TMI Blog2021 (6) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a direction to grant one final opportunity to the assessee to substantiate his case by producing the buyer and the registered valuer for their examination by the AO and to arrive at the true character of the property. The AO shall decide the issue - Grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA No.403/Del/2018 - - - Dated:- 10-6-2021 - Shri R.K. Panda, Accountant Member For the Assessee : Shri Kapil Goel, Advocate For the Revenue : Shri Rajesh Kumar, Sr. DR ORDER This appeal filed by the assessee is directed against the order dated 16th October, 2017 of the CIT(A)-21, New Delhi, relating to assessment year 2014-15. 2. Facts of the case, in brief, are that the assessee is an individual and derives income from pension from the Ministry of Railways. He filed the return of income on 14th October, 2014 declaring the total income of ₹ 1,31,638/-. The case of the assessee was selected for limited scrutiny with the reason long-term capital loss on sale of property. During the course of assessment proceedings, the AO noted that the assessee has sold one property bearing No.2538, Ward-XII, Punjabi Basti, Sabji Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO also proposed the total long-term capital gain of ₹ 40,93,635/- after deducting the indexed cost of acquisition at ₹ 42,56,364/- from the sale consideration of ₹ 83,50,000/-. 3.2 In response to the above, the assessee filed the following reply which has been reproduced by the AO and which reads as under:- Sub ; Scrutiny Assessment for A.Y. 2014-15 (Mr. Awtar Singh Dheeran - PAN AAIPD8887G) Reference show cause Notice dated 24.11.2016 regarding capital gain on property) Respected Sir/Madam, With reference to the above, we would like to submit our replays under: - The Assessee purchased the property referred to above (located at Basti punjabian, Municipal No,. 2538 in ward XII, Sabji Mandi, Delhi -110 007) in 1959, with 2 storeys built up and some vacant portion of land. - A copy of municipal tax receipt from that time clearly mentions a two storey building. A copy is attached for reference. - Subsequently in the Late 1980 s another floor was built. - While the original plan of the building at the time of purchase is not available, a plan was made by an architect in 1984-85. A copy of this is attached for reference. Also attached for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de addition of ₹ 40,93,635/- to the total income of the assessee. 6. In appeal, the ld. CIT(A) upheld the action of the AO by observing as under:- 5.iv I have carefully considered the findings of the AO as also submission of the appellant. It is noted that the appellant has sold 2/3rd portion of one property situated at 2538, Basti Punjabian, Sabji Mandi, Delhi vide sale deed dated 27.02.2014 for sale consideration of ₹ 83,50,000/-. As per the sale deed the property was having built up area on ground floor with its exclusive roof/terrace rights. The assessee s contention is that the property so sold was a three storey building consisting of ground floor, first floor and second floor and the assessee got approved valuer s report for determination of fair market value of the property as on 01.04.1981 as per which the fair market value and cost of construction as per registered valuer s report pertaining to first and second floor was arrived at ₹ 5,76,875/- and indexed cost of construction pertaining to first floor and second floor was arrived at ₹ 54,16,856/-. The approved valuer s report is dated 25.08.2014 i.e, subsequent to the sale of property. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given such estimate not on the basis of physical inspection of the property but on the basis of facts stated by the assessee. In the approved valuer s report in part-11 declaration it is clearly stated that all the details/information including area and ownership details were provided by the party. Moreover, in the sale deed dated 27.02.2014 there is only mention of ground floor construction and even the map enclosed with the sale deed also indicate only ground floor construction. Keeping in view of these facts the constructed area on first floor and second floor is not evidenced by any credible evidence and infact the documentary evidence in the form of sale deed dated 27.02.2014 proved only constructed area at ground floor. As regards the contention of the assessee that the AO has allowed credit for 100% land cost whereas cost of construction in respect of first and second floor was not allowed, it may be mentioned that as per the AO and as per the facts on record the sold land was having constructed area only on the ground floor and, therefore, the AO has rightly allowed 100% land cost whereas cost of construction claimed in respect of first and second floor was not allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to keep any records as per Rule 6F of Income tax rules. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal. 8. The ld. counsel for the assessee strongly challenged the order of the CIT(A) in confirming the addition made by the AO. Referring to section 55(2) of the IT act, the ld. Counsel submitted that the fair market value of the property has to be adopted at the option of the assessee and not at the option of the AO. He also relied on the following decisions:- i) Bawa Shiv Charan Singh vs. CIT, reported in 149 ITR 29; ii) Madras Fertilizers Ltd. vs. CIT, reported in 209 ITR 44. 9. He accordingly submitted that the ld.CIT(A) is not justified in sustaining the addition made by the AO especially when the assessee has proved beyond doubt that it was a three storied building and, therefore, the AO should have allowed indexed cost of acquisition for the three storied building as per the valuation report filed by the assessee. 10. The ld. DR, on the other hand, strongly supported the order of the CIT(A). Referring to page 8 of the order of the CIT(A), he drew the attention of the Bench to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property, it is noted that only ground floor of the property was sold. The AO, therefore, rejecting the various explanations given by the assessee, redetermined the indexed cost of acquisition of the property at ₹ 42,56,364/- and after deducting the same from the sale consideration, arrived at the long-term capital gain of ₹ 40,93,635/-. I find, the ld.CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the ld. Counsel that the property was a three-storied building and the municipal tax receipt for ₹ 600/- shows the existence of first floor and the second floor and, therefore, the lower authorities are not justified in rejecting the cost of construction of the first floor and second floor as per the report given by the registered valuer. 13. On a pointed query by the Bench at the time of hearing as to why the sale deed contains only the ground floor and not first and second floors, the ld. Counsel submitted that an attempt to reduce the stamp duty by the buyer might have forced the assessee to mention the same as only ground floor. If the above contention of the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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