VINOD RIKHABCHAND KOTHARI,MUMBAI vs. ASST CIT 14(1), MUMBAI

During hearing Shri Jitendra S. Sanghvi, authorized representative of the assessee advanced arguments which are identical to the ground raised by contending that photocopy of the bills evidencing expenses for cost of improvement were duly furnished before the Assessing Officer and the assessee was not legally duty bound to produce the original bills. It was contended that it is the duty of the Assessing Officer to prove that cost of improvement was not incurred by the assessee. On the other hand, the ld. DR, Shri Mukundraj M. Chate defended the conclusion arrived at in the impugned order by contending that in spite of providing opportunities to the assessee, original bills were never produced. It was the duty of the assessee to substantiate its claim with documentary evidence.

We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee declared income of Rs.41,41,830/- in his return filed on 31.3.2012. The case was selected for scrutiny, therefore notice u/s. 143(2) dt. 1.8.2012 was served upon the assessee. Another notice dt. 11.10.2012 u/s. 142(1) alongwith questionnaire was also served upon the assessee. The ITP, Mr. Sanghvi attended the proceedings. The assessee sold three plots of land through a single sale agreement dt. 25.9.2009 on a sale consideration of Rs. 1,05,37,600/- and offered Rs. 35,62,788/- as Long Term Capital Gain after indexation. The assessee worked out the Long Term Capital Gain after reducing the sale proceeds, cost of selling, cost of acquisition and cost of improvement. The assessee claimed Rs.27,75,000/- as cost of improvement. The assessee was asked to furnish the evidence with respect to cost of improvement. The assessee produced photocopies of 30 bills from different parties. The assessee was asked to produce the original bills and details of payments reflected in the bank account with respect to payment to the concerned parties. The assessee showed its inability to produce the original bills and also the bank statement reflecting payment details vide letter dt. 15.2.2013. Identical is the situation before the ld. Commissioner of Income Tax (Appeals). The Bench while hearing the assessee asked the assessee even if the original bills are not produced whether the assessee is in a position to produce the parties to whom payments were made. The assessee specifically said ‘No’. In such a situation it is evidently clear that the original bills were never produced by the assessee right from assessment stage and till the stage of this Tribunal meaning thereby either the assessee is hiding something or having no proof of payment. Our observation is further fortified by the fact that this Bench further provided opportunity to the assessee that the parties to whom the payments were made can be produced before the Assessing Officer, the assessee replied in negative. Thus, it is clear that there is no proof with the assessee. It is also observed that if the assessee can retain photocopies, certainly nothing prevented him to keep the originals of the bills but that was not done to the reasons best known to the assessee. In the absence of any supporting evidence like original bills, bank statement, non-production of parties, the disallowance was rightly made. We affirm the stand of the ld. Commissioner of Income Tax (Appeals) resulting into dismissal of appeal of the assessee.

This order was pronounced in the open court in the presence of the ld. representative from both sides at the conclusion of the hearing on 08/03/2016.