9911796707
TMI Blog2012 (4) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of a site purchased on 18.5.2006 amounting to ₹ 49,23,330 and advance of ₹ 35,20,300 paid towards construction of house property. The Assessing Officer completed the assessment by an order under section 143(3) on 29.12.2008 determining the income of the assessee at ₹ 60,15,011. Aggrieved by the order of assessment, the assessee went in appeal before the CIT(A) who by order dt.26.10.2010 allowed the assessee partial relief whereby the income of the assessee was revised to ₹ 41,10,892. The assessee is now in appeal before us. 3.0 The assessee originally filed grounds of appeal dt.4.2.2011 and subsequently filed revised grounds of appeal on 28.2.2012 which are as under (since they were not numbered, they have been numbered in seriatim) : " 1. The Assessing Officer erred in determining the total income at ₹ 54,94,225 as against ₹ 25,73,876 declared in the return. 2. The Hon'ble CIT(A) erred in confirming the disallowance made by Assessing Officer of a sum of ₹ 9 lakhs incurred through one Sri D. Shivakumar for purchase of wood and making doors frame, window frames, shutters, kitchen cabinets for the new residential house unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of materials and expenses of ₹ 4,79,500 up to 31.3.2007 and ₹ 11,45,894 incurred during 1.4.2007 to 30.8.2008 i.e. incurred within the stipulated period of 3 years in determining the cost of construction for the purpose of arriving at Long Term Capital Gains is not in conformity with law and facts of the case and hence may be deleted and justice rendered. 10. The Assessing Officer and Hon'ble CIT(A) ought to have considered various decisions cited in support of the claims, to determine the cost of construction. For these and other grounds that may be urged at the time of hearing, the appeal may be allowed and justice rendered." 4.1 The grounds of appeal at S.No.1 is general in nature and hence no adjudication is called for thereon. 4.2 In the course of hearing of the appeal, the learned Authorised Representative submitted that the ground of appeal at S.No.6 is not being pressed as the assessee intend to file a rectification application before the CIT(A). This ground is accordingly dismissed. 4.3 The grounds of appeal at S.Nos.7 to 10 were not argued in the course of hearing and are hence not adjudicated upon. 5.1 Disallowance of ₹ 9 lakhs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131 of the Act on 5.12.2008. In Answers to question Nos.6 and 7 of the statement, Shri D. Shivakumar, brother-in-law of the assessee stated that he had got cots, sofa set, divan, dining set and other furnitures made for the assessee through carpenters known to him and for these works received ₹ 9 lakhs. The learned Departmental Representative strongly countered the learned Authorised Representative's claim that the Assessing Officer made the disallowance of ₹ 9 lakhs without giving the assessee opportunity of hearing or to cross-examine Shri Shivakumar. She pointed out that in para 7 of the assessment order immediately after recording the statement on 5.12.2008 itself, the Assessing Officer by way of a letter sent to the assessee, asked him to respond to the statement of Shri Shivakumar and to which the assessee replied. She also drew our attention to the fact that the A.O.had also noted that there were no documentary proof or bills produced for verification for this work carried out by Shri D. Shivakumar for the assessee; that ₹ 6 lakhs paid to Shri Shivakumar was on 3.11.2005 which is almost six months before the assessee purchased the residential site on 18.5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer. The assessee's reliance on a confirmation dt.18.11.2008 by Shri D. Shivakumar is being disregarded for the reason that there is no proof that it was filed before Assessing Officer or CIT(A) and also because it is merely a self-serving document bereft of any corroborative evidence. We find that in coming to the decision to make the disallowance of ₹ 9 lakhs being expenditure incurred for household furniture and not related to construction of the residential house, the Assessing Officer has very succinctly laid down the reasons for his finding in para 8 of the order of assessment which are as under : " a. The witness Sri Shivakumar in his statement recorded under section 131 under oath on 5.12.2008 stated very clearly that he had received the amount for making cot, furnitures etc. The submission by the assessee that Sri D. Shivakumar had actually carried out the work of making doors and frames are unsubstantiated. Further, the assessee's submission that payment made towards furniture is also included in construction activity is beyond the meaning of 'amount spent towards building residential house.' b. The assessee has claimed that these amounts have been paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t S.No.5, the assessee challenges the CIT(A)'s action in allowing only ₹ 4,10,000 out of ₹ 10,20,355 being expenditure incurred for labour charges and purchases of material for construction of residential building. It was submitted by the learned Authorised Representative that the assessee incurred expenditure amounting to ₹ 16,20,300 towards labour charges and material purchase through one Arunkumar. He further stated that as bills for such expenditure were produced only to the extent of ₹ 5,99,945 before the Assessing Officer, he allowed this claim and disallowed the balance expenditure of ₹ 10,20,355 as they were not supported by bills. It is submitted that in appeal, the learned CIT(A) in para 7.4(iii) on pages 7 and 8 of his order has held that -- " (iii) In view of the documentary evidence produced convincingly to the Assessing Officer regarding the completion of the residential building, which implied that the appellant had necessarily incurred materials and labour expenses essential for completion of a building, the Assessing Officer is directed to allow a partial amount of ₹ 4,10,000 out of the claim of expenditure of ₹ 10,20,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lip;…. in view of the documentary evidence produced convincingly to the Assessing Officer regarding the completion of the residential building, which implied that the assessee had necessarily incurred material and labour expenses essential for completion of a building…" and then proceeded to allow the relief of ₹ 4,10,000 out of the disallowance of ₹ 10,20,355 purely on an estimate basis. We find that there is some merit in the argument put forward by the assessee, that if the learned CIT(A) was of the view that the documentary evidence produced before the Assessing Officer by the assessee was convincing enough to imply that the assessee had incurred material and labor expenses essential for completion of the building, then he should have allowed the assessee's claim and not sustained any portion of the disallowance. However, we are unable to concur with the view that the entire expenditure claimed be allowed as in normal construction activity, labour charges / expenses are generally made through self made voucher and bills and therefore the likelihood of claiming such expenses excessively cannot be ruled out. In these circumstances and after overall consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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