Disallowance of Construction Cost for Lack of Documentary Evidence: ITAT Restricts Addition to Rs. 10 Lakh and Deletes Cost of Improvement [Read Order]
The tribunal condoned a 230-day delay in filing the appeal due to the assessee’s overseas residence and related difficulties
Disallowance – Documentary Evidence – ITAT – Taxscan
Disallowance – Documentary Evidence – ITAT – Taxscan
The Cochin Bench of Income Tax Appellate Tribunal ( ITAT ) restricts addition of construction cost disallowance to Rs. 10 lakh due to lack of documentary evidence and deletes the disallowance related to cost of improvement.
Joseph Puthenpurayil Augusthy, appellant-assessee, was a non-resident who filed income tax return on 31st May 2013, declaring income of Rs. 45,01,880. The case was selected for scrutiny. The Assessing Officer (AO) found that the assessee showed income from sale of flats and had claimed construction cost of Rs. 1.32 crore spread over years.
The assessee also split profits with the spouse. When asked, the assessee could not provide proof of construction cost. The AO disallowed the entire Rs. 1.3 crore and added it to income. The Commissioner of Income Tax(Appeals)[CIT(A)] upheld this addition. The assessee then appealed to the tribunal.
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The assessee counsel said the appeal was delayed by 280 days because the assessee lived abroad and faced medical emergencies and technical problems while filing online. The Departmental Representative (DR) opposed the delay request.
The two member bench comprising Prakash Chand Yadav (Judicial Member) and Inturi Rama Rao ( Accountant Member) accepted the 230-day delay and decided to hear the case. The assessee counsel asked to send the case back to the AO for fresh hearing.
The tribunal noted that the AO disallowed Rs. 1.29 crore for construction cost due to lack of proof. The CIT(A) reduced this to Rs. 20 lakh and disallowed Rs. 3.16 lakh for improvement cost. The tribunal deleted the Rs. 3.16 lakh disallowance and limited the construction cost disallowance to Rs. 10 lakh, giving partial relief to the assessee.
In short,the appeal was allowed partly.
To Read the full text of the Order CLICK HERE
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