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Facts
The assessee sold an immovable property for Rs. 32,72,000 and declared short-term capital gains. The dispute arose from the disallowance of Rs. 25,00,000 claimed as the cost of construction of the house, which the lower authorities upheld.
Held
The tribunal found that neither the assessee fully proved the cost of construction nor could it be entirely denied due to the nature of the unorganized sector. Therefore, a lump sum disallowance of Rs. 12,00,000 was deemed just and proper, allowing Rs. 13,00,000 of the claimed cost.
Key Issues
The key legal issue was the substantiation of the cost of construction for a capital asset sold, specifically whether the assessee could prove the claimed Rs. 25,00,000 expenditure.
Sections Cited
Section 147, Section 144
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Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Sh. Satbeer Singh Godara & Sh. Manish Agarwal
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2016-17, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2024-25/10734919886(1) dated 20.02.2025, in proceedings u/s 147 r.w.s. 144 of the Income Tax Act, 1961.
Heard both the parties at length. Case file perused.
It emerges during the course of hearing that the assessee/appellant raises her sole substantive grievance directed against both the learned lower authorities’ action disallowing her cost of construction of the house/capital asset
We make it clear that there is no dispute between the parties that the assessee had sold her immovable property/house for sale consideration of Rs.32,72,000/- and declared short term capital gains arising therefrom as assessable under the provisions of the Act. Coming to the foregoing sole substantive issue between the parties, the Revenue vehemently argues that she had failed to prove the same in both the lower proceedings.
We have given our thoughtful consideration to the assessee’s and the Revenue’s respective vehement submissions. Learned counsel more particularly submits that the assessee had purchased only a vacant plot followed by her construction cost incurred thereupon which finally culminated in the short term capital gains declared at her behest.
We find no reason to accept either party’s arguments in entirety. This is for the precise reason that neither the assessee has successfully discharged her onus to plead and prove the impugned cost of construction of Rs.25,00,000/- nor her the same could be altogether denied as each and every evidence in such unorganized sector is very difficult to be verified. We thus deem it appropriate in these peculiar backdrop that a lump sum disallowance of Rs.12,00,000/- only would be just and proper with a rider that the same shall not be treated as a precedent. The assessee’s cost of construction claim of Rs.25,00,000/- is hereby allowed to the extent of Rs.13,00,000/- in other words. Necessary computation shall follow as per law.