MADANRAJ HAMIRMAL SHAH,MUMBAI V. ITO, ERODE

ITA 1334/CHNY/2024

AI Insights

The case involves appeals by Madanraj Hamirmal Shah against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2011-12 and 2012-13. The primary issues revolved around the jurisdiction of the Assessing Officer, the validity of reassessment proceedings, and the interpretation of various financial transactions related to property purchases and investments. The Tribunal examined the legal and factual basis of the additions made by the Assessing Officer, including the valuation of properties and the source of funds for investments. The Tribunal's decision addressed both the legal and evidential aspects of the case, leading to a partial allowance of the appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107919 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Other Referred Cases: Shirishbhai Hargovandas Sanjanwala v/s ACIT, Premlatha Chhajed v/s The Income Tax Officer NCW - 5(4), Chennai, Ganga Saran & sons P. Ltd. v/s ITO, Lakhmanimewal Das v/s ITO, Venu Proteins Industries v/s ITO, Harley Street Pharmaceuticals Ltd. v/s ITO, S. Venkat Reddy v/s DCIT, Modipon Ltd. v/s ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P. VIJAIDEEPAN
• Assessee Lawyers: P. C. JAIN; MOHIT BANGANI
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Unexplained investment; Sale consideration of property below Jantri Value; Cost of acquisition; Capital Gains; Principle of natural justice; Assessment record; Borrowed satisfaction
• Section: 147; 148; 144; 195; 54; 69A; 6

Judgement Text

"आयकर अपीलीय अिधकरण,‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी मनु क ुमार िगįर, Ɋाियक सद˟ एवं ŵी एस. आर.रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./ITA Nos.: 1334 & 1335/Chny/2024 िनधाŊरणवषŊ / Assessment Years: 2011-12 & 2012-13 Madanraj Hamirmal Shah C-405, Royal Samrat, S.V. Road,Goregoan West, Mumbai – 400 062. [PAN: ADWPM-2343-M] V. Income Tax Officer, Ward -1(2), Erode. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎकीओरसे/Appellant by : Shri. P.C. Jain, Advocate & Shri. Mohit Bangani, Advocate ŮȑथŎकीओरसे/Respondent by : Shri. P. Vijaideepan, JCIT सुनवाई की तारीख/Date of Hearing : 11.02.2025 घोषणा की तारीख/Date of Pronouncement : 26.03.2025 आदेश /O R D E R PER S.R.RAGHUNATHA, AM: These two appeals by the assessee are filed against separate order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2011-12 and 2012-13, vide DIN & order No. ITBA/NFAC/S/250/2023-24/1062072762(1) and No. ITBA/NFAC/S/250/2023-24/1062072922(1) both dated 06.03.2024 respectively. 2. The assessee filed the following concise grounds of appeal against the assessment order for the A.Y. 2011-12: 1. Jurisdictional Error: :-2-: ITA. Nos:1334 & 1335/Chny/2024 The appellant asserts that the Assessing Officer (AO) exceeded jurisdiction by initiating proceedings under Section 147 and issuing notice under Section 148 despite knowing the fact that the appellant being a non-resident with an address in Mumbai as his Indian Address. This, according to appellant, renders the entire proceeding VOID-AB- INITIO. Case Law Reference: 1.Hon'ble Gujarat High Court in Shirishbhai Hargovandas Sanjanwala v/s ACIT (2017), 396 ITR (Gujarat) 2. Reassessment Based on Borrowed Satisfaction: The AO initiated reassessment based on information about property purchase without proper \"reasons to believe\" as required by law. It's argued that the AO acted on borrowed satisfaction rather than possessing actual information or evidence of income escapement. Case Law Reference: 1. Hon'ble Bench of ITAT- Chennai in Premlatha Chhajed v/s The Income Tax Officer NCW - 5(4), Chennai (ITA No.2233/Mds/2017) 2.Hon'ble Supreme Court of India in Ganga Saran & sons P. Ltd. Reported in 130 ITR 1 3.Hon'ble Supreme Court of India in ITO v/s Lakhmanimewal Das reported in (1976) 103 ITR 437 (SC) 3. Violation of Natural Justice: The appellant was not given adequate opportunity to be heard, as the notice to file a reply was unreasonably short given the circumstances of age and health. The AO's actions are criticized as hasty and impractical, causing undue harassment. 4. Misinterpretation of Facts: The AO allegedly misinterpreted an agreement of sale as a sale deed and erroneously applied higher valuation norms, disregarding the actual transaction details and banking records provided by the appellant. Further, your Appellant had not made any Investments in Term Deposits for Rs.20.00 Lac during the year, for which a Certificate from the Bank has also been submitted. Case Law Reference: ITO v/s Venu Proteins Industries (2010) 195 Taxman 14 (Ahd-Trib) (Mag) ITO v/s Harley Street Pharmaceuticals Ltd. (2010) 38 SOT 486 (Ahd), :-3-: ITA. Nos:1334 & 1335/Chny/2024 5. Incorrect Valuation Basis: The valuation of property was allegedly incorrect, applying the stamp duty valuation from the date o registration rather than the date of agreement, which the appellant argues should have been used for assessment under the Income Tax Act, 1961. Case Law Reference: DCIT /s S. Venkat Reddy (2013) 57 SOT 117 (HYD), ITO V/S Modipon Ltd. (2015) 154 ITD 369 (Delhi) The Learned CIT (Appeal) completely omitted to consider the Grounds raised before him in respect of the Additions which gave birth to confirmation of Arbitrary Additions. For these and other Grounds that shall be adduced at the time of hearing, it is prayed that the Order of the Learned AO which has been upheld by the CIT (Appeals) may be quashed and claim of the appellant be restored.” 3. The brief facts of the case are that the assessee is an individual and non-resident, did not file his return of income since the income of the assessee was not in excess of maximum amount not chargeable to tax. Based on the information in the possession of the department that the assessee has purchased immovable property for consideration of Rs.65,36,709/- during the A.Y. 2011-12, the ITO Ward 1(2), Erode, initiated proceedings u/s.147 of the Act and issued statutory notices. However, the assessee did not file his return of income and filed a letter dated 26.11.2018 stating that he has shifted his residence to Mumbai from Erode and requested to transfer his file and PAN to Mumbai Income Tax office jurisdiction where he will be assessable. Subsequently, the AO stated that as per the request of the assessee, the records were sent to Income tax :-4-: ITA. Nos:1334 & 1335/Chny/2024 office, Ward 24(3)(4), Mumbai but returned on 07.12.2018 with the postal remark “unclaimed”. Since the assessee did not file his return of income and not responded for any of the statutory notices and failed to submit required information, the AO passed an exparte order u/s.144 r.w.s.147 of the Act on 28.12.2018 after giving proposal on 11.12.2018 by making an addition of Rs.65,36,709/- towards purchase of immovable property and Rs.20,00,000/- towards HDFC Bank deposit as unexplained investment u/s.69 of the Act. Aggrieved by the order of the AO the assessee preferred an appeal before the ld. CIT(A), NFAC, Delhi. 4. Before the ld. CIT(A) the assessee has reiterated the entire facts and raised the grounds on jurisdiction as the assessee’s status has been mentioned as resident, as against the status of Non-resident. Further, the assessee has stated that the asset purchased was for Rs.40.00 lakhs as against the value considered by the AO of Rs.65,36,709/-, the impugned addition made by the AO need to be deleted. Further, the deposit of Rs.20.00 Lakhs is not made during the year as alleged by the AO and hence the impugned addition also needs to be deleted. After considering the submissions of the assessee, the ld.CIT(A) has confirmed the disallowance of cost of improvement in his order dated 06.03.2024 as the assessee has not furnished any evidence in support of the claim by holding as under: 6. FINDINGS & DECISION :-5-: ITA. Nos:1334 & 1335/Chny/2024 6.1 I have gone through the Assessment Order and submissions of the appellant. The AO has carried out additions of Rs. 85,36,709/- for the year under consideration. Ground No. 1, 2, 7 and 8 6.2 These grounds are regards to the order under section 144 r.w.s. 147 of the I.T. Act, 1961 dated 28.12.2018, in the status of Resident, is ab initio void. 6.3 It is noted from the submissions furnished by the appellant during the appellate proceedings, the appellant has stated that the assessment made in the status of 'resident' by the AO is not sustainable by law, as the appellant resides in Mumbai. 6.4 It is noted from the assessment order that the AO has mentioned that the appellant's status is Resident. It means that the appellant has stayed in India u/s 6 of the IT Act, 1961 during the year under consideration. Further the appellant himself has stated that the appellant is residing in Mumbai and notice from the AO has been received by the appellant. 6.5 Further it is also noted that during the course of the assessment proceedings, the AO had sent the assessment records for the year under consideration to the AO, Ward 24(3)(4), Mumbai. However, the same was returned with postal remark \"unclaimed\". In this circumstances, the AO was having no other option except to complete the assessment. Therefore, the contention of the appellant is not found to be acceptable. 6.6 Accordingly, the Grounds No. 1, 2, 7 and 8are dismissed. Ground No. 3, 4 and 5 6.7 These grounds are regards to the appellant had invested Rs 65.36,709.00 in the purchase of a flat out of income chargeable to tax. 6.8 During the course of the assessment proceedings, the appellant has, purchased immovable property for consideration of Rs. 65,36,700/-. The appellant was asked to furnish the sources for the same. However, the appellant was failed to do so and the appellant has not filed his return of Income for the year under consideration. 6.9 It is noted from the submissions furnished by the appellant during the appellate proceedings, the appellant has stated that the total consideration for the property was only Rs. 40 lakhs and all the payments were made by cheques only. 6.10 It is noted from the sale deed 22.12.2010 that sale consideration of property is Rs. 65,36,709/-. It is clear that the appellant has stated about consideration of property wrongly. The appellant is failed to discharge his onus. The appellant has not furnished satisfactory evidences reply. Therefore, the contention of the appellant is not found to be acceptable Hence the addition of Rs. 65,36,709/- made by the AD is upheld. :-6-: ITA. Nos:1334 & 1335/Chny/2024 6.11 Accordingly, the Grounds No. 3, 4 and 5 are dismissed. Ground No. 6 6.12 This ground is regards to time deposits to tune of Rs. 20,00,000/- during the year under consideration. 6.13 During the course of the assessment proceedings, the AO has stated that the appellant has made a time deposits to tune of Rs. 20,00,000/- in HDFC Bank Ltd. during the year under consideration. The appellant was asked for explanation for the same. However, the appellant was failed to do so. 8.14 It is noted from the submissions furnished by the appellant during the appellate proceedings, the appellant has stated that the appellant has not deposited cash to tune of Rs. 20,00,000/- during the year under consideration. The AO in its assessment order has not mentioned about cash deposits, it has been mentioned that the appellant has a time deposits to tune of Rs. 20,00,000/- in HDFC Bank Ltd during the year under consideration. However, the appellant has neither furnished any documentary evidences nor filled his Return of Income for the year under consideration. Therefore, the contention of the appellant is not found to be acceptable. Hence the addition of Rs. 20,00,000/- made by the AO is upheld 6.15 Accordingly, the Ground No. 6 is dismissed. 5. Aggrieved by the order of the ld.CIT(A) the assessee preferred an appeal before us. 6. The ld.AR for the assessee stated that the AO exceeded jurisdiction by initiating proceedings under Section 147 and issuing notice under Section 148 despite knowing the fact that the assessee being a non- resident with an address in Mumbai as his Indian Address. This, according to assessee, renders the entire proceeding void-ab-initio. Further, the ld.AR submitted that the AO allegedly misinterpreted an ‘agreement of sale’ as a ‘sale deed’ and erroneously applied higher valuation norms, disregarding the actual transaction details and banking records provided by the assessee. Further, the ld.AR stated that the assessee had not made any :-7-: ITA. Nos:1334 & 1335/Chny/2024 Investments in Term Deposits for Rs.20.00 Lac during the year, for which a Certificate from the Bank has also been submitted. The ld.AR argued that the valuation of property was allegedly incorrect, applying the stamp duty valuation from the date of registration rather than the date of agreement should have been used for assessment under the Income Tax Act, 1961. The ld.AR also relied on the following decisions to buttress his argument. DCIT v. S.Venkat Reddy (2013) 57 SOT 117 (HYD), ITO V/S Modipon Ltd. (2015) 154 ITD 369 (Delhi) 7. The ld.AR further submitted the Bank statement of HDFC Bank, Bank statement of Kotak Mahindra Bank, Certificate from HDFC Bank to prove that the assessee did not have any term deposit and confirmation letter from ‘Aviva Construction company for having paid Rs.40.00 Lakhs only for purchase of flat. Apart from these documents, the ld.AR stated that the assessee had already furnished the registered agreement of sale dated 10.11.2010 registered on 23.12.2010 and Passports entry and exit stampings in India etc. In light of the above submissions the ld.AR prayed for deleting the additions on account of 69A made by the AO, which has been confirmed by the ld.CIT(A). 8. Per contra the ld. DR relied on the orders of the lower authorities and stated that the assessee has not furnished any of the documents / evidence in support of his claim before the lower authorities. Further the assessee has not proved with any evidence to show the source for :-8-: ITA. Nos:1334 & 1335/Chny/2024 purchase of the said immovable property and prayed for dismissing the appeal of the assessee. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Admittedly the assessee had not filed his return of income and purchased an immovable property registered in his name on 23.12.2010 with a sale consideration shown as Rs.40.00 Lakhs and the stamp duty value of Rs.65,36,709/-. Accordingly, the AO had reopened the case for assessment and issued statutory notice to the assessee on 26.03.2018. Since, the assessee did not participate in the assessment proceedings except requesting for transfer of file to Mumbai Income tax office, since he has shifted his residence from Chennai to Mumbai on 23.11.2018. The AO passed an exparte order u/s.144 r.w.s. 147 of the Act by adding an amount of Rs.65,36,709/- unexplained investment u/s.69A of the Act along with undisclosed deposit of Rs.20,00,000/-. The ld.CIT(A) also confirmed the same, since the assessee did not furnish any supporting evidence in support of his appeal. On perusal of documents submitted before the ld.CIT(A) and before us, we note that assessee is a Non-resident and has purchased the immovable property by paying the sale consideration out of funds held in his NRE HDFC bank account to the tune of Rs.40.00 Lakhs. Hence, in our considered opinion the assessee has explained the source for investment made in immovable property and set aside the order of the :-9-: ITA. Nos:1334 & 1335/Chny/2024 ld.CIT(A) by directing the AO to delete the addition of Rs.40.00 Lakhs. However, the assessee has failed to explain or provide any evidence for the difference in sale consideration paid and the stamp duty value to the tune of Rs.25,36,709/- and hence we sustain the addition and direct the AO to recompute the income and tax accordingly. 10. In respect of addition made on account of Term deposit of Rs.20Lakhs, we note that the assessee has furnished the banker’s certificate stating that the assessee has not made any deposit of Rs.20.00 Lakhs in his name and hence we are of the view that the AO and that of the ld.CIT(A) has erred in making addition of Rs.20.00 Lakhs as unexplained investment and delete the impugned addition and ordered accordingly. 11. In respect of the legal issues raised by the assessee we do not find any infirmity in the order of the ld. CIT(A) at para 6.5 of his order. 12. In the result the appeal of the assessee is partly allowed. ITA No: 1335/Chny/2024 for A.Y. 2012-13: 13. The assessee filed the following concise grounds of appeal against the assessment order for the A.Y.2012-13: 1. Jurisdictional Error: The AO exceeded jurisdiction by initiating proceedings under Section 147 and issuing notice under Section 148 despite knowing the appellant’s non-resident status with an address in Mumbai as his Indian Address. 2. Reassessment Based on Borrowed Satisfaction: :-10-: ITA. Nos:1334 & 1335/Chny/2024 The AO initiated reassessment based on insufficient information and lacked valid \"reasons to believe\" 3. Violation of Natural Justice: The appellant was not given adequate opportunity to be heard, as the notice to file a reply was unreasonably short. 4. Failure to consider evidence: The appellant asserts that the AO disregarded crucial evidence regarding the acquisition and improvement costs of a property purchased on 19/01/2004 for Rs.6,45,000/-. It is claimed that additional investments of Rs.23,50,000/- were made for improvements through a contract agreement dated 24/01/2004 with Mr. Babulal. Despite submitting a detailed affidavit and supporting documents, the AO allegedly failed to acknowledge these expenses in determining the capital gains. The appellant argues that after applying indexation, the net capital gain should result in a capital loss of Rs.77,916/- u/s.48 of the Act and a return of income was also submitted. The appellant further contends that the AO’s insistence on concrete evidence ignores the affidavit and contract agreement provided, which should have been sufficient for assessment purposes. The AO failed to acknowledge the appellant’s evidence and expenses regarding property improvements, leading to an incorrect capital gain assessment. 5. Non- application of section 54 benefit: The appellant claims entitlement to the benefit under section 54 of the Act, asserting that the property sold for Rs.50,00,000/- on 15/10/2011 was replaced with another property purchased for Rs.40,00,000/- on 10/11/2010, within the stipulated timeframe. As per Section 54, this replacement entitles the appellant to exemption from capital gains tax, resulting in a net taxable income of NIL after considering indexed costs. The AO failed to apply section 54, disregarding the property reinvestment that qualifies for capital gains exemptions. The ld.CIT(A) completely omitted to consider the grounds raised before him in respect of additions which gave birth to confirmation of arbitrary additions. For these and other Grounds that shall be adduced at the time of hearing, it is prayed that the Order of the Learned AO which has been upheld by the CIT (Appeals) may be quashed and claim of the appellant be restored. :-11-: ITA. Nos:1334 & 1335/Chny/2024 14. The brief facts of the case are that the assessee is an individual and non-resident, did not file his return of income during the A.Y. 2012- 13.Based on the information in the possession of the department that the assessee has sold an immovable property for consideration of Rs.50,00,000/- during the A.Y. 2012-13 and hence the ITO, Ward 1(2), Erode, initiated proceedings u/s.147 of the Act and issued statutory notice on 23.03.2019. The assessee filed his return of income in response to notice u/s.148 of the Act, on 15.04.2019 by admitting a NIL income. In response to notice u/s.142(1) dated 13.12.2019, the assessee filed his reply dated 23.12.2019 by furnishing the calculation of capital gain on sale of property and its cost of purchase as Rs.6,45,000/- spent on 19.01.2004. Further, the assessee had stated that he had spent Rs.23,50,000/- on 24.01.2004 towards improvement through a contractor Mr. Babulal. However, no document was produced in support of the same. Therefore, the AO passed an order u/s.143(3) r.w.s.147 of the Act on 31.12.2019by denying the deduction of cost of improvement of Rs.23,50,000/- along with the cost inflation index and computed the long term capital gain at Rs.39,06,425/-. Aggrieved by the order of the AO the assessee preferred an appeal before the ld. CIT(A), NFAC, Delhi. 15. Before the ld. CIT(A) the assessee has stated the entire facts and raised the grounds on jurisdiction as the assessee’s status has been :-12-: ITA. Nos:1334 & 1335/Chny/2024 mentioned as resident, as against the status of Non-resident. Further, the assessee has stated that the cost of improvement of Rs.23,50,000/- incurred during the assessment year 2004-05 cannot be denied as the impugned asset sold is land and building. Therefore, the impugned additions made by the AO needs to be deleted. After considering the submissions of the assessee, the ld.CIT(A) has confirmed the disallowance of cost of improvement in his order dated 06.03.2024 as the assessee has not furnished any evidence in support of the claim by holding as under: FINDINGS & DECISION 6.1 I have gone through the Assessment Order and submissions of the appellant. The AO has carried out additions of Rs 38:06 425-for the year under consideration Ground No. 1 and 2 6.2 These grounds are regards to jurisdiction over case. 6.3 Further it is also noted that during the course of the assessment proceedings the AO has stated that the appellant has made a request on 26.11.2018 to transfer the assessment records for the year under consideration to the AO Ward-24(3)(4) Mumbai Further the AO has stated that the case records could not be notified since time available for completing the assessment was very less. Due to unavoidable circumstances the case was not transferred. In this circumstances the AO was having no other option except to complete the assessment. It is also noted from the submissions furnished by the appellant during the appellate proceedings, the appellant himself has started that the appellant is residing in Mumbai and notice from the AO has been received by the appellant. Therefore the contention of the appellant is not found to be acceptable 6.4 Accordingly the Grounds No. 1 and 2are dismissed. Ground No. 3, 4, 5 and 6 6.5 These grounds are regards to addition of Rs. 39,06,425/- under the head of Capital Gain for the year under consideration. 6.6 During the course of the assessment proceedings, the appellant has sold an immovable property and claimed cost of improvement of Rs. 23,50,000/- and :-13-: ITA. Nos:1334 & 1335/Chny/2024 resulted in capital loss of Rs.77,916/- for the year under consideration. The appellant was asked to furnish the explanation with regards to cost of improvement. In response the appellant has stated during the course of the assessment proceedings that payments towards improvement have been made in cash. However, the appellant was failed to furnish any documentary evidences to establish the genuineness of expenses claimed for improvement. Hence, the calculation of Capital Gain was done by the AD and it has resulted in Capital Gain of Rs. 39,06,425/ 6.7 It is noted from the submissions furnished by the appellant during the course of the appellate proceedings, the appellant has stated that the computation of capital gains by the appellant without claiming exemption u/s 54/54F, as it resulted in negative capital gains. However, the appellant has not furnished any concrete evidences with regards to cost of improvement for Rs. 23,50,000/- Therefore, the contention of the appellant is not found to be acceptable. Hence the addition of Rs. 23,50,000/- made by the AO is upheld. 6.8 Accordingly, the Grounds No. 3, 4, 5 and 6 are dismissed. 16. The ld.AR for the assessee submitted that the impugned asset is sale of house property without incurring the cost of improvement by the assessee cannot come into existence for sale as a building. In support of the same the ld.AR submitted the agreement of sale dated 19.01.2004, agreement of transfer dated 15.10.2011, Affidavit dated 30.12.2019 for having incurred the cost of improvement of Rs.23.50 Lakhs, contract agreement with Mr. Babulal, Bank statements, Passports entry and exit stampings in India etc. Further, the ld.AR stated that without prejudice to the earlier claim, the assessee has purchased a House property for Rs.40.00 Lakhs which is registered in the name of assessee on 23.12.2010, within one year prior to the sale of the impugned house property for Rs.50.00 Lakhs (on 15.10.2011) is eligible for deduction u/s.54 of the Act and prayed for allowing the same as a fresh claim. :-14-: ITA. Nos:1334 & 1335/Chny/2024 17. Per contra the ld. DR relied on the orders of the lower authorities and stated that the assessee has not furnished any of the documents / evidence in support of his claim before the lower authorities. Further the claim of deduction u/s.54 of the Act has never been claimed before the lower authorities. Hence, prayed for dismissing the appeal of the assessee. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is undisputed fact that the assessee has sold the immovable property during the A.Y. 2012-13 (on 15.10.2011) for Rs.50.00 Lakhs and had not filed the return of income. Later in response to the notice u/s.148 of the Act, the assessee filed his return of income claiming the cost of acquisition of Rs.6,45,000/- as per the sale deed (Purchase dated 19.01.2004) and cost of improvement incurred of Rs.23,50,000/- during the F.Y. 2003-04 (A.Y. 2004-05) and computed the negative capital gain of Rs.77,916/-. However, the assessee has not provided any evidence for the cost of improvement. Hence, the AO rejected the claim of cost of improvement with indexation and recomputed the long- term capital as Rs.39,06,425/- and brought to tax. The same was confirmed by the ld.CIT(A) as the assessee did not file any other evidence during the appellate proceedings also. 18. Before us, the assessee has filed an agreement entered between the assessee and the contractor dated 23.01.2004 and the entire contract amount of Rs.23.50 Lakhs has been paid by cash. We note that the :-15-: ITA. Nos:1334 & 1335/Chny/2024 assessee has not explained the source for cash paid to the contractor and filed an affidavit dated 30.12.2019 stating that the amount was paid in cash. In the present facts and circumstances of the case, the evidence furnished by the assessee for claiming the cost of improvement of Rs.23.50 Lakhs cannot be accepted. Therefore, we are in agreement with the AO and that of the ld.CIT(A) in declining the claim of cost of improvement along with the indexation and hence the same is sustained. 19. However, the alternate claim of the assessee to allow the deduction u/s.54 of the Act on account of house property purchased for Rs.40.00 Lakhs which is registered in the name of assessee on 23.12.2010, within one year prior to the sale of the impugned house property for Rs.50.00 Lakhs (on 15.10.2011) is acceptable. The claim of the assessee is supported by our order (supra) for the A.Y. 2011-12, wherein the house property purchased in that assessment year was the impugned asset on account of the unexplained investment decided in favour of the assessee partly by confirming the cost of purchase as Rs.40.00 Lakhs. In the present facts and circumstances of the case, we are of the considered view that the assessee is eligible for deduction u/s.54 of the Act, since the new asset (house property) has been purchased for Rs.40.00 Lakhs, one year prior to the sale of the impugned house property and hence we direct the AO to allow deduction u/s.54 of the Act on account of the purchase of new house property. Ordered accordingly. :-16-: ITA. Nos:1334 & 1335/Chny/2024 20. In respect of the legal issues raised by the assessee we do not find any infirmity in the order of the ld. CIT(A) at para 6.3 of his order. In the result the appeal of the assessee is partly allowed. 21. In the result, both the appeals filed by the assessee are partly allowed. Order pronounced in the open court on 26th March, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) Ɋाियक सद˟/Judicial Member (एस.आर.रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated, the 26th March, 2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "