SHRIRAM NARAYAN TIKDE,NAGPUR V. INCOME TAX, WARD 4(4) , NAGPUR

ITA 89/NAG/2021

AI Insights

The case involves an appeal by Shriram Narayan Tidke against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2008-09. The primary issues in the appeal included the legality of the notice issued under section 148, the addition of Rs. 3,00,000 as income from a gift, the computation of long-term capital gains on the sale of a property, and the addition of Rs. 13,00,000 as unexplained cash deposits. The Tribunal found that the gift was substantiated by documentary evidence and the capital gains should be computed after allowing the claimed deductions and improvements. The Tribunal also noted that the cash deposits were explainable through corresponding cash withdrawals and thus not liable for addition under section 68.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474252 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Other Referred Cases: Sunil Kumar Agarwal v. Commissioner of Income-tax, Siliguri (372 ITR 83), C. Aryama Sundaram v. Commissioner of Income-tax-3, Chennai (407 ITR 1)
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: ABHAY AGRAWAL
• Keywords: Set aside; Business income; Capital asset; Sale consideration of property below Jantri Value; Fair market value; Gift; Capital Gains; Valuation report
• Section: 147; 148; 143(3); 154; 54; 48; 68; 54F; 44AD; 234B; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER SMC MATTER ITA no.89/Nag./2021 (Assessment Year : 2008–09) Shriram Narayan Tidke Plot no.213, Janki Nagar Near Hanuman Mandir, Ring Road Nagpur 440 037 PAN – ACLPT7281M ……………. Appellant v/s Income Tax Officer Ward–4(4), Nagpur ……………. Respondent Assessee by : Shri Abhay Agrawal Revenue by : Shri Abhay Y. Marathe Date of Hearing – 21/01/2025 Date of Order – 27/01/2025 O R D E R The aforesaid appeal by the assessee is emanating from the impugned order dated 27/08/2020, passed by the learned Commissioner of Income Tax (Appeals)–1, Nagpur [“learned CIT(A)”], for the assessment year 2008–09. 2. In its appeal, the assessee has raised following grounds:– “1. The learned AO erred in Issuing notice under section 148 and assessment order passed under section 147 read with section 143(3) of the Act is bad in law. 2. The learned AO erred in making an addition of Rs.3,00,000 by alleging it to be an addition on account of asset over liability without appreciating that, the amount was a gift given by assessee's wife which was supported by withdrawals in the wife's bank account and confirmation given by the wife. 2 Shriram Narayan Tidke ITA no.89/Nag./2021 3. The learned AO erred in making an addition on account of long- term capital gain at Rs.20,34,726 on sale of Shantinagar, Nagpur house property against long-term capital gains of Rs.73,041 offered by the assessee. In doing so, the learned AO erred in not providing benefit of indexed cost of improvement of Rs.4,55,185 incurred during FY 2006-07, brokerage fees on sale of plot of Rs.25,000 and deduction under section 54 claimed by the assessee on new investment of Rs. 17,00,000 made in another residential property situated at Janaki Nagar, Nagpur. 4. Without prejudice to Ground number 3 above, the assessee submits that, the learned AO and learned CIT(A) erred in not referring the valuation of the property sold i.e situated at Shanti Nagar, Nagpur to DVO as per section 50C(2) since, the assessee had objected that stamp duty valuation exceeded the fair market value of the property sold. 5. The learned AO erred in not providing benefit of deduction under section 54 on the erroneous understanding that, the construction of new house property i.e situated at Janaki Nagar, Nagpur was made between the period 01/10/2006 to 31/07/2007 which actually related to the improvements made on the house property sold i.e at Shanti Nagar, Nagpur. The investment in new house property Janaki Nagar was in fact made during the period 01/10/2007 to 31/07/2008. Thus, the construction of new house property was completed on 31/07/2008 i.e within three years of sale deed of property sold dt. 06/11/2007. 6. That apart from incorrect appreciation of fact regarding period of construction, there is no other objection/s raised with regards to deduction u/s 54 by the learned AO during assessment proceedings and remand proceedings as well as by learned CIT(A) during appellate proceedings and hence claim of deduction under section 154 by making Rs.17,00,000 should be granted to the assessee. 8. The learned AO erred in making an addition of Rs. 13,00,000 towards cash deposited in the bank account without appreciating the fact that, there were corresponding cash withdrawals made during the year from time to time amounting to Rs.23,78,000 and; out of which the unutilised cash was re- deposited in the intervening period from time to time, totalling to Rs.13,00,000. That the cash deposits are fully explainable from the cash withdrawals made during the year, opening cash balance available, income earned during the year and hence, addition made of Rs.13,00,000 u/s 68 is unwarranted, unjustified and bad in law. 8. The learned AO and learned CIT(A) erred in not appreciating the facts emanating from the documentary evidences filed by the assessee and merely dismissing the claims of the assessee on the ground that, the assessee had taken separate stand earlier and subsequent submissions were an afterthought. 9. Whether on the facts and circumstances of the case, the learned AO erred in levying excess interest u/s 234B & 234C of the Act. 10. The Appellant prays leave of the Hon’ble Tribunal to add, amend, alter any of the Grounds of appeal.” 3 Shriram Narayan Tidke ITA no.89/Nag./2021 2. During the course of hearing, the Registry has pointed out that there is a delay of 233 days in filing the present appeal by the assessee. The learned Counsel for the assessee clarified that the order passed by the learned CIT(A) was dated 27/08/2020, and the appeal was filed before the Tribunal on 17/09/2021. The learned Counsel submitted that the period of delay is covered by the judgment dated 10/01/20221 passed by the Hon’ble Supreme Court in Suo–Moto Writ Petition (C) no.3 of 2020. We find that the Hon'ble Supreme Court, vide order dated 10/01/2022, passed in M.A. no.21 of 2022, in M.A. no.665 of 2021, in Suo–Motu Writ Petition (Civil) no.3 of 2020, directed that the period from 15/03/2020 till 28/02/2022, shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws in respect of all judicial and quasi judicial proceedings. As the due date for filing present appeal was falling within the aforesaid time- period, in view of the order passed by the Hon’ble Supreme Court, there is no delay in filing the present appeal and we proceed to decide the appeal on merits. 3. While going through the material available on record, we find that the assessee has furnished written submission which is pertinent to reproduce herein below for better appreciation of facts:– 1. “Ground of Appeal No. 2 [Concise grounds]: The learned AO erred in making an addition of Rs.3,00,000 without appreciating that, the amount was a gift given by assessee's wife which was supported by withdrawals in the wife's bank account and confirmation given by the wife. 1.1 The assessee had filed bank statement of donor i.e assessee’s wife and co-related the cash withdrawals from her SB Account with Bank of India Ajni Square having Saving Bank Account No:870710100008919 (Refer page no. 46-48 of paperbook for copy of bank statements). 4 Shriram Narayan Tidke ITA no.89/Nag./2021 Date of Withdrawals from Bank Account Date of Cash Gift Given to Husband Past Withdrawals Rs.160000.00 Opening Balance Standing Rs.160000.00 01/08/2007 Rs.60000.00 02/08/2007 Rs. 50000.00 06/10/2007 Rs.75000.00 19/10/2007 Rs.50000.00 04/12/2007 Rs.200000.00 13/11/2007 Rs.25000.00 14/12/2007 Rs.15000.00 Total Rs. 495000.00 Total Rs. 300000.00 1.2 The assessee had filed documentary evidence i.e confirmation provided by donor justifying the gift given to the assessee. Confirmation of gift provided by wife is enclosed at page 45 of paperbook. 1.3 Donor has explained source of income as she is regularly filing her Income Tax Returns. Copies have already been submitted (Refer page no. 49- 50 of paperbook) 1.4 Assessee and her wife lost mental peace of mind in proceedings u/s 131, as this was their first income tax scrutiny case. 1.5 Gift received is capital in nature hence credited to assessee’s capital account. There is nothing wrong in giving such accounting treatment in books of accounts (Refer page no. 44 of paperbook for copy of balance sheet of assessee) 2. Ground of Appeal No.3, 4 & 5 [Concise grounds]: 3. The learned AO erred in making an addition on account of long-term capital gain at Rs.20,34,726 on sale of Shantinagar, Nagpur house property against long-term capital gains of Rs.73,041 offered by the assessee. 4. Without prejudice to Ground number 3 above, the assessee submits that, the learned AO and learned CIT(A) erred in not referring the valuation of the property sold i.e situated at Shanti Nagar, Nagpur to DVO as per section 50C(2). 5.The learned AO erred in not providing benefit of deduction claimed under section 54 by making investment of Rs.17,00,000 in construction of new residential property at Janaki Nagar, within prescribed period of time. 2.1 The capital gains computation as per assessee is as under: Particulars Amount Amount Sale of Residential Property a. Consideration Received b. Stamp Valuation U/s 54C (Whichever is More) 14,50,000.00 20,56,000.00 20,56,000.00 5 Shriram Narayan Tidke ITA no.89/Nag./2021 Less:- Brokerage on sale of Plot 25,000.00 Net Consideration realised 20,31,000.00 Less: Indexed Cost of Acquistion 10000.00/259*551 21,274.00 Less: Improvement Cost (As discussed above) 428750/519*551 4,55,185.00 4,76,459.00 Long Term Capital Gain 15,54,541.00 Less: Deduction U/s 54F (As discussed above as per Valuation report of empanelled Income Tax Valuer) 19/11/2007 to 31.07.2008 14,81,500.00 Net Taxable Long term Capital Gain 73,041.00 2.2 Reference to DVO for calculating fair market value of property sold of Shanti Nagar  During the period assesseee had sold his inherited residential property on 06.11.2007 for Rs. 14,50,000/-, such property is situated at Shantinagar Nagpur. The same was inherited to assessee on demise of his mother namely Late Laxmibai Narayan Tidke. The stamp duty value as per section 50C is 20,56,000/-.  The assessee had objected to the action of learned AO in not referring the property for valuation to the DVO. Refer Ground of Appeal No.2 raised before learned CIT(A). However, the learned CIT(A) being quasi-judicial authority did not himself refer the matter to DVO for valuation. Reliance is placed on decision of Hon’ble Calcutta HC in the case of Sunil Kumar Agarwal v. Commissioner of Income-tax, Siliguri (372 ITR 83) (Calcutta HC). The assessee requests that, the matter be referred to DVO for finding the fair market value of the property sold. 2.3 Deduction towards cost of improvement incurred on Shantinagar house property of Rs.4,28,750 during FY 2006-07 Sr. No. Dates Remarks Paperbook 1. 1/10/2006 to 31/07/2007 Cost of improvement incurred on Shatinagar house property of Rs.4,28,750 Refer pages 51- 59 2. 24/11/2006 Sanction obtained of Janki Nagar property 3. 01/10/2007 to 31/07/2008 Construction at Janaki Nagar property of Rs.17,00,000 Refer pages 77- 131 4. 06/11/2007 Sale deed of Shantinagar property Refer pages 60- 76 6 Shriram Narayan Tidke ITA no.89/Nag./2021  The property at Shantinagar was purchased by mother of assesseee at Rs.10000/- on dated 31.07.1994. However, subsequently assessee has incurred an amount of Rs. 428750/- in financial year 2006-2007 which is evident from records and the sale deed itself describes the details of construction and quantum of said construction work available on said residential property. As per sale deed such property comprises brick wall and kawellu roof having twelve rooms along with toilet and bathroom having total built up area of 111.483 Square Meters (1200 Square Foot) (Refer copy of sale deed of residential property sold situated at Shantinagar at page 60-76 of paperbook).  Considering the amount invested in construction on such property, assessee was entitled for deduction of cost of improvement from sale consideration. Total amount invested in construction of Property at Shanti nagar was Rs.4,28,750/- during the FY 2006-07 (Copy of contract with Nagrao Borkar, contractor for an amount of Rs.4,28,750 alongwith invoices towards cost of improvement of property at Shanti Nagar is enclosed at page 51-59 of paperbook).  During the initial period of assessment proceedings before AO the assessee had submitted his reply on such Capital gain without claiming cost of improvement which was physically available on site and as evident from registered documents available. However, later on assessee came in touch with the counsel then, the deduction towards the improvement cost was correctly claimed by assessee as per available income tax rules and regulation. Further assessee has also produced bills of such cost of improvement before the AO. However, the AO denied such deduction. 2.4 Claim of deduction u/s 54F for investment made in construction of new residential house property at Janaki Nagar  Date of sale of Long Term Capital Asset i.e House Property at Shanti Nagar is 06/11/2007.  Construction at Janki Nagar was started from 01/10/2007 out of advance sale proceed received of Shanti nagar in June 2007.  Plot at Janki nagar was purchased much earlier having registered Sale deed in the name of Shriram Tidke. Sale deed was executed on 21/04/2006 (Refer page 145-149 of paperbook II)  Construction at above plot completed on Dt.31/07/2008 for Rs.17,00,000 in FY 2007-08. Total cost of construction was amounting to Rs.17,00,000. Relevant documentary evidences in the form of bills etc. in enclosed at page no. 77- 131 of paperbook.  Valuation report of empanelled valuer is submitted for available construction at New House Property at Janki Nagar (Refer copy of valuation report enclosed at pages 132-141 of paperbook).  Though construction was started before the sale deed of long-term capital assets (shanti nagar) but it is from advance consideration received from such transfer. Reliance is placed on C. Aryama Sundaram v. Commissioner of Income-tax-3, Chennai (407 ITR 1) (Madras HC).  Plot is separate from his uncle namely Bhagwan Tidke as separate sale deed i,e .executed having separate corporation tax receipt, Electric bill.  Combined map was only for convenience purpose because Plot size is only 2400 sq ft & splitting of plot is not allowed as per NIT rules & regulation. 7 Shriram Narayan Tidke ITA no.89/Nag./2021  Plot is registered in the name of the assesee having area of 1000 Square ft out of total area of Plot is 2400.00 Sq ft..and rest of 1400 Sq Ft.is registered in the name of Bhagwan Marotrao Tidke.  There are several middle-class families which requires the accommodation space in around 1000 sq ft. There was huge cost involved and legal obstacles in split the single plot.  Sanctioned map is not the criteria to be considered while determine the claim of deduction because almost in all cases construction at site is different from what is being sanctioned on paper.  Sale deed and separate possession is noted with Registrar of properties as per Sale Deed executed.  All the Original Bills and measurement submitted to ITO as per their letter dtd 20.02.2017 before finalizing the remand report dtd.06/12/2018 was submitted but the AO seems to be hush on this aspect.  Assessee has constructed house from the period 01.10.2007 to 31.07.2008 which is in line with claiming deduction U/s 54 for construction of house.  One cannot start construction before the date of Map Sanction i.e 24/11/2006. Hence the Period of construction taken from typical mistake is not correct and period of construction should be reckoned 01.10.2007 to 31.07.2008  Mere typical mistake does not make him liable to pay unjustified demand as the assessee is being middle class family cannot afford the unjustified tax demand.  Construction done during FY 2006-07 by Contractor Shri Nagorao borkar was at Shanti Nagar Site not at Janki Nagar but AO misconstrued at Janki Nagar Site. The Contract Agreement specifies the type of work done which is evident from Sale deed executed of Shanti Nagar House. (Refer page no. 51-76 of paperbook) 3. Ground of Appeal No. 6 [Concise grounds]: The learned AO erred in making an addition of Rs.13,00,000 u/s 68 towards cash deposited in the bank account without appreciating the fact that, the cash deposits were fully explainable  Assessee sold his residential house at Shantinagar for an amount of Rs.14,50,000/- (Refer page no. 60-76 of Paperbook)  The entire sale consideration was received in cheques except nominal amount of Rs.1,100.00 received in cash which is evident from sale deed.  Out of above, an amount of Rs.14,48,900 received in Cheques, assessee deposited Cheques of Rs.5,00,000.00 in Bank of Maharashtra SB 27430 Nandanwan Branch and Rs.9,48,900.00 Cheques deposited in UBI SB A/c 543002010002061 in Manewada Branch.  Assessee had opening cash balance of Rs.394980.00. Such fact was also submitted to AO during assessment proceedings.  From Perusal of Bank account maintained with above UBI account it can be seen that cash deposits of Rs.2,30,000.00 on dtd.20.09,25.09,28.09 and 02.11.2007 was out of opening cash balance.  Cheques of Sale consideration started to deposit in UBI account from 07/11/2007 of Rs.9,48,900.00  Assessee had made cash withdrawals on various occasion from both the above banks and correspondingly deposited the same amount resulted in AO wrongly treating cash deposits of 13,00,000 as income U/s 68. 8 Shriram Narayan Tidke ITA no.89/Nag./2021  Apart from above assessee received gift of Rs.1,40,000.00 from his wife during the year (Apart from 160000.00 standing as Unsecured Loan)  The relevant cash transaction of cash withdrawals and deposits are already submitted in detailed submission before your honor.  The cash deposits in UBI as reported in AIR are justified with cash withdrawals from time to time from both the banks maintained by the assessee.  It was uncertain nature of cash requirements during the period when construction activity is going on. When assessee was not required cash he keeps deposit in bank and when required he withdrew amount from bank.  The same amount which was withdrawn cannot compel assessee to pay tax on income which he never earns.  During assessment proceedings and statement recorded U/s 131 it was not possible for assessee to give answer based on mind memory.  After having proper accounting the figures are given to AO which is did not consider.  Assessee is middle class family having limited source of income hence the cash deposits out of explained source treating the income is beyond the imagination and required to be considered your honour in the lights of available facts.  Details of Cash withdrawn and deposits are given underneath:- Date Bank Name Cash withdrawn Cash deposits 28/04/2007 BOM 25000.00 03/05/2007 BOM 40000.00 16/05/2007 BOM 155000.00 20/09/2007 UBI 50000.00 25/09/2007 UBI 90000.00 28/09/2007 UBI 50000.00 03/10/2007 UBI 40000.00 06/10/2007 UBI 20000.00 09/10/2007 UBI 45000.00 10/10/2007 UBI 18000.00 11/10/2007 UBI 10000.00 20/10/2007 UBI 20000.00 27/10/2007 UBI 90000.00 02/11/2007 UBI 20000.00 19/11/2007 UBI 150000.00 22/11/2007 UBI 100000.00 03/12/2007 UBI 200000.00 04/12/2007 UBI 200000.00 04/12/2007 BOM 250000.00 06/12/2007 UBI 300000.00 06/12/2007 UBI 200000.00 14/12/2007 UBI 570000.00 29/12/2007 UBI 200000.00 31/12/2007 BOM 37000.00 05/01/2008 UBI 250000.00 19/01/2008 UBI 20000.00 20/01/2008 UBI 50000.00 21/01/2008 BOM 45000.00 06/02/2008 UBI 25000.00 12/02/2008 UBI 50000.00 21/02/2008 UBI 80000.00 9 Shriram Narayan Tidke ITA no.89/Nag./2021 27/02/2008 UBI 120000.00 27/02/2008 BOM 23000.00 10/03/2008 UBI 50000.00 12/03/2008 BOM 25000.00 26/03/2008 UBI 60000.00 Total Withdrawals/Deposits 23,78,000.00 13,00,000.00 During recording of statement, it was not possible for assessee to give the accurate answers based on mind memory hence after proper accounting of financials assesee arrived at above conclusion and such facts was submitted before Assessing Officer but he was not ready to accept the same. Assessee belongs to middle class family having limited source of income. The entire amount of cash deposits in Union Bank of India of Rs.13,00,000.00 treating the income is beyond the imagination hence required to be considered by your honor in the lights of available facts and proper accounting. Cash flow statement for the year FY 2007-08 is enclosed at page 142 of paperbook. Monthly cash flow statement as reconciled with financial statements is enclosed at page 143 of paperbook.” 4. Ground no.1, relates to re–opening of assessment under section 147 of the Act and the notice under section 148 r/w section 143(3) of the Act is said to be bad–in–law. 5. Since I am adjudicating the other grounds of appeal raised byt eh assessee on merits, therefore, the issue or re–opening of assessment under section 147 and the notice under section 148 r/w section 143(3) of the Act becomes infructuous hence dismissed. 6. Ground no.2, relates to addition of ` 3,00,000, alleging it to be addition made by the Assessing Officer on account of asset over liability. 7. The assessee had shown receipt of gift of ` 3,00,000 from his wife during the year under consideration. The Assessing Officer disbelieved the gift transaction on the ground that the assessee had given contrary statement recorded under section 131 of the Act and hence the Assessing Officer made addition of ` 3,00,000, to total income of the assessee. 10 Shriram Narayan Tidke ITA no.89/Nag./2021 8. I find force in the contentions of learned Counsel for the assessee. The Counsel for the assessee submitted before me that the gift transaction was supported by confirmation provided by the wife which was exhibited at Page– 45 of paper book and is placed on record. He further submitted that there were corresponding cash withdrawals in the bank account of the assessee’s wife and copy of bank statement was exhibited at Page–46 to 48 of paper book which is also placed on record. Further, the assessee’s wife was a taxpayer and filed her return for the year under consideration. Copy of acknowledgement of return of income filed for the assessment year 2008-09 and 2007-08 were exhibited at Pages–49 to 50 of paperbook. I also find that the assessee’s wife had shown business income for sale of sarees during the year under section 44AD of the Act. The learned Counsel submitted that all the documents and details were submitted before the learned CIT(A) as well before learned the Assessing Officer during remand proceedings. The learned CIT(A) had also called for remand report from the the Assessing Officer twice. Therefore, all the documents were filed before the authorities below. The learned CIT(A) observed that the explanation of the assessee is an after- thought full. The assessee has created justification over a period of time. The learned Departmental Representative supported order passed by the learned CIT(A) and the Assessing Officer. The documentary evidences adduced by the assessee supports the gift transaction between husband and wife. Both the authorities below could not find any defect with the documentary evidences adduced by the assessee. Gift received is capital in nature hence credited to assessee’s capital account. Therefore, we set aside the impugned order 11 Shriram Narayan Tidke ITA no.89/Nag./2021 passed by the learned CIT(A) on this issue and the addition of ` 3,00,000, is hereby deleted. Thus, ground no.2, raised by the assessee is allowed. 9. Grounds no.3, 4 and 5, relate to addition on account of long term capital gain of ` 20,34,726, as against capital gain of ` 73,041, so computed by the assessee. 10. The addition has been made due to following reasons:– (i) Cost of improvement on property sold as claimed by the assessee at ` 4,28,750 has not been granted; (ii) Deduction under section 54F of the Act in respect of investment made into a new residential house claimed at ` 14,81,500 has been denied; & (iii) The Assessing Officer erred in not referring the matter to the DVO for computing the fair market value of the property sold. 11. Before us, the learned counsel for the assessee submitted that the assessee had sold a residential house property at Shanti Nagar and made investment into a new residential house constructed at Janki Nagar. The assessee had claimed cost of improvement of ` 4,28,750. The assessee furnished copy of bills and vouchers for both the costs incurred. With respect to cost of improvement of ` 4,28,750, the learned Counsel referred to bills / vouchers which were exhibited at Pges 51-59 of the paperbook and are placed on record. With respect to deduction claimed under section 54F of the Act, the learned Counsel referred to documentary evidences in the form of bills / vouchers in respect of construction at Janki Nagar house which were exhibited at Page–77-131 of paper book and are placed on record. The assessee had purchased land for Janki nagar house from his brother and sale 12 Shriram Narayan Tidke ITA no.89/Nag./2021 deed for the same which is exhibited at Page–145-149 of paper book-II and are placed on record. The learned Counsel further submitted that though the sanction of Janki Nagar plot was a combined one but there was registered sale deed in favour of assessee in respect of his plot of land, the assessee had also obtained copy of valuation report from registered valuer who had inspected the site at Janki Nagar and arrived at valuation of ` 15,61,400. Thus, the learned Counsel submitted that the cost of improvement and investment into a new property were supported by documentary evidences and should be allowed. 12. The learned Departmental Representative supported order passed by the authorities below. 13. Having heard the rival parties and on a perusal of the material available on record, I find that the authorities below have doubted the bills and vouchers furnished by the assessee in respect of costs of improvement and new construction made based on suspicion and surmises. The Assessing Officer and the learned CIT(A) did not make any further enquiry to support their alleged suspicions, but simply denied the benefit to the assessee. The learned CIT(A) has reproduced few copy of bills wherein there were some over-writing on the date. However, I find that there were many bills which are placed on record in the paper book which does not have any overwriting and no reason as to why those were not acceptable by the authorities below. I also find merit in the assessee’s contention that the Assessing Officer and the learned CIT(A) both erred in not referring the matter to the DVO to arrive at the fair market value of the property sold. I further find that the assessee had 13 Shriram Narayan Tidke ITA no.89/Nag./2021 also produced all the original bills and vouchers before the Assessing Officer during remand proceeding. This is evident from the copy of remand report dated 06/12/2018 which is exhibited at Page–25-37 of the paper book and are placed on record. I also find that in the remand report dated 06/12/2018, no specific finding is given by the Assessing Officer against the original bills and vouchers produced. I further find that the Assessing Officer had erred in confusing between the bills of cost of construction and the bills of cost of investment in the new property. The cost of improvement on the property of at Shanti Nagar was carried out during the period from 01/10/2006 to 31/07/2007, whereas the investment in the new property was made between 01/10/2007 and 31/07/2008. Hence, after considering the circumstances and facts of the case, I find that apart from casting general suspicions and surmises over the nature of the bills submitted, no enquiry was made by the authorities below to support their suspicion. In such a situation, the assessee has satisfied the onus cast upon him by furnishing necessary documentary evidences. Keeping in view the overall facts and circumstances of the case, therefore, I direct the Assessing Officer to allow cost of improvement incurred on property sold and deduction under section 54F of the Act in respect of investment in new house construction, as claimed by the assessee, thereby computing long-term capital gains at ` 73,041, shown by the assessee. Accordingly, we set aside the impugned order passed by the learned CIT(A) and allow grounds no.3, 4 and 5, raised by the assessee. 14. Ground no.6, raised by the assessee relates to disallowance of deduction under section 54 of the Act by making investment of ` 17 lakh. 14 Shriram Narayan Tidke ITA no.89/Nag./2021 15. The Assessing Officer has made addition of ` 13,00,000 under section 68 of the Act towards cash deposits in bank accounts of the assessee. The learned Counsel for the assessee submitted before us that the funds from sale of property at Shanti Nagar was received through cheques and deposited into bank accounts. During the year under consideration, there were regular cash withdrawals aggregating to ` 23,78,000, as against cash deposit of ` 13,00,000 in the bank accounts of the assessee. 16. The learned Counsel for the assessee submitted that cash was withdrawn from the bank accounts and utilised for the construction as needed from time-to-time. The assessee had also re-deposited the cash which was not in immediate use, into his bank accounts. Copy of cash flow statement annually and monthly was exhibited at Page–142-143 of the paper book. 17. The learned Departmental Representative supported order passed by the authorities below. 18. I have heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below. I find that the learned CIT(A) has not doubted cash flow statement submitted by the assessee. The result as per financial statements and the return of income has been accepted, except for the additions made. The learned CIT(A) has only mentioned that there was some time–gap between certain deposits and withdrawals. However, the fact remains that, apart from the general suspicion and services, the learned CIT(A) has failed to point out any defect in the cash flow statement. I further find that though the payments from sale 15 Shriram Narayan Tidke ITA no.89/Nag./2021 of Shanti Nagar property were received in cheques, however, there were corresponding cash withdrawals sufficiently available for subsequent cash deposits, which has not been considered by the authorities below and consequent to this, it can be reasonably inferred that the cash deposits were sourced out of cash withdrawals as per details reproduced by the learned CIT(A) in its order vide Page–5 and 6. Therefore, I set aside the impugned order passed by the learned CIT(A) on this count and I hold that the cash deposits stand explained and addition of ` 13,00,000, is directed to be deleted. Thus, grounds no.6, raised by the assessee is allowed. 19. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 27/01/2025 NAGPUR, DATED: 27/01/2025 Sd/- V. DURGA RAO JUDICIAL MEMBER Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "