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TMI Blog2025 (5) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018-19, confirming the assessment order passed under section 143(3) of the Act dated 17.02.2021 by the Income Tax Officer, Ward 4(2)(3), Ahmedabad [hereinafter referred to as "the Assessing Officer" or "the AO"]. Facts of the Case 2. The assessee filed return of income electronically on 16.10.2018, declaring total income of Rs. 5,09,010/-. The case was selected for limited scrutiny with the sole issue being verification of claim of deduction under section 54 of the Act in relation to capital gains declared in the return. The notice under section 143(2) was issued on 28.09.2019, followed by notice under section 142(1). In the course of assessment proceedings, the assessee submitted that he had sold a residential flat located at B- 31, 3rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the stamp duty of Rs. 48,000/- was the value of the stamp paper used for the purchase deed, and sufficient evidence had been furnished to substantiate the same. With respect to the other expenses of Rs. 1,72,675/- and improvement cost of Rs. 1,00,000/-, it was submitted that supporting documents had been filed and, if required, further documentary evidence would be furnished. The assessee also submitted that a detailed reply dated 17.02.2021 had been filed online (Acknowledgement No. 17022114188174), which was not considered by the AO. 5. The CIT(A), however, rejected the contentions of the assessee, holding that no new or conclusive evidence was placed on record to substantiate the disallowed claims. He upheld the disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds stamp duty of Rs. 48,000/-, other incidental expenses of Rs. 1,72,675/-, and cost of improvement of Rs. 1,00,000/- were not on account of any finding of falsity or contradiction in the assessee's claims, but merely on the ground that the evidence furnished was not sufficient in the opinion of the Assessing Officer. The AR contended that the same approach was followed by the learned CIT(A) who summarily affirmed the disallowances without independently appreciating the evidentiary value of the material on record. 8. The AR emphasized that the assessee had duly furnished relevant documentary evidence before both the Assessing Officer and the CIT(A), including the sale deed, cost records, and submission confirming the cost of improvement. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meant to grant additional opportunity to the lower authorities in absence of any demonstrable deficiency in the assessee's explanation. The AR submitted that the ratio of the aforesaid judgment squarely applies to the present case, where the assessee has produced all possible documentation in support of his claim and has cooperated with the assessment and appellate proceedings. Therefore, it was prayed that the matter be decided on merits, in favour of the assessee, in light of the material already on record. 10. At this stage, when the Bench specifically queried the AR as to whether the assessee would be in a position to furnish any further supporting documents to substantiate the payment in respect of vouchers already placed on record at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of hearing, the AR pointed out two vouchers forming part of the paper book: i. A voucher dated 28.06.2001 confirming receipt of Rs. 1,70,000/- in cash towards interior work; (paper book page No. 56) ii. A voucher dated 22.07.2005 showing receipt of Rs. 1,04,000/- in cash for civil improvement, reasonably rounded off by the assessee to Rs. 1,00,000/-.(paper book page No. 57) 14. These vouchers are specific, dated, and signed acknowledgments of cash payments made by the assessee for works executed in the property. The names of the assessee and property location (Virat Complex, Varanasi) are clearly mentioned. More importantly, the phrase "received in cash" (Nagad) is expressly stated. While these are not formal invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 54 is to be allowed on the actual investment made in a residential house, including registration and stamp duty charges, the stamp duty of Rs. 88,200/- forms a valid part of such investment and must be included while quantifying the exemption allowable under section 54. We have also considered the reliance placed by the AR on the judgment of the Hon'ble Gujarat High Court in Rajesh Babubhai Damania v. ITO [(2002) 122 Taxman 614 / 251 ITR 541]. While that case involved loan confirmations and production of creditors, the principle that once the assessee discharges the initial burden of proof, the claim should not be rejected merely on suspicion (particularly when not doubted by the lower authorities), holds true in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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