RATAN PAUL ,COOCHBEHAR vs. ITO, WARD - 2(2), COOCHBEHAR , COOCHBEHAR

This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax-(A)-Jalpaiguri dated 05.12.2017 passed u/s 250 of the Income Tax Act, 1961 (the ‘Act ‘) relating to A.Y. 2013-14.

The facts of the case are brought out by the ld. CIT(A) in detail by the CIT(A) in his order from pages 4 to 9 of his order. For sake of brevity I do not extract the same. The assessee is an individual and derives income from land. The issue which is before me is the computation of long term capital gain on sale of land. The assessee purchased land on 28.12.1990 for Rs.9,000/-. He claimed that he had carried out improvements on this land. The cost of improvement incurred and claimed by the assessee and the cost of improvement allowed by the ld. AO is as follows :-

The assessee claimed that he has received gifts from friends and relatives for all these above referred assessment years and the source of expenditure for improvement of land were these cash gifts from total 18 donors. Gift deeds were filed from all these 18 persons, from whom the assessee claimed to have received donations. On the directions of the AO, the assessee produced 11 donors on 31.08.2016 and 4 donors on 16.09.2016 and three donors could not be produced. Out of the 11 gift donors produced on 31.08.2016, four donors denied that they have given gifts to the assessee. Seven donors, though confirmed the gift had stated that the gift deed was executed in the year 2016 itself, whereas the date of execution on the gift deeds as produced by the assessee was recorded as the date of gift deeds i.e. either in the year 1990 or 1991 etc. Some of the gift donors had stated that the gift deeds in question were executed in that year in which the cash gifts were given. In view of such contradictory statement, the claim of the assessee was not accepted by the AO. On appeal the First Appellate Authority confirmed the same., Aggrieved the assessee is in appeal before me.

I have heard rival contentions. The entire issue in my view has been diverted in this case. The issue is whether the assessee has incurred expenditure towards cost of improvement of the land acquired by him. The said expenditure is claimed to have been incurred by him during the financial year 1990-91, 1991-92 and 1992-93. This is more than 25 years ago. Now, to ask the assessee to substantiate the source of income earned by him in these years for meeting his claim of having incurred expenditure for improvement of land and to adjudicate the same, is in my view uncalled for. The better way would have been to examine as to whether the assessee had actually incurred the expenditure as claimed. If the assessee cannot produce the evidence of having incurred such expenditure, on the ground that it is very old, then a valuation report can be taken from a valuer in support of the claim. Allowing 50% of the salary income as expenditure incurred is in my view is not correct. At the same time the claim of the assessee of having received cash gifts in these years does not appear to be correct, though certain donors have confirmed the gifts. Some of the donors denied having given the gifts. Some donors dispute the date of exexution of the gift deeds.

In view of the irrational manner in which the source of the assessee 25 years ago is sought to be examined and also in view of the unsubstantiated explanations sought to be brought on record by the assessee, I am of the considered opinion that interest of justice would be met if the claim of the assessee is considered on adhoc manner as the AO had accepted part claim of the assessee. The expenditure incurred on cost of improvement may be allowed at 25% of that which is claimed by the assessee in each of the A.Yrs. 1990-91, 1991-92, 1992- 93 and 2012-13 and the long term capital gain computed accordingly. I order accordingly.

In the result the appeal of the assessee is allowed in part.