VANDANA MATHUR,GURGAON V. ITO,WARD-4(5), GURGAON

ITA 1031/DEL/2024

AI Insights

The case involves Vandana Mathur, the appellant, contesting the disallowance of the indexed cost of improvement on a property and the treatment of cash deposits during the demonetization period as unexplained investments by the Income Tax Department. The Assessing Officer (AO) and the National Faceless Appeal Centre (NFAC) had earlier disallowed the claims, leading to the appeal. The Tribunal, after reviewing the evidence and previous assessments, found in favor of the appellant, highlighting inconsistencies in the department's treatment of similar cases and the lack of substantial evidence to support the disallowances made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312918 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Nan Kumar Taneja Vs. ITO, Sudhir Bhai Praveen Kant Thaker Vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Keywords: Corroborative evidences; Unexplained cash credit; Unexplained investment; Capital Gains
• Section: 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘C’: NEW DELHI) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:-1031/Del/2024 (Assessment Years- 2017-18) Vandana Mathur C-101, Essel Tower, M. G. Road, Gurgaon Haryana – 122016 Vs. ITO Ward- 4 (5) Gurgaon PAN No: AHYPM2370G APPELLANT RESPONDENT Assessee by : None Revenue by : Shri Om Prakash, Sr.(DR) Date of Hearing :17.03.2025 Date of Pronouncement : 30.04.2025 ORDER PER SUDHIR PAREEK, JM The aforetitled appeal arising out of the order dated 08.01.2024 passed by the National Faceless Appeal Centre (for the sake of convenience, here in after referred in short as Ld. NFAC] passed against the order dated 04.11.2019 passed by the Assessing Officer Page 2 of 12 [(for the sake of convenience, here in after referred in short as Ld. AO)] for A.Y. 2017-18. 2. The assessee has raised following grounds of appeal : - (a) That under the facts and circumstances of the case, the authorities below were not justified in disallowing the indexed Cost of improvement amounting to Rs. 49,64,602/- while working out the capital gain on sale of property being Flat No. A-5/705, Sahara Grace, Chakkarpur, Sector-28, Gurgaon. (b) That without prejudice to ground no. (a) above, appellant had correctly claimed cost of improvement and the authorities below had erred in law and on the facts by passing the impugned order disallowing cost of improvement incurred in furnishing the flat and the Ld. NFAC was not at all justified in confirming the action of the Ld. AO because at both end they failed to appreciate the fact that a furnished flat (which is the present case) fetch significant more value than the unfurnished raw flat delivered by the builder. In view of this factual error, the orders passed by the authorities below deserve to be annulled/cancelled. Page 3 of 12 (c) That the authorities below were not justified to disallow the above-mentioned claim ignoring the details/ evidence filed in support of the same and the expenses were directly relatable to improvement of property in respect of which the Capital Gain was in question and therefore, the orders passed by the authorities below deserve to be annulled/cancelled. (d) That the ld. AO was not justified in initiating penalty proceedings u/s 270A(9)(c) by concluding that the assessee has claimed expenses towards cost of improvement amounting to Rs. 49,64,602/-but the same is not substantiated with any evidences despite taking all the supporting evidences on record and discarding the same to make a high pitched assessment and therefore, the orders passed by the authorities below deserve to be annulled/cancelled. 2 (a) That the authorities below were not justified in treating cash deposit during demonetization period amounting to Rs. 14,50,000/- in joint account held by the assessee with her husband, as un-explained investment of the assessee u/s 69 of the Act. Page 4 of 12 (b) That the authorities below were not justified in treating cash withdrawn during P.Y. 2015-16 as utilized towards purchases made which have been claimed as cost of improvement done during P.Y. 2008-09 and P.Y. 2009-10 and therefore, the orders passed by the authorities below deserve to be annulled/cancelled. (c) That the authorities below were not justified in treating the cash deposited in joint account as referred above as unexplained cash credit in the hands of the assessee ignoring the fact that the same has been assessed in the hands Mr. Deepak Mathur (Joint account holder & husband of the assessee) where the jurisdiction CIT(A) had accepted the genuineness of the source of cash deposit and had granted relief. In view of the contrary view within the department as to same transactions, the orders passed by the authorities below deserve to be annulled/cancelled. 3. That the appellant craves leave to add to, alter, amend, modify, substitute, delete, and/or rescind all or any of the Page 5 of 12 GROUNDS OF APPEAL on or before the final hearing, if necessity so arises. 3. Facts of the case may be concisely described as that the assessee filed his return of income for the A.Y. 2018-18 declaring income of Rs.9,98,620/- and thereafter the case was selected for scrutiny with reasons regarding capital gain / loss on sale of property and cash deposit during demonetization period. Persuasion thereof statutory notices u/s 143 (2) issued and at the time of completion of assessment proceeding, expenses claimed towards cost of improvement at Rs.49,64,602/- disallowed and added to the income of the assessee under the head long term capital gains and also added Rs.14,50,000/- to the income of the assessee by treating as unexplained investment u/s. 69 of the Act. 4. In course of hearing, when the matter called for none appeared on behalf of the assessee and no any adjournment sought for and in such circumstances we proceeded ourselves to decide the instant Page 6 of 12 appeal its merit alone and for this purpose we heard Ld. DR and carefully perused the material on record. 5. Regarding ground No.1 by way of instant appeal, grievance expressed regarding disallowance of index cost of improvement amounting Rs.49,64,602/- while working out the capital gain on sale of property being flat No. A-5/705, Sahara Grace, Chakkarpur, Sector-28 Gurgaon whereas assessee/ appellant correctly claimed cost of improvement and both the authorities below erroneously disallowed cost of improvement incurred in furnishing the flat and not appreciated material fact that a furnished flat fetch significant more value than the unfurnished raw flat delivered by the builder and ignored details/ evidence filed in support of the claim. 6. The assessee has submitted the details of improvement bill as under :- Page 7 of 12 7. Per contra the ld. DR relied upon the orders passed by both the lower authorities. 8. Regarding this issue the Ld. AO observed that the explanation furnished by the assessee found not tenable as the expenses incurred towards the item are not integral part of the residential house. It is relevant to mention here that the it was submitted by the assessee before the Ld. AO that being individual no books of accounts maintained by him so ledger account is not available and furnished the copy of bills for ready reference and submitted that furniture / almirah/ bed sheet electric/ electronic cannot be claimed towards cost of improvement and if buy furnished house these cost become part of house. 9. By aggrieving, the assessee/ appellant knocked the door of Ld. CIT(A) by preferring appeal but the CIT(A) dismissed the same with simply reiterating the findings given by the Ld. AO. 10. On behalf of the assessee / appellant, summary of improvement bill furnished before us in which all the details / explanation given and it can’t be inferred that expenses, details of expenses which is submitted are not integral part of furnished Page 8 of 12 house and we have no hesitation to hold that the finding of both the lower authorities quite unsustainable in law in this regard and so ground No.1 is hereby allowed and addition in question deserves to be deleted. 11. So far as the ground No.2 is concern, dissatisfaction by way of instant appeal shown before us by stating that both the authorities without any justification treated the cash deposit during demonetization period amounting to Rs.14,50,000/- in joint account maintained by the assessee with her husband as unexplained investment u/s.69 of the Act and the same has been assessed in the hands of Deepak Mathur (joint account holder and husband of the assessee) where the jurisdictional Ld. CIT(A) accepted the genuineness of the source of cash deposit and granted relief and in view of that contrary view within the department as to same transaction deserves to be annulled / cancelled. 12. In this regard the Ld. AO found reply of the assessee/ Appellant not tenable only because of cash the withdrawal made by the assessee were made in the month of May 2015 to March 2016 and there is time gap of more than 1-2 years between the cash withdrawal made and cash deposited into bank. Page 9 of 12 13. The ld. CIT(A) while disposing the appeal dismissed the ground by stating that when the money withdrawn could not be utilized then why the same was held for such long time and not deposited. Into bank and for this reason only the contention of the assessee found unacceptable 14. In the order passed by the coordinate Bench in ITA No.4959/Del/2018 Nan Kumar Taneja Vs. ITO, Ward-33, New Delhi in which coordinate Bench held that income tax return, cash book maintained by the assessee have neither been rebutted over there is no any finding that case in hand disclosed in the balance sheet was beyond the scope of their income or are not substantiated from the bank account and simply because after the period of demonetization, certain amount of cash has been deposited in the account, does not mean the case in hand as on 31.03.2015 and 31.03.2016 which is duly shown in the balance sheet and discussed with the department in the respective income tax return file and earlier is unexplained likewise also relied upon the order of the coordinate Bench in ITA No.788/AHD/2012 Sudhir Bhai Praveen Kant Thaker Vs. ITO AHD in which held as under :- Page 10 of 12 “We find merit into the contention of the Ld. Counsel for the assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilized for any other purpose merely on the basis of conjecture that the amount might have been utilized for any other purpose and was not available with the assessee for making the deposits, we are unable to accept the reasoning of the authorities below.” 14. It is brought in our notice that the assessment order for A.Y. 2017-18 in the case of Deepak Mathur (joint account holder and husband of the assessee Vandanda Mathur)in which the same amount was added in the hands of Sh. Deepak Mathur and view of that same amount cannot be taxed in the hands of assessee/ appellant Vadana also as it will create double taxation which is contrary to law and by only this reason the ground is deserves to be allowed and addition is deleted. Page 11 of 12 15. Consequently, the appeal of the assessee is allowed and addition in question is deleted. Order pronounced in the Open Court on 30.04.2025 Sd/- Sd/- (SHAMIM YAHYA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30/04/2025. Neha, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "