MITESH L.GURSAHANI,MUMBAI vs. ITO (ERSTWHILE WARD 19(1)(1), MUMBAI

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ITA 4932/MUM/2018Status: DisposedITAT Mumbai02 December 2019AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the parties who undertook the renovation work responded to the Assessing Officer's notice and were considered genuine by the CIT(A) in part, there was no reason to treat other responding parties as non-genuine. Therefore, the addition sustained by the CIT(A) was liable to be deleted.

What were the facts?

The assessee claimed cost of improvement for a capital asset sold, providing confirmations from parties who undertook the renovation work. The Assessing Officer and CIT(A) partially disallowed the claim due to lack of supporting bills and the nature of confirmations.

What were the issues?

Whether the cost of improvement claimed by the assessee is adjustable from the sale of a capital asset, and if confirmations from parties are sufficient evidence when bills are not provided.

Which sections of the Income-tax Act were involved?

Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya (AM) & Shri Amarjit Singh (JM)

For Appellant: Shri G.T. Karnani
For Respondent: Shri Chaitanya Anjaria
Hearing: 04.09.2019Pronounced: 02.12.2019

This appeal by the assessee is directed against the order of learned CIT(A) dated 3.5.2018 and pertains to A.Y. 2011-12.

2.

The issue raised is that learned CIT(A) erred in confirming the addition of the Assessing Officer in treating cost of improvement at Rs. 4,24,790/-.

3.

The issue in dispute in this case is ‘cost of improvement’ claimed by the assessee is adjustable from sales of capital asset. The assessee has sold an immovable property for Rs. 60 lakhs during the year under consideration. The assessee had claimed Rs. 8,20,000/- as cost of improvement during the assessment year 2005-06 and 2006-07. Cost was said to be incurred on items like cement, flooring tiles, POP, hardware, electrical work-in-progress, wood work, supervision and labour charges. Except list of expenditure no supporting bills were shown. The Assessing Officer issued notice u/s. 131 of the Act to the relevant parties who have confirmed that such renovation was done by the assessee. Entire payment was done in cash.

4.

Learned CIT(A) was observed that all the confirmation were similar type. Learned CIT(A) concluded that it is also a fact that the parties concerned have filed confirmation though without any supporting details. He proceeded to hold that the parties/recipients who were assessed to tax are genuine parties. Hence, he allowed cost of improvement of Rs. 3,95,210/- purchased from them. Accordingly, he sustained disallowance of cost of improvement of Rs. 4,24,790/-.

5.

Against this order the assessee is in appeal before us. We have heard both the counsel and perused the records. We find that the concerned parties have responded and confirmed that the assessee had done renovation work and when learned CIT(A) is even allowing those parties who are assessed to tax as genuine, there is no reason why other parties should be treated as non- genuine. In our considered opinion when parties have duly responded to the notice of the Assessing Officer, learned CIT(A) cannot treat some of them as genuine and some of them as non-genuine. Accordingly, in our considered opinion addition sustained by learned CIT(A) is liable to be deleted. We order accordingly.

6.

In the result, appeal by the assessee stands allowed. Order has been pronounced in the Court on 02.12.2019.

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