SRI MUNIYELLAPPA,BANGALORE vs. INCOME TAX OFFICER WARD-4(3)(2), BANGALORE

This appeal is filed by the assessee which is directed against the order of ld. CIT(A)-4, Bangalore dated 22.03.2017 for Assessment Year 2011-12.

The grounds raised

The appellant prays before the honourable members to accept the valuation report as an evidence for calculating building value and to render the justice.

For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered.”

It was submitted by ld. AR of assessee that the assessment order has been passed by the AO u/s. 144 and therefore, it is apparent that full & proper submission could not be made by the assessee before the AO. He further submitted that before the CIT(A), certain new evidences were made available by the assessee but the same were not considered by CIT(A) in proper perspective by holding that it is apparent that the assessee, during the assessment proceedings had accepted the fact that no evidence was available to explain the cost of construction or improvement in respect of the property acquired / constructed in the year 2001. He submitted that in the interest of justice, the matter should be restored back to the file of AO / CIT(A) for fresh decision in the light of valuation report produced by assessee before CIT(A). The ld. DR of revenue supported the order of CIT(A).

I have considered the rival submissions. I find that the assessment order in question has been passed by the AO u/s. 144. In the assessment order, the AO has noted that notice u/s. 143(2) was issued on 01.08.2012 and in response to the final opportunity notice issued; the assessee has appeared and filed the details called for. Thereafter, the AO noted in the assessment order that the assessee deposited cash of Rs. 10 Lakhs or more in the savings bank account and the assessee was asked to furnish the return details along with the bank statement and sale deed. The AO also noted that it is found that the date of registration is 20.10.2000. He further asked the assessee to produce the Page 3 of 4 proof towards cost of construction and the year of construction and the assessee accepted that he has no documentary proof of construction. In view of this, the AO disallowed the cost of construction and capital gain was computed by deducting selling expenses of Rs. 2.05 lakhs and indexed cost of Rs. 6,42,352/- from the sale proceeds of Rs. 41 Lakhs. Before the CIT(A), the assessee has submitted that this fact that the house was constructed in the year 2001 is evident from the sale deed dated 19.05.2010 and hence, the cost of construction of the property in question in the year 2001 should be considered in the light of valuation report submitted by the assessee before the CIT(A) as per which the valuer has valued the cost of construction at Rs. 8.30 Lakhs. It is also submitted by assessee before the CIT(A) that the assessee is not carrying on any business activity and assessee did not maintain books of accounts and therefore, assessee is not able to produce documentary evidence and books of accounts with regard to construction of house during the year 2001. The basis of the decision of CIT(A) is this that the assessee has not furnished the details of such expenditure or the construction / building invoices. The property in question was purchased by the assessee as per registered sale deed on 20.10.2000. The copy of this purchase deed is not available on record although copy of sale deed dated 19.05.2010 as per which the assessee sold the property is available on record. In the schedule of property as per sale deed dated 19.05.2010, the built up area and year of construction is mentioned along with the quality of roof, walls, flooring, doors and windows etc. By obtaining the purchase deed dated 20.10.2000, it should be compared as to whether the built up area and other details of the property mentioned in the same is similar as mentioned in the sale deed dated 19.05.2010 because on such comparison, it will come out as to whether the assessee has made any improvement in the property after the purchase of the same in the year 2000. The cost of purchase as per the deed dated 20.10.2000 should be considered along with the estimated cost of improvement if it is found that there is some addition/improvement made by the assessee after the purchase of the property in question as per the said purchase deed. The valuation report brought on record by the assessee determining the cost of property in the year 2001 at Rs. 6.30 Lakhs being the value of main building and Rs. 2 Lakhs as the value of Page 4 of 4 other structures like sump tank, compound wall and gate etc. should also be considered if found relevant after examining such comparison of the purchase deed and sale deed and then the issue should be decided afresh regarding the actual cost of construction and improvement and then the capital gain should be computed. With these observations, I restore the matter back to the file of CIT(A) for fresh decision after providing adequate opportunity of being heard to both sides.

In the result, the appeal filed by the assessee is allowed for statistical purposes.