CHANDRIKABEN HARISH SHAH,,AHMEDABAD vs. INCOME TAX OFFICER,7(4),, AHMEDABAD

This is the 29th hearing of the case before the Tribunal. None appeared on behalf of the assessee, however, written submissions dated 15.5.2018 is placed on record. With this written submissions and the assistance of the ld.DR, we proceed to dispose of the appeal filed by the assessee.

Brief facts of the case is this that the assessee is an individual drawing income from other sources. For the Asstt.Year 2010-11, the assessee filed her return of income on 13.7.2011 declaring a total income of Rs.3,35,070/-. The same was processed under section 143(1) of the Act, and then taken up for scrutiny assessment and notice under section 143(2) and 142(1) were being issued from time to time, and the assessment has been completed. During this assessment year, the assessee has sold immovable property for Rs.62,64,840/-. The assessee has claimed cost of acquisition at Rs.2,82,208/- cost of improvement of Rs.18,96,390/- and the assessee offered long term capital gain of Rs.16,32,000/- by way of revised statement of total income. The same was accepted by the AO and assessed the income at Rs.17,28,459/- and levied consequential interest under section 234A, 234B and 234C of the Act, and also initiated penalty proceedings under section 271(1)(c) of the Act.

A perusal of the above assessment order and relevant records by the ld.CIT following details are revealed:

It has further been noticed that the indexed cost of improvement was five times more than the indexed cost of acquisition. Further, as evidence of the said improvement expenditure, the assessee had merely furnished an expenditure statement and various vouchers on simple paper, which did not bear dates and signatures of the persons receiving the money. The perusal of the sale deed executed with Rainbow Papers Ltd, and registered on 10/03/2010, reveals that no improvement in the sold land at Rajour has been shown in the description of the land so sold, whereas the assessee had claimed to have incurred the following major items of expenses.

The ld.CIT on perusal of the assessment records observed that the assessee failed to prove her claim for expenditure incurred so as to claim cost of improvement on the basis of vouchers furnished by the assessee which does not carry signatures and basic details. Thus, the AO erroneously allowed the claim for the cost of improvement without verifying the genuineness of the expenditure incurred and source of payment by the assessee. Thus, the AO completed the assessment without application of mind. Therefore, a show cause notice was issued on the assessee on 11.8.2014 calling for explanation from the assessee. The assessee vide her letter dated 16.1.2015 replied that the AO has examined the issue, and therefore the assessment order is not erroneous or prejudicial to the interest of the Revenue, and relied upon the decision of Bombay High Court in the case of CIT Vs. M/s.Fine Jewellery (India Ltd., Income-tax Appeal No.296 of 2013 and requested to drop the revision proceedings.

On considering the above reply, the ld.CIT observed as under:

Thus, the ld.CIT set aside the assessment order dated 25.3.2013 and directed the AO to make de novo assessment and pass fresh order giving opportunity to the assessee. Aggrieved against the revision order, the assessee is in appeal before us by raising the following grounds of appeal:

The Ld. CIT failed to appreciate that while passing the Assessment Order dated 25.03.2013 the Ld. Assessing Officer has passed the assessment order after due application of mind and after carrying on required investigations. Hence, the Ld. CIT is not justified in invoking the provisions of Section 263 of the Act.

Without prejudice to the above the Ld. CIT failed to appreciate that the issues raised during the course of the proceedings u/s 263 do not satisfy the condition that the assessment order dated 25.03.2013 is erroneous as well as prejudicial to the interests of revenue. Therefore, the order passed under section 263 of the Act dated 05.01.2015 is bad in law and hence, the same may be quashed and set aside.”

The ld.DR appearing for the Revenue states that the grounds raised by the assessee are general in nature without any material or evidence in support of her claim. However, written arguments filed by the assessee is also challenging invocation of section 263 and also relied on the decisions of Hon’ble Supreme Court in the case of Malabar Industries (2000) 243 ITR 83 (SC) and CIT Vs. Max India Ltd, (2007) 295 ITR 282 (SC). Thus, the assessee pleaded in the written submission to quash 263-order passed by the ld.CIT and allow the appeal of the assessee.

Per contra, the ld.DR submitted that revision order passed by the Commissioner is well within the provisions of section 263 of the Act. There is nothing on the assessment record to show that vouchers for cost of improvement were verified at all by the AO. The letter dated 18.12.2012 filed by the assessee during the assessment proceedings showed that documents, vouchers were enclosed for verification, but there are no such documents available in the file, and there is no correspondence with the these parties. However the assessee had filed declaration dated 11.3.2013 along with self-prepared statement of cost of improvement. Further there are undated vouchers from Hinglaj Building Contractor which did not bear sales-tax number or even telephone number, and the vouchers are also unsigned. Thus, the AO accepted self-prepared statement without making any verification and allowed the cost of improvement of land amounting to Rs.18,93,390/-. Even these payments are not proved, how it has been made. Therefore, the ld.CIT rightly invoked section 263 of the Act which does not require any interference.

We have given thoughtful consideration and perused the material available on record. Though the assessee has filed written arguments vide her letter dated 15.05.2018 no material evidence for the claim of cost of improvement, construction, redevelopment expenditure have been placed before us. In the absence of any details, we are not in a position to interfere with the order passed by the ld.CIT, invoking provisions of section 263 of the Act. Thus, the grounds raised by the assessee are hereby rejected.

In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 29th April, 2022 at Ahmedabad.