Urmilla Prakash, CHENNAI V. ITO Non Corporate Ward 3(5), CHENNAI

ITA 2550/CHNY/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7331 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: N QUADIR HOSEYN; L NATARAJAN
• Keywords: Cost of acquisition
• Section: 131; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , ! , ! & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2550/CHNY/2017 /ASSESSMENT YEAR: 2013-14 MRS.URMILLA PRAKASH, NO.5, RUTLAND GATE FOURTH STREET, NUNGAMBAKKAM, CHENNAI-34. [PAN: AJZPP 5601 Q] VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-3(5), CHENNAI. ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.N.QUADIR HOSEYN, ADV. & MR.L. NATARAJAN, CA )*( + /RESPONDENT BY : MS.VIJAYAPRABHA, JCIT + /DATE OF HEARING : 27.03.2018 + / DATE OF PRONOUNCEMENT : 27.03.2018 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.2550/CHNY/2017 IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-4 , CHENNAI, IN ITA NO.40/2016-17/2013-14/CIT(A)-4 DATED 19.08.2017 FOR THE AY 2013-14. 2. MS. VIJAYAPRABHA, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.N.QUADIR HOSEYN, ADV. & MR.L.NATARAJAN, CA, REPR ESENTED ON BEHALF OF THE ASSESSEE. ITA NO.2550/CHNY/2017 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS A LADY OF NEARLY 50 YEARS. IT WAS A SUBMISSION THAT THE ASSESSEE HAD RECEIVED A FLAT AT KOTTURPURAM FROM HER HUSBANDS M OTHER THROUGH SETTLEMENT DEED DATED 18.08.2008. THE ASSESSEE SOL D THE SAID FLAT DURING THE RELEVANT ASSESSMENT YEAR FOR A SALE CONSIDERATI ON OF RS.2.25 CRS. AND HAD DISCLOSED THE LONG TERM CAPITAL GAINS OF RS.62. 50 LAKHS. THE ASSESSEE HAD CLAIMED DEDUCTION U/S.54 IN RESPECT OF THE NEW CONSTRUCTION BY HER AT THIRUKAZHUKUNDRAM. IT WAS A SUBMISSION T HAT THE CONSTRUCTION WAS DONE THROUGH ONE M/S.RAJAN ENGINEERING CONTRACT OR FOR A TOTAL CONSIDERATION OF RS.1,54,91,094/-. IT WAS A SUBMIS SION THAT IN THE COURSE OF THE ASSESSMENT, THE AO HAD ISSUED NOTICE U/S.131 TO THE PROPRIETOR OF M/S.RAJAN ENGINEERING CONTRACTOR, BEING ONE MR.K.M. RAJAN AND HIS STATEMENT WAS RECORDED U/S.131 ON 04.11.2015. THE AO, SUBSEQUENTLY, RECORDED THE STATEMENT OF THE ASSESSEE ON 02.02.201 6 AND WAS ASKED TO PROVE THE CONSTRUCTION OF THE NEW HOUSE. IT WAS A SUBMISSION THAT THE ASSESSEE WAS INFORMED THAT M/S.RAJAN ENGINEERING CO NTRACTOR HAD STATED OF RENOVATION OF AN OLD HOUSE AND ON THE GROUND THA T THE BILLS & VOUCHERS WERE NOT PRODUCED IN RESPECT OF THE ASSESSEES CLAI M OF DEDUCTION U/S.54 OF THE ACT, THE CLAIM WAS DENIED. IT WAS A SUBMISS ION THAT ON ACCOUNT OF THE NON-AVAILABLE OF THE DOCUMENTARY PROOF, THE ASS ESSEES CLAIM OF DEDUCTION U/S.54 OF THE ACT WAS WITHDRAWN IN THE ST ATEMENT RECORDED FROM HER ON 02.02.2016. IT WAS A SUBMISSION THAT ON APP EAL, THE LD.CIT(A) HAD CONFIRMED THE ACTION OF THE AO. IT WAS A SUBMI SSION THAT THE STATEMENT RECORDED FROM THE CONTRACTOR MR.K.M.RAJAN , WHO IS THE ITA NO.2550/CHNY/2017 :- 3 -: PROPRIETOR OF M/S.RAJAN ENGINEERING CONTRACTOR, WAS AT PAGE NOS.19-28 OF THE PAPER BOOK. THE LD.AR DREW OUR ATTENTION TO TH E STATEMENT RECORDED FROM THE ASSESSEE ON 02.02.2016 AT PAGE NOS.29 & 31 OF THE PAPER BOOK. IT WAS A SUBMISSION THAT IN THE STATEMENT OF THE CO NTRACTOR MORE SPECIFICALLY AT QUESTION NOS.9 TO 11 AND THE ANSWER S THERETO WHICH READ AS FOLLOWS: 9: IN NERUMBUR, BEFORE CONSTRUCTING THE HOUSE, WHET HER THE PLOT WAS VACANT OR ANY BUILDING EXISTING THEREON? A 9: IN NERUMBUR, THERE WAS ALREADY AN OLD HOUSE. W E RAISED THE NEW HOUSE, AFTER DEMOLISHING THE EXISTING STRUCTURE. Q 10: IN NERUMBUR, BY WHOM AND WHEN THE OLD HOUSE S ITUATED ON THE SITE OF MRS.URMILA PRAKASH WAS DEMOLISHED? A 10: BY THE END OF MARCH 2013, I DID DEMOLISH THE OLD HOUSE OF MRS. URMILA PRAKASH IN NERUMBUR WITH MY WORKERS. Q 11: FOR THE CONSTRUCTION OF MRS. URMILA PRAKASHS HOUSE, HOW MUCH, WHEN AND HOW YOU RECEIVED THE AMOUNTS? A 11: FOR CONSTRUCTING MRS. URMILA PRAKASHS HOUSE, I RECEIVED RS.40,000/- TO RS.50,000/- EVERY WEEK SINCE THE FIRST WEEK OF APRI L 2013 TILL THE END OF SEPTEMBER 2014 AND IN THE AGGREGATE I HAD RECEIVED RS.1,50,00,000/-. 4. HE ALSO DREW OUR ATTENTION TO QUESTION NO.15 AND THE ANSWER THERETO, WHICH IS AS FOLLOWS: Q 15: WHEN DID YOU COMPLETE CONSTRUCTION AND HAND O VER THE HOUSE TO MRS.URMILA PRAKASH? A 15: I HAVE FULLY COMPLETED THE CONSTRUCTION AND HANDED OVER THE HOUSE TO MRS.URMILA PRAKASH BY THE END OF SEPTEMBER, 2014. WHEREIN, THE CONSTRUCTION IS STATED TO HAVE BEEN CO MPLETED BY THE END OF SEPTEMBER, 2014. THE LD.AR FURTHER DREW OUR ATTENT ION TO THE STATEMENT RECORDED FROM MR.K.M.RAJAN AT QUESTION NO.4 AND THE ANSWER THERETO WHICH READS AS FOLLOWS: ITA NO.2550/CHNY/2017 :- 4 -: Q 4: COULD YOU EXPLAIN THE DETAILS OF YOUR INCOME TA X? A 4: MY PERMANENT ACCOUNT NUMBER (PAN) AJAPR 1826 L . I WILL SUBMIT COPIES OF ACKNOWLEDGMENT FOR THE RETURNS FILED FOR THE YEAR 2 013-14 AND 2014-15. 5. IT WAS A SUBMISSION THAT THE EXISTENCE OF THE NE W HOUSE, EVEN THOUGH, CLAIMED COULD BE VERIFIED, EVEN NOW, HAS NO T BEEN DONE BY THE AO BUT HAD DISALLOWED THE CLAIM OF DEDUCTION U/S.54. IT WAS A PRAYER THAT THE ASSESSEE MAY BE GRANTED THE CLAIM OF DEDUCTION U/S. 54 IN RESPECT OF THE NEW HOUSE CONSTRUCTED AFTER DEMOLISHING THE OLD EXI STING STRUCTURE. IN REGARD TO GROUND NOS.9 & 10, IN RESPECT OF THE INDE XED COST OF ACQUISITION IN RESPECT OF THE HOUSE SOLD, THE LD.AR DID NOT PRE SS THE SAID GROUNDS. 6. IN REPLY, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS CLAIMED THE CONSTRUCTION OF NEW HOUSE AFTER DEMOLISHING OF THE OLD HOUSE. IT WAS A SUBMISSION THAT THE AO ON ENQUIRY, IN THE FORM OF S TATEMENT RECORDED FROM THE CONTRACTOR SHOWED THAT RENOVATION HAD BEEN DONE AND THE SAME WAS HANDED OVER TO THE ASSESSEE. THE ASSESSEE HAD W ITHDRAWN THE CLAIM OF DEDUCTION U/S.54. IT WAS A SUBMISSION THAT THE LD.DR DREW OUR ATTENTION TO THE STATEMENT RECORDED FROM THE ASSESS EE WHICH HAS BEEN EXTRACTED IN THE ASSESSMENT ORDER IN RESPECT OF QUE STION NO.5 AND ANSWER THERETO AT PAGE NO.2 OF THE ASSESSMENT ORDER. IT W AS A SUBMISSION THAT THE CLAIM OF DEDUCTION U/S.54 HAS BEEN MADE IN RESP ECT OF THE EXISTING BUILDING AND NO DEMOLITION HAS BEEN DONE AND MINOR RENOVATION, IF AT ALL, HAS BEEN DONE AND THE SAME WOULD NOT ENTITLE THE AS SESSEE U/S.54. THE ITA NO.2550/CHNY/2017 :- 5 -: LD.DR DREW OUR ATTENTION TO THE ORDER OF THE LD.CIT (A) AT PARA NO.17 TO SUBMIT THAT EVEN THOUGH, THE LD.CIT(A) HAS GRANTED THE ASSESSEE ANOTHER OPPORTUNITY TO PROVE THE CLAIM FOR DEDUCTION U/S.54 , THE ASSESSEE WAS UNABLE TO PRODUCE EVEN A SINGLE DOCUMENTARY EVIDENC E TO SUBSTANTIATE THE CLAIM. IT WAS A SUBMISSION THAT THE CLAIM OF DEDUC TION U/S.54 WAS AN AFTERTHOUGHT AND WAS NOT SUBSTANTIATED AS HAS BEEN RECORDED BY THE LD.CIT(A) IN PARA NO.17 OF HIS ORDER WAS MADE WITH MALAFIED INTENTION. 7. SHE VEHEMENTLY SUPPORTED THE ORDER OF THE AO & T HE LD.CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 9. AT THE OUTSET, A PERUSAL OF THE STATEMENT RECORD ED FROM MR.K.M.RAJAN, PROPRIETOR OF M/S.RAJAN ENGINEERING C ONTRACTOR, HAS BEEN RECORDED BY THE AO BY INVOKING THE POWERS U/S.131 O F THE ACT ON 04.11.2015. THE STATEMENT IN ITS ENTIRETY READS AS FOLLOWS: SWORN STATEMENT OF MR.K.M.RAJAN, PROPRIETOR/CONTRACTO R, RAJAN ENGINEERING, S/O MATHEW, RESIDING AT NO:146, DHARGHA ROAD, KATCHERIM ALAI, OLD PALLAVARAM, CHENNAI: 600 043 TAKEN UNDER SECTION 131 OF INCOME TAX ACT, 1961 ON 04-11-2015. OATH ADMINISTERED OATH TAKEN QUESTION 1: DID YOU UNDERSTAND THE IMPLICATIONS AND PUNISHMENTS OF FURNISHING FALSE STATEMENT UNDER THE INCOME TAX ACT? ANSWER 1: AFTER YOUR EXPLANATION, I HAVE UNDERSTOOD THE IMPLICATIONS AND PUNISHMENTS OF GIVING FALSE STATEMENT. Q 2: COULD YOU EXPLAIN ABOUT YOURSELF AND YOUR PROFE SSION? A 2: I HAD BEEN WORKING AS A MASON IN THE CONSTRUCT ION INDUSTRY FOR THE PAST SEVERAL YEARS. DURING THE PAST TEN YEARS, I HAVE BEEN EXECUTING PI ECEMEAL WORKS IN THE NAME OF RAJAN ENGINEERING CONTRACTOR. ITA NO.2550/CHNY/2017 :- 6 -: Q 3: DO YOU MAINTAIN ACCOUNT BOOKS FOR YOUR CONSTRUC TION WORKS? A 3: I AM NOT MAINTAINING ACCOUNT BOOKS FOR MY CONS TRUCTION WORKS. EVERY YEAR, I ESTIMATE MY INCOME AND FILE MY RETURNS ACCORDINGLY. Q 4: COULD YOU EXPLAIN THE DETAILS OF YOUR INCOME TA X? A 4: MY PERMANENT ACCOUNT NUMBER (PAN) AJAPR1826L. I WILL SUBMIT COPIES OF ACKNOWLEDGEMENT FOR THE RETURNS FILED FOR THE YEAR 2013-14 AND 2014-15. Q 5: COULD YOU GIVE DETAILS ABOUT WHAT ARE ALL THE B ANKS IN WHICH YOU KEEP ACCOUNTS SINCE 01.04.2013? A 5: I AM HAVING ACCOUNT WITH SBI PALLAVARAM BRANCH SB A/C NO.300251841. I SHALL FURNISH THE BANK STATEMENT FROM 01.04.2013 TO 11.09.2015. Q 6: HOW DO YOU KNOW MRS. URMILA PRAKASH? WHAT SORT OF PROFESSIONAL EXCHANGE YOU ARE HAVING WITH HER? A 6: I HAD EXECUTED SEVERAL PIECES OF CONSTRUCTION WORKS AT HER RUTLAND GATE HOUSE IN NUNGAMBAKKAM. LATER ON, AT HER BEHEST, I BUILT HER HOUSE IN NERUMBUR COMING UNDER THE THIRUKAGHUKUNDRAM PANCHAYAT. Q 7: DID YOU ENTER INTO ANY AGREEMENT IN CONSTRUCTIN G THE AFORESAID HOUSE. GIVE A COPY OF THAT AGREEMENT. A 7: I ENTERED INTO AN AGREEMENT ON 05-03-2013 WITH MRS.URMILA PRAKASH. I SHALL SUBMIT THE COPY TO YOU. Q 8: DO YOU HAVE ANY PLAN APPROVAL FOR BUILDING THIS HOUSE? A 8: WE DID NOT OBTAIN ANY PLAN APPROVAL FOR BUILDI NG THIS HOUSE BECAUSE IT COMES UNDER THE JURISDICTION OF THE GRAM PANCHYATS LIMITS. Q 9: IN NERUMBUR, BEFORE CONSTRUCTING THE HOUSE, WHE THER THE PLOT WAS VACANT OR ANY BUILDING EXISTING THEREON? A 9: IN NERUMBUR, THERE WAS ALREADY AN OLD HOUSE. W E RAISED THE NEW HOUSE, AFTER DEMOLISHING THE EXISTING STRUCTURE. Q 10: IN NERUMBUR, BY WHOM AND WHEN THE OLD HOUSE SI TUATED ON THE SITE OF MRS.URMILA PRAKASH WAS DEMOLISHED? A 10: BY THE END OF MARCH 2013, I DID DEMOLISH THE OLD HOUSE OF MRS. URMILA PRAKASH IN NERUMBUR WITH MY WORKERS. Q 11: FOR THE CONSTRUCTION OF MRS. URMILA PRAKASHS HOUSE, HOW MUCH, WHEN AND HOW YOU RECEIVED THE AMOUNTS? A 11 :FOR CONSTRUCTING MRS. URMILA PRAKASHS HOUSE, I RECEIVED RS.40,000/- TO RS.50,000/- EVERY WEEK SINCE THE FIRST WEEK OF APRIL 2013 TILL THE END OF SEPTEMBER, 2014 AND IN THE AGGREGATE I HAD RECEIVED RS.1,50,00,000/-. Q 12: FOR CONSTRUCTING THE AFORESAID HOUSE, FROM WHO M AND HOW DID YOU PURCHASE THE REQUISITE MATERIALS SUCH AS BRICKS, BLUESTONES, SAN DS, CEMENT AND IRON RODS? ALSO FURNISH THE NAMES AND ADDRESSES AND THE BILLS GIVEN BY THEM ? A 12: FOR CEMENTS AND RODS, I PAID CASH AND PURCHAS ED FROM VINAYAGA HARDWARES, NERUMBUR. FOR THIS, I DO NOT HAVE ANY BILLS. I ALSO PAID CASH IN PURCHASING BRICKS, SAND AND BLUESTONES (JALLI) FROM BALU OF NERUMBUR. I DONT KN OW THE ADDRESS OR MOBILE PHONE NUMBERS OF THE AFORESAID PERSONS. ITA NO.2550/CHNY/2017 :- 7 -: Q 13: EXPLAIN THE AREA AND THE NUMBER OF ROOMS THAT YOU CONSTRUCTED FOR MRS. URMILA PRAKASH IN NERUMBUR? A 13: IN THE LAND OF MRS URMILA PRAKASH AT NERUMBUR , SPREAD OVER 100 ACRES, I CONSTRUCTED 2160 SQ.FT. GROUND FLOOR AND AN UPPER STOREY WITH A SWIMMING POOL. IN THE GROUND FLOOR, THERE ARE THREE BEDROOMS, ONE KITCHEN, ONE HALL AND THREE BATHROOMS WITH A SITOUT. IN THE UPPERSTOREY, I CONSTRUCTED A HALL, TWO BEDROOMS, ON E KITCHEN AND TWO BATHROOMS. I ALSO CONSTRUCTED A SWIMMING POOL MEASURING AN EXTENT OF 30X18. Q 14: TILL AUGUST 31, 2013 HOW MUCH MONEY DID YOU RE CEIVE FROM MRS.URMILA PRAKASH? A 14: I RECEIVED RS.25.00 LAKHS IN CASH TILL 31.08. 2013 FOR LABOUR AND MATERIALS PUT TOGETHER. Q 15: WHEN DID YOU COMPLETE CONSTRUCTION AND HAND OV ER THE HOUSE TO MRS.URMILA PRAKASH? A 15: I HAVE FULLY COMPLETED THE CONSTRUCTION AND H ANDED OVER THE HOUSE TO MRS. URMILA BY THE END OF SEPTEMBER, 2014. Q 16: FOR CONSTRUCTING THE AFORESAID HOUSE, DID YOU GIVE ANY BILL IN WRITING TO MRS. URMILA PRAKASH? A 16: MRS. URMILA PRAKASH USED TO GIVE CASH EVERY W EEK AND WITH THAT I CONSTRUCTED THE HOUSE AFTER PAYING FOR LABOUR AND MATERIALS. I HAVE NOT GIVEN ANY BILLS TO MRS. URMILA PRAKASH. Q 17: HOW MANY WORKERS WERE USED IN CONSTRUCTING THE AFORESAID HOUSE? HOW DID YOU DISBURSE THE WAGES TO THEM? WHETHER YOU HAVE ANY VO UCHER FOR THAT? A 17: I EMPLOYED SIX MASTRI (SUPERVISORS) AND EIGHT HELPERS FOR CONSTRUCTING THE HOUSE. I HAVE PAID THEM WAGES/LABOUR CHARGES EVERY WEEK. I HA VE NOT KEPT ANY VOUCHER FOR THESE PAYMENTS. Q 18: MRS. URMILA PRAKASH HAS SUBMITTED YOUR FINAL I NVOICE DATED 20.01.2015. HAVE A LOOK AT IT. IS THE INVOICE GIVEN BY YOU? WHILE ANSWERING TO QUESTION NUMBER-16 YOU STATED THAT YOU HAVE NOT GIVEN ANY BILL. EXPLAIN THIS. A 18: THE SIGNATURE IN THE FINAL INVOICE DTD. 20.01 .2015 SHOWN BY YOU IS MINE. BUT THE DETAILS IN THE INVOICE AND ATTACHED OTHER BILL OF Q UANTITIES HAVE BEEN PREPARED BY MRS.URMILA PRAKASH WHO OBTAINED MY SIGNATURE. Q. 19: IN YOUR FINAL INVOICE DTD. 20.01.2015, THERE APPEARS SIX ITEMS THAT SHOW A GROSS AMOUNT OF RS.1,54, 91,000/-. BUT IN RESPONDING TO QU ESTION-3 YOU SAID THAT YOU DO NOT MAINTAIN ANY ACCOUNT BOOKS. WHILE THIS BE THE CASE, HOW IS IT THAT YOU ENTERED AN EXACT SUM OF RS.24,54,466/- FOR EACH AND EVERY WORK SUCH AS DESIGNING AND SUPERVISING CHARGES. HOW IS IT FEASIBLE? A 19: THE DETAILS AND THE AMOUNTS SPECIFIED IN THE FINAL INVOICE DTD. 20.01.2015 HAVE BEEN TYPED IN MY LETTER-HEAD BY MRS URMILA PRAKASH AND M Y SIGNATURE OBTAINED THEREON. SINCE I DID NOT MAINTAIN BOOKS OF ACCOUNTS, I SIGNED THE FI NAL INVOICE PREPARED BY HER FOR THE AMOUNT PAID BY HER. Q 20: IN THE AFORESAID FINAL INVOICE DTD. 20.01.2015 , IT IS WRITTEN THAT A SUM OF RS.1,55,00,000/- AS ADVANCE HAS BEEN RECEIVED BY YO U IN JUNE 2013. BUT IN RESPONDING TO QUESTION NUMBER-14, YOU HAD STATED THAT YOU HAD RECE IVED RS.25.00 LAKHS TILL 31.08.2013. EXPLAIN THIS. A. 20: AS STATED IN QUESTION NUMBER-14, I RECEIVED A BOUT RS.25.00 LAKHS TILL 31.08.2013 IN CASH FROM MRS. URMILA PRAKASH. WHILE RESPONDING TO QUESTION NUMBERS 18 AND 19, THE FINAL INVOICE DTD. 20.01.2015 WAS PREPARED BY MRS. URMILA PRAKASH AND SHE OBTAINED MY SIGNATURE THEREON. I HAVE NOT RECEIVED RS.1,55,00,0 00/- IN JUNE 2015. ITA NO.2550/CHNY/2017 :- 8 -: Q 21: DID YOU CONSTRUCT ANY OTHER HOUSE LIKE THE AFO RESAID HOUSE? A 21: I HAVE BEEN EXECUTING ONLY PIECEMEAL WORK AS STATED EARLIER. I HAVE NOT CONSTRUCTED ANY OTHER HOUSE FOR ANYBODY LIKE THIS HOUSE. Q 22: DID YOU KEEP ANY MEMORANDUM BOOK FOR CONSTRUCT ING THIS HOUSE? A 22: I HAVE NOT KEPT ANY MEMORANDUM BOOK FOR CONST RUCTING THIS HOUSE. Q 23: THE ATTACHMENTS ACCOMPANYING THE FINAL INVOICE REVEALS BOQ. FOR EXECUTING THE WORK DETAILED THEREON, BEAMS/PILLARS MUST PERFORCE HAVE TO BE ERECTED. BESIDES, LAYING WEATHERING COURSE, PLASTERING, MASONRY, PAINTING AN D POLISHING AND OTHER INCIDENTAL WORKS OUGHT TO BE DONE. FOR EXECUTING THIS DEXTEROUS WORK SKILLED MANPOWER IS REQUIRED. WHOM DID YOU EMPLOY TO EXECUTE ALL THESE WORKS? A 23: I HAVE NOT DONE ALL THE WORKS LISTED ABOVE. I LAID WEATHERING COURSE AND DID PLASTERING AND PAINTING, BESIDES LAYING TILES IN SO ME PLACES. I DO NOT KNOW ABOUT CARPENTRY/WOODWORK. MRS. URMILA PRAKASH ENGAGED SOME OTHER PERSONS FOR CARPENTRY. I DID PLASTERING FOR THE ROOF IN A FEW PLACES. I HAVE NOT DONE ANY OTHER WORK. Q 24: DO YOU WANT TO SAY ANYTHING ELSE? A 24: AS I HAVE STATED EARLIER, I HAVE DONE ONLY SO ME CONSTRUCTION WORK. I DO NOT KNOW THE DETAILS OF OTHER WORKS SHOWN IN THE FINAL INVOICE D ATED 20.01.2015. THOSE JOBS HAVE BEEN DONE BY OTHER PERSONS EMPLOYED BY MRS. URMILA PRAKA SH. OTHER THAN THIS, I HAVE NOTHING ELSE TO SAY. SD/- RAJAN 04.11.2015 THE AFOREMENTIONED SWORN STATEMENT HAS BEEN READ OU T AND EXPLAINED SANS COERCION OR UNDER DURESS. THE SAID STATEMENT IS TAKEN AS GIVEN BY ME. SD/- RAJAN 04.11.2015 T.N.GURUPRASAD INCOME TAX OFFICER NON-CORPORATE WARD 3(5) CHENNAI. 10. THE STATEMENT OF THE ASSESSEE DATED 02.02.2016 IN ITS ENTIRETY WHICH READS AS FOLLOWS: SWORN STATEMENT TAKEN U/S.131 FROM SMT. URMILA PRAKA SH, W/O. BUCHI PRAKASH, AGED ABOUT 60 YEARS, RESIDING AT NO.5, 4 TH STREET, RUTLAND GATE, NUNGAMBAKKAM, CHENNAI-600 03 4 ON 02.02.2016. OATH TAKEN OATH ADMINISTERED Q 1: ARE YOU AWARE OF THE CONSEQUENCE OF GIVING A F ALSE STATEMENT ON OATH. ANS: YES. I AM AWARE OF GIVING A FALSE STATEMENT ON OATH. Q 2: PLEASE IDENTIFY YOURSELVES. ITA NO.2550/CHNY/2017 :- 9 -: ANS: I AM SMT. URMILA PRAKASH RESIDING AT NO.5, 4 TH STREET, RUTLAND GATE, NUNGAMBAKKAM, CHENNAI-600 034. I AM A SMALL ENTREPR ENEUR AS WEDDING CONSULTANT FOR BRIDAL WEAR. Q 3: I AM FURNISHING YOU A COPY OF THE SWORN STATEM ENT TAKEN FROM SHRI K.M. RAJAN, PROP. RAJAN ENGINEERING CONTRACTOR, 146, DHARGA ROAD, KAT CHERY MALAL, OLD PALLAVARARN. CHENNAI- 600 043, ON 04.11.2015. PLEASE GO THROUGH THE SAME. FROM THE CONTENTS OF HIS DEPOSITION, IT APPEARS THAT YOUR CLAIM OF DEDUCTION U/S.54 IS IN CORRECT. PLEASE EXPLAIN. ANS: I HAVE CONSTRUCTED A NEW HOUSE FOR RS.1,55,00 ,000/- UNDER MY OWN SUPERVISION. SINCE I WAS UNDER THE IMPRESSION THAT THE BILLS/VOUC HERS WERE NOT NECESSARY BUT ONLY THE CONSTRUCTION IS ESSENTIAL, I WAS NOT MAINTAINING TH E BILLS/VOUCHERS. AS STATED BY SHRI K.M.RAJAN, HE DID ONLY CERTAIN CIVIL WORKS FOR WHIC H I HAD PAID HIM. I HAD ENGAGED OTHER PERSONS FOR DOING CARPENTARY, PLUMBING AND OTHER WO RKS FOR WHICH I PAID THEM SEPARATELY. SINCE I DIDNT MAINTAIN THE BILLS/VOUCHERS ISSUED FO R THE WORK UNDERTAKEN AND IN ORDER TO GIVE DOCUMENTARY EVIDENCE FOR THE CONSTRUCTION OF T HE HOUSE. I HAD PREPARED A COMPOSITE INVOICE UNDER THE LETTER HEAD OF SHRI K.M.RAJANS P ROPRIETARY CONCERN AND SUBMITTED TO YOU FOR RECORD PURPOSES. HENCE, A NEW RESIDENTIAL HOUS E HAS COME IN PLACE, THE CLAIM OF DEDUCTION U/S.54 IS INDEED CORRECT. Q 4: IT IS SEEN FROM THE PARTICULARS OF THE INVOICE DATED 20.01.2015 THAT IT IS ONLY FOR RENOVATION OF THE HOUSE AND NOT FOR NEW CONSTRUCTIO N OF THE HOUSE. ALSO PRODUCE NECESSARY COPY OF APPROVAL FROM THE LOCAL AUTHORITIES IN PROO F OF NEW CONSTRUCTION. ANS: I HAVE DEMOLISHED THE OLD HOUSE AND CONSTRUCT ED A NEW HOUSE AS PER THE OLD PLAN. THE FACT ABOUT THE EXISTENCE OF THE NEW HOUSE COULD BE VERIFIED EVEN NOW. AS ALREADY STATED ABOVE ONLY FOR THE PURPOSE OF GIVING DOCUMEN TARY ECIDWENCE FOR CONSTRUCTION OF THE HOUSE. I HAD PREPARED THE INVOICE UNDER THE LETTER HEAD OF SHRI K.M.RAJANS PROPRIETARY CONCERN AND SUBMITTED TO YOU. HE WAS CHOSEN BECAUS E HE IS OUR FAMILY CONTRACTOR WHILE ALL OTHERS WHO PROVIDED PETTY SERVICES COULD NOT BE LOC ATED. THE ENTIRE CAPITAL GAINS HAVE BEEN INVESTED IN THE NEW HOUSE. HOWEVER, YOURSELF INSIST THAT PROOF OF NEW CONSTRUCTION HAS TO BE SUPPORTED BY AN APPROVED PLAN FROM LOCAL AUTHORITIES. SINCE I PULLED DOWN THE OLD HOUSE AND RECONSTRUCTED IT, THERE WAS NO NEED TO OB TAIN PLAN APPROVAL. Q 5: THE CONTENTS OF THE INVOICE EXHIBIT THAT IT IS A RENOVATION OF THE OLD HOUSE. EVEN YOU ARE NOT CATEGORICAL IN YOUR STATEMENT THAT AN INDEP ENDENT NEW RESIDENTIAL UNIT WAS CONSTRUCTED. PULLING DOWN THE OLD HOUSE AND RECONST RUCTION SHOULD NECESSARILY BE SUPPORTED BY PLAN APPROVAL. BILLS/VOUCHERS ARE NOT PRODUCED. H ENCE, THE CLAIM OF DEDUCTION U/S.54 IS UNSUPPORTIVE, ALTHOUGH A NEW STRUCTURE HAS COME IN PLACE OF THE OLD ONE. ANS: I AGREE. BUT THE NEW HOUSE IS CREATED BY EXTEN SIVELY RENOVATING THE BID HOUSE. I AM NOW APPRISED THAT RENOVATION IS NOT ELIGIBLE [OR EX EMPTION. MY HEALTH, AGE AND FAMILY CIRCUMSTANCES DO NOT PROVIDE ME THE NECESSARY TIME AND ENERGY TO AGITATE FURTHER ON THIS ISSUE. IT IS TRUE THAT THE NEW CONSTRUCTION HAS COM E UP. THE STATEMENT OF SHRI K.M.RAJAN ALSO CONFIRMS IT. HOWEVER, IN THE ABSENCE OF SUPPOR TING DOCUMENTATION AND IN ORDER TO AVOID PROTRACTED LITIGATION, I AM WITHDRAWING THE C LAIM OF EXEMPTION U/S.54. Q 6: HAVE YOU GOT ANYTHING ELSE TO SAY? ANS: THOUGH I HAD A NEW HOUSE CONSTRUCTED, I AM COM PELLED TO WITHDRAW THE EXEMPTION U/S54 FOR WANT OF DOCUMENTARY PROOF. I WILL PAY THE TAXES DUE IMMEDIATELY. 11. THE FACTS HERE CLEARLY SHOW THAT THE ASSESSEE H AD MADE A CLAIM OF DEDUCTION U/S.54 IN RESPECT OF THE CONSTRUCTION OF A NEW INDEPENDENT HOUSE. THE ASSESSEE HAD GIVEN THE NAME AND ADDRESS OF THE CONTRACTOR. THE AO DID NOT BELIEVE IN THE ASSESSEE AND TOOK IT UPON HIMSELF TO ISSUE ITA NO.2550/CHNY/2017 :- 10 -: THE NOTICE U/S.131 AND RECORD THE STATEMENT OF THE SAID CONTRACTOR ON 04.11.2015. THUS, CLEARLY THE STATEMENT RECORDED B Y THE AO FROM MR.K.M.RAJAN, CONTRACTOR, BECOMES EVIDENCES COLLECT ED BY THE AO. A PERUSAL OF THIS EVIDENCE SHOWS THAT THE SAID MR.K.M .RAJAN IS AN INCOME TAX ASSESSEE, HAS FILED RETURNS FOR THE RELEVANT AS SESSMENT YEAR, HAS EXECUTED SEVERAL PIECES OF CONSTRUCTION WORK AT THE ASSESSEES HOUSE AT NUNGAMBAKKAM AND AS PER THE ANSWER TO QUESTION NO.6 , HE BUILT HER HOUSE AT NERUMBUR BEING THE HOUSE IN RESPECT OF WHI CH THE CLAIM OF DEDUCTION U/S.54 HAS BEEN MADE. THE SAID STATEMENT IN REPLY TO QUESTION NO.7 TALKS OF THE AGREEMENT DATED 05.05.2013 WHICH HAS ALSO BEEN PRODUCED BEFORE THE AO. THE AGREEMENT IS SEEN AT P AGE NOS.43 TO 49 OF THE PAPER BOOK. ADMITTEDLY, THE SAID AGREEMENT IS ON A PLAIN PAPER WHICH TALKS OF THE COST OF CONSTRUCTION AT RS.1.55 CRS. A ND OF AN ADVANCE OF RS.40.00 LAKHS HAVING BEEN PAID ON 05.03.2013 AT TH E TIME OF SIGNING OF THE AGREEMENT. THE SAID AGREEMENT ALSO TALKS OF TH E DEMOLITION OF THE EXISTING OLD HOUSE STANDING IN THE LAND AND CONSTRU CTING THE NEW HOUSE IN THE SAME PLACE AFTER STRENGTHENING AND RE-STRUCTURI NG THE FOUNDATION OF THE BUILDING. THE DEMOLISH DEBRIS IS ALSO TO BE RE MOVED AND THE CONTRACTOR IS PERMITTED TO RETAIN THE SALE VALUE AR ISING OUT OF THE DEMOLISHING THE DEBRIS. THE STATEMENT OF MR.K.M.RA JAN IN REPLY TO QUESTION NO.9, TALKS OF AN OLD HOUSE ALREADY EXISTI NG AND THE NEW HOUSE BEING CONSTRUCTED AFTER DEMOLISHING OF THE EXISTING STRUCTURE. IN QUESTION NO.10 AND ANSWER THERETO THE DEMOLISHING OF THE OLD HOUSE WAS DONE BY MARCH, 2013. THE CONTRACTOR, MR.K.M.RAJAN, IN REPL Y TO QUESTION NO.13 ITA NO.2550/CHNY/2017 :- 11 -: HAS ALSO GIVEN THE DETAILS OF THE LAND AND THE HOUS E WHICH HAS BEEN PUT UP. IN THE STATEMENT RECORDED FROM MR.K.M.RAJAN, HE HAS SPECIFICALLY CONFIRMED THAT IT IS ONLY THE STRUCTURAL, WHICH HAS BEEN DONE BY HIM AND THAT CARPENTRY AND OTHER DEXTEROUS WORK WHERE SKILL ED MANPOWER IS REQUIRED HAS BEEN DONE BY OTHER PERSONS ENGAGED BY THE ASSESSEE. WHEN THIS IS COMPARED WITH THE STATEMENT RECORDED FROM T HE ASSESSEE, THE SAME STAND SUPPORTED BY THE REPLY OF THE ASSESSEE T O QUESTION NOS.3 & 4 OF THE STATEMENT RECORDED ON 02.02.2013. THUS, CLE ARLY, THE STATEMENT RECORDED FROM THE CONTRACTOR BY THE AO IS EVIDENCE COLLECTED IN FAVOUR OF THE ASSESSEE BY THE AO, SUCH EVIDENCE CANNOT BE WIS HED AWAY ESPECIALLY WHEN IT HAS BEEN COLLECTED BY THE AO BEHIND THE BAC K OF THE ASSESSEE AND IS IN FAVOUR OF THE ASSESSEE. IN FACT, THE STATEME NT MADE BY THE ASSESSEE THAT THE CONSTRUCTION WAS DONE, THOUGH, M/S.RAJAN E NGINEERING CONTRACTOR STOOD VERIFIED ON EXAMINATION AND THE NON-AVAILABIL ITY OF THE BILLS & VOUCHERS HAS BEEN EXPLAINED. THE CONTRACT ALSO CLE ARLY SPECIFIES THE AMOUNT OF RS.1.55 CRS. BEING THE COST OF CONSTRUCTI ON AND IN THE STATEMENT OF THE ASSESSEE, THE ASSESSEE HAS ALSO ST ATED THAT THE CONSTRUCTION CAN BE VERIFIED. IF AT ALL, THE AO HAD ANY DOUBT, IT WAS VERY MUCH OPEN TO THE AO TO HAVE THE CONSTRUCTION EXAMIN ED BY THE DVO FOR DETERMINING THE COST OF CONSTRUCTION AND AS TO WHET HER THE CONSTRUCTION IS OLD OR NEW. EVEN, THIS HAS NOT BEEN DONE BY THE AO. WHEN THE EVIDENCE WAS AVAILABLE WITH THE AO AND HAD BEEN COLLECTED BY THE AO AND WHICH IS IN FAVOUR OF THE ASSESSEE, SUCH EVIDENCE CANNOT BE DISCARDED ONLY ON THE GROUND THAT THE ASSESSEE IS NOT ABLE TO PRODUCE ANY INDEPENDENT EVIDENCE ITA NO.2550/CHNY/2017 :- 12 -: IN HER FAVOUR. THIS BEING SO, WE ARE OF THE VIEW T HAT THE ASSESSEE HAS CONSTRUCTED NEW RESIDENTIAL HOUSE AT THIRUKAZHUKUND RAM AS CLAIMED BY THE ASSESSEE AND AS EVIDENCED BY THE STATEMENT RECO RDED BY THE AO U/S.131 FROM THE CONTRATOR, MR.K.M.RAJAN ON 04.11.2 015. CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION U/S.54 AND THE AO IS DIRECTED TO GRANT THE BENEFIT OF DEDUCTION AS CLAIM ED. GROUND NOS.9 & 10 OF THE ASSESSEES APPEAL STANDS DISMISSED AS WITHDR AWN. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 27, 20 18, AT CHENNAI. SD/- SD/- ( ) ( S. JAYARAMAN ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER /CHENNAI, 2 /DATED: MARCH 27, 2018. TLN + )34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 ) /DR 3. 6 ( ) /CIT(A) 6. /GF