HARI MOHAN,BENGALURU V. INCOME TAX OFFICER, WARD-6(3)(1), BANGALORE

ITA 328/BANG/2025

AI Insights

The case revolves around an appeal by Shri Hari Mohan against the order of the National Faceless Appeal Centre (NFAC), which denied the cost of improvement of Rs. 14,50,000 claimed by the assessee on a property sold during the assessment year 2015-16. The improvements were made by the assessee's mother in 2004. The Assessing Officer (AO) initially disallowed the claim due to lack of supporting evidence, a decision upheld by the CIT(A). The Tribunal, however, accepted additional evidence presented during the appeal, including affidavits and a handwritten diary, and referenced precedents that supported the admissibility of such evidence in the absence of direct documentary proof.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717658 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 20-02-2025
• Other Referred Cases: CIT Vs. Manju J Kotari, Shir Tejmal Bhojaraj Vs. ITO
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALUSAMY N
• Assessee Lawyers: PRANAB KISHORE DAS
• Keywords: Set aside; Additional evidence; Corroborative evidences; Cost of acquisition; Capital Gains
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BANGALORE BEFORE SHRI NARENDER KUMAR CHODHRY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 328/Bang/2025 Assessment Year: 2015-16 Shri Hari Mohan, 30, Saraswathi Maniramappa Garden, Geddalalhalli, Bangalore – 560 094. PAN – AUFPM 1611 N Vs. The Income Tax Officer, Ward -6(3)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Pranab Kishore Das, CA Revenue by : Shri Balusamy N, JCIT (DR) Date of hearing : 06.08.2025 Date of Pronouncement : 13.08.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 24/12/2024 in DIN No. ITBA/ NFAC/S/250/2024-25/1071517015(1) for the assessment year 2015-16. 2. The only issue raised by the assessee is that the learned CIT-A erred in denying the cost of improvement of Rs. 14,50,000/- while calculating the capital gains. 3. In the present case, the assessee has claimed a cost of improvement done by his mother in the year 2004 amounting to Printed from counselvise.com ITA No.284/Bang/2025 Page 2 of 5 . 14,50,000/- corresponding index cost of Rs. 30,79,646/- only which was claimed as a deduction against the long-term capital gain. But the same was disallowed by the AO on the ground that there was no supporting evidence furnished by the assessee. Accordingly, the AO disallowed the same and added to the total income of the assessee. 5. Being aggrieved, the assessee preferred an appeal before the ld. CIT(A). 6. The assessee before the ld. CIT(A) reiterated the submission that the cost of improvement was incurred by the mother of the assessee in the year 2004 and, therefore, the corresponding index cost of acquisition should be allowed to the assessee. However, the ld. CIT(A) in the absence of supporting documents, justifying the cost of improvement claimed by the assessee, has upheld the finding of the AO. 7. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 8. The ld. AR before us filed additional evidences in the form of Affidavit of the assessee and his mother to justify the cost of improvement incurred by the assessee. Similarly, the ld. AR filed the hand written diary maintained by assessee with respect to the cost incurred on the improvement of the impugned property. The ld. AR in support of his contention relied on the judgment of Hon’ble Karnataka High Court in the case of CIT Vs. Manju J Kotari reported in 251 ITR 109. Similarly, the ld. AR also relied on the order of Jodhpur Tribunal in the case of Shir Tejmal Bhojaraj Vs. ITO 139 TTJ 505. Printed from counselvise.com ITA No.284/Bang/2025 Page 3 of 5 . 9. On the other hand, the learned DR submitted that the onus lies upon the assessee based on the documentary evidence to justify the cost of improvement claimed by him. Thus, in the absence of documentary evidence, the claim of the assessee cannot be entertained. The ld. DR vehemently supported the order of the authorities below. 10. We have heard the rival contentions of both parties and perused the materials on record. The admitted fact is that the assessee acquired necessary property from his mother in the earlier year, which was sold in the year under consideration. As per the assessee, his mother has incurred cost of improvement of Rs. 14,50,000/- in the year 2004, which was claimed as deduction on the sale of the property. The assessee filed Affidavit, the Affidavit of his mother and the hand written diary with regard to the cost incurred for the improvement of the property which could not be filed before the authorities below. As such, these documents were filed first time before the ITAT, therefore, the assessee before us requested to admit the same on the reasoning that these are crucial documents for the purpose of the adjudication. 10.1 The controversy before us arises whether the Affidavits and the hand written diary are sufficient to justify the cost of improvement claimed by the assessee. In this regard, we refer to the Jodhpur Tribunal in the case of Shir Tejmal Bhojaraj cited supra, wherein, it was observed as under: \"In the absence of direct documentary evidence, the Tribunal held that Abe assessee's claim of cost of improvement could not be brushed aside solely on that ground. The sworn affidavit of the Printed from counselvise.com ITA No.284/Bang/2025 Page 4 of 5 . assessee, supported by circumstantial evidence and consistent explanation, was deemed acceptable to substantiate the expenditure.\" 10.2 From the above order of the Tribunal, it is transpired that the Affidavit are piece of evidence and the same can be considered while deciding the issue on hand. 10.3 Proceeding before us were initiated u/s 147 r.w.s 144B of the Act by issuing a notice dated 31/03/2022 under section 148 of the Act, wherein the dispute relates to the cost of improvement incurred by the assessee in the year 2004. Considering the huge time gap when the cost was incurred by the assessee vis-à-vis to justify such cost based on documentary evidence, it is a difficult task to bring the supporting materials. It is for the reason that nobody could predict while incurring the cost of improvement that 17 years later, it will be asked to justify such cost. Accordingly, we are of the view that the Affidavits filed by the assessee are sufficient enough for consideration with respect to the cost of improvement. Even under the Income-tax Act, the proceedings can be initiated up to 10 years, which implies that the information pertaining to the earlier year i.e. before 10 years, the assessee is not required to maintain the same. Accordingly, considering the facts in totality, we are of the view that the balance of connivance lies in favour of the assessee. Hence, we set aside the finding of the ld. CIT(A) and direct the AO to allow the cost of improvement to the assessee while calculating the capital gain in dispute. Thus, the ground of appeal of the assessee is hereby allowed. Printed from counselvise.com ITA No.284/Bang/2025 Page 5 of 5 . 11. In the result, the appeal filed by the assessee is allowed. Order pronounced in court on 13th day of August, 2025 Sd/- Sd/- (NARENDER KUMAR CHODHRY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 13th August, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore Printed from counselvise.com "