2025 (6) TMI 318 - AT - Income Tax

Disallowance on account of cost of construction - main reason was that the assessee could not file documentary evidences in support of this expense - CIT(A) in the interest of justice has restricted the addition to Rs. 20 lakh only and disallowed the cost of improvement claimed by the assessee. HELD THAT - We are of the view that considering the status of assessee an NRI and his precious time the purpose of justice would be served by deleting the addition in respect of cost of improvement and so far as the cost of construction is concerned we grant a partial relief of Rs. 10 lakh and restrict the disallowance to the tune of Rs. 10 lakh only. Appeal filed by the assessee is partly allowed.

Summary

The Appellate Tribunal (ITAT Cochin), per Judicial Member Prakash Chand Yadav, heard the appeal of a non-resident assessee against the CIT(A)'s order for AY 2012-2013. The Assessing Officer (AO) had disallowed the entire cost of construction of Rs. 1.32 crore claimed by the assessee on the sale of flats due to lack of documentary evidence, adding the amount to income. The CIT(A) upheld the addition but restricted it to Rs. 20 lakh and disallowed Rs. 3,16,124 claimed as cost of improvement.The assessee's appeal before ITAT was delayed by 280 days, attributed to medical emergencies and e-portal issues; the delay was condoned after considering the affidavit. On merits, the ITAT noted the AO's disallowance was primarily due to absence of proof. The Tribunal deleted the addition of Rs. 3,16,124 for cost of improvement and granted partial relief on cost of construction by reducing the disallowance from Rs. 20 lakh to Rs. 10 lakh, observing that "considering the status of assessee an NRI and his precious time, the purpose of justice would be served" thereby partly allowing the appeal.