SHRI VONODKUMAR D.BHARGAVA,,BHARUCH vs. ITO WARD 1(3), BHARUCH, BHARUCH

आयकर अपील�य अ�धकरण, सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT “SMC” BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER आ.अ.सं./ITA No.716/SRT/2018 (AY 2013-14) (Hearing in virtual Court) Shri Vinodkumar D Bhargava Income Tax Officer, 14, Ayushi Bungalows, Nr. Ward-1(3), Bharuch, Vs Abhilasha Tower, Zadeshwar Road, Bharuch PAN No: ABZPB 6035 C अपीलाथ�/Appellant ��यथ� /Respondent �नधा�रती क� ओर से /Assessee by None राज�व क� ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 27.12.2022 उ�घोषणा क� तार�ख/Date of 27.12.2022 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of Learned Commissioner of Income Tax (Appeals)-1, Vadodara [for short to as “LdCIT(A)”] dated 14.06.2018 for assessment year 2013-14, which in turn arises out assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.01.2016. The assessee has raised the following grounds of appeal:- “1. The addition made on account of Long Term Capital Gain of Rs.4,52,80/-.

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava Without prejudice to the above appellant reserves its right to make any amendment to the grounds of appeal at the time of hearing.” 2. Brief facts of the case are that assessee is an individual, filed his return of income for assessment year under consideration i.e. 2013-14 on 28.03.2014 declaring total income of Rs.11,02,850/-. The case of assessee was selected for scrutiny and assessment was completed under section 43(3) of the Act on 29.01.2016. During assessment, the Assessing Officer noted that assessee has sold immovable property situated at Bharuch 21, Ayushi Bungalow, Near Abhilasha Tower, Zadeshwar Road, Bharuch vide sale deed No.5897/2012 dated 31.04.2012 for a consideration of Rs.75.00 lakh. The assessee offered Long Term Capital Gains (LTCG) of Rs.5,64,396/- after claiming exemption of Rs.33,24,975/-, under section 54 of the Act. During assessment, the assessee also asked to furnish the work of his LTCG with documentary evidence and cost of acquisition of such property. The assessee in his submission, submitted that cost of land purchased at Rs.4,21,072/-, stamp duty at Rs.35,500/- other charges at Rs.6,555/- and cost of construction at Rs.16,43,073/-. Thus, the claim of total cost of acquisition at Rs.21,06,200/-. The Assessing Officer 2

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava noted that no details regarding cost of construction was furnished by assessee. The Assessing Officer was issued further show cause notice dated 21.01.2016. In response thereto assessee again filed his reply dated 21.01.2016. The reply of assessee was recorded in para-4.1 of assessee order. In reply, the assessee submitted that total cost of acquisition of property at Rs.21,06,200/- which also included indexation while filing return of income, the assessee made agreement of Rs.18 lakhs to acquired such property, which includes cost of land at Rs.4,21,072/-. The assessee also furnished copy of agreement to sale. The assessee claimed that stamp duty of Rs.35,500/- and other expenses of Rs.6,555/- was spent. The assessee also incurred cost of construction of Rs.16,43,073/-. The assessee furnished copy of construction bill of Rs.2,62,000/- and claimed total cost of acquisition at Rs.21,06,200/- (Rs.18,00,000 + Rs.35,500/- + 6,555/- + Rs.2,64,145/-). The assessee furnished the working of taxable LTCG in the following manner: “Sales consideration received Rs.75,00,000/- Less: Indexed cost of acquisition (R.21,06,200/- * 852/497) Rs.36,10,629/- LTCG Rs.38,89,371/- 3

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava Less: Exemption claimed u/s 54 Rs.33,24,975/- Taxable LTCG Rs. 5,64,396/-“ 3. The Assessing Officer on considering the reply of assessee held that assessee claimed extra cost of improvement of Rs.2,64,145/-. However, no details regarding payment of such expenses were furnished by assessee. The Assessing Officer again issued show cause notice to substantiate with evidence of such improvement cost. The assessee furnished his reply dated 29.01.2016. The assessee in his reply submitted that the details of construction pertain to assessment years 2004-05 and 2005-06 i.e., ten years back. So he is not having any record of the same and assessee made an application to the bank for obtaining the statement of such expenses but same is not provided to assessee by his banker so far. The reply of assessee was not accepted by Assessing Officer by taking view that the assessee furnished only a copy of invoice issued by civil contractor, Shri Govindbhai J Solanki & Co. dated 10.11.2005 amounting to Rs.2.62 lakh and the bill contains the same nature of work which was completed by builder at the time of construction of the said bungalow but no payment of such expenses were furnished by assessee. In absence of

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava such payment, the cost of construction of Rs.2,64,145/- is disallowed and the Assessing Officer re-work LTCG at Rs.4,52,820/- for want of evidence of construction expenses of Rs.2,64,145/-. 4. Aggrieved by the addition of LTCG of Rs. 452,820/-, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee filed his detailed written submissions and reiterated that he made additional expense in making extra construction work of Rs.2,64,145/-. The Assessing Officer has not disputed the invoice of said contractor and only objection of Assessing Officer was that work is similar to the developer made. The assessee submitted that as per agreement of construction of assessee’s bungalow and as per in the agreement and it does not include the car shed. To support such submission, the assessee furnished photograph of his bungalow in question showing the car parking shed as additional construction as the same was not constructed in other bungalows in the same society. 5. The Ld. CIT(A) after considering the submission of assessee held that assessee claimed additional cost of Rs.2,64,145/- and furnished construction bill-wise of Rs.2,62,000/- of

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava contractor. The assessee failed to prove the genuineness of such expenditure and the source of expense. The assessee could not furnish any evidence and the source of additional cost. The expenditure cannot be allowed as deduction in view of the provision of Section 69C of the Act. The Ld. CIT(A) held that claim of additional cost cannot be allowed and enhanced LTCG made by Assessing Officer. Aggrieved by the order of Ld. CIT(A), the assessee has filed present appeal before the Tribunal. 6. None appeared on behalf of assessee despite the service of notice on more than three occasions. On further perusal of record, it is noticed that this appeal was filed in the year 2018 on service of notice, the Ld. Authorized Representative (AR) for the assessee was also appearing as per his whims and choice. None appeared on behalf of assessee on the date of hearing i.e. 20.10.2022, however, on issuance of fresh notice again, Ld. AR of the assessee further appeared on the date of hearing i.e., 06.12.2022 and the case was further fixed as per his request on 27.12.2022 (Today). On 27.12.22, none appeared on behalf of assessee nor filed any adjournment application by assessee or his Ld. AR.

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava Therefore, I left no option except to decide the appeal of assessee on the basis of materials available on record after hearing Ld. Senior Departmental Representative (ld. Sr-DR) for the Revenue and perused the findings of authorities below. 7. The Ld. Sr-DR for the Revenue supported the order of lower authorities and submits that assessee failed to file any evidence about the improvement cost of Rs.2,64,145/-. Thus in absence of any corroborative evidence, the assessee is not eligible for any relief. 8. I have considered the submission of Ld. Sr-DR for the Revenue and have also gone through the order of lower authorities carefully. I find that there is very short dispute before me, which relates to cost of improvement of Rs. 2,64,145/-. The Assessing Officer disputed the claim of improvement of additional construction expenses of Rs.2,46,145/- by taking view that invoice contained the same item of work which was completed by the builder while construction of assessee’s bungalow. On the contrary, Ld. CIT(A) while considering the submission made by assessee noted that assessee failed to prove the genuineness

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava of expenditure as well as source of investment and unexplained expenditure cannot be allowed as deduction as per the provision of Section 69C of the Act. I find that Ld. CIT(A) has not issued any show cause notice to assessee about making disallowance of improvement cost under section 69C of the Act. Therefore, the finding of Ld. CIT(A) to that extent is set aside / quashed. Now adverting to the claim of assessee about the additional expenditure / cost of improvement of Rs.2,64,145/-. I find that assessee filed receipt of civil contractor, namely, Shri Govindbhai J Solanki & Co. of Rs.2.62 lakh but no investigation of fact was made either by Assessing Officer while making assessment order or by ld. CIT(A) during first appellate stage. The only objection of Assessing Officer was that nature of work shown in the bill of contractor / Shri Govindbhai J Solanki & Co. is the same as appearing in the agreement of builder. I find that before Ld. CIT(A) the assessee has shown evidence in the form of photograph about such construction of car parking shed, which was constructed as additional as same was not originally constructed by said builder. No verification of fact was

ITA No.716/SRT/2018 (A.Y 13-14) Sh. Vinodkumar D Bhargava conducted by Ld. CIT(A) rather Ld. CIT(A) proceeded one step further to disallow the genuineness of such expenditure, which was not the subject-matter of the appeal at all and that to without issuance of any show cause notice. However, the fact remain same that neither the assessee could prove beyond doubt about such genuineness of additional cost nor the lower authorities has brought any evidence on record about non-genuine of additional construction of assessee’s bungalow. Therefore, by giving the benefit of doubt, I allow 50% of additional cost of Rs.2,64,145/- and direct the Assessing Officer to re- compute / re-work of LTCG of assessee. 9. In the result, appeal of the assessee is partly allowed in above terms. Order pronounced in the open court on 27/12/2022. Sd/- (PAWAN SINGH) [�याियक सद�य JUDICIAL MEMBER] सूरत /Surat, Dated: 27/12/2022 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- By order 4. CIT // True Copy // 5. DR 6. Guard File Sr PS/ Asistant Registrar