,800/-. Theassessee claimed indexed cost of improvement amounting to Rs.46,48,182/-.However, the Assessing Officer disallowed the said cost of improvement onthe grounds that the assessee failed to produce adequate documentaryevidence-such as expense bills to substantiate the construction andimprovement costs. Consequently, the entire claim was rejected, citinginsufficiency of evidence and unexplained source of funds. Additionally, asum of Rs.17,433 credited on 13 January 2015 in the bank passbook was alsotreated as undisclosed income. The assessee contended that this amount wasomitted from business income due to unclear printing in the passbook.
Aggrieved by the assessment order, the assessee filed an appeal beforethe CIT(A). However, the appeal was dismissed primarily on the ground thatthe assessee failed to furnish necessary supporting evidence during theappellate proceedings, particularly regarding the cost of improvement and thesource of funds.
Before the Tribunal, the assessee submitted that certain additionalevidences are now available, which could substantiate the cost ofimprovement claimed in the return of income. The assessee prayed for onemore opportunity to present these documents before the CIT(A).
The learnedDepartmental Representative supported the order of the authorities below butdid not raise any serious objection to the remand request made by theassessee.
Marath Velayudhan Joshy 7. We after considering the submissions of both parties and perusing thematerials available on record, the we noted that certain documents relevant tothe assessee's claim were not examined at the appellate stage. In the interest ofjustice and fair play, the matter is remanded back to the file of the CIT(A) forde novo adjudication. The CIT(A) shall provide adequate opportunity to theassessee to furnish the necessary evidences in support of the claim relating tothe cost of improvement and the addition of Rs.17,433/- made by assessingofficer. The assessee is also directed to cooperate fully in the remandproceedings and submit the relevant documents within a reasonable time.
In the result, the appeal of the assessee is allowed for statistical purposes.
Kolkata, the 22nd July, 2025.
Sd/- Sd/- [Inturi Rama Rao] [Sonjoy Sarma] लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member Dated:.22.07.2025.
Copy of the order forwarded to: 1. Appellant - 2.Respondent -` 3. CIT(A)- 4. CIT- , 5. CIT(DR),