Failure to Produce relevant Evidence: ITAT confirms Addition of Capital Gain by Disallowing Cost of Purchase and Cost of Improvement [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi confirmed the addition of capital gain by disallowing cost of purchase and cost of improvement on failure to produce relevant evidence.

The issue relates on the facts and circumstances of the case, wherein the Commissioner of Income Tax (Appeals) has erred in law in upholding the disallowance of the claim of cost of construction amounting to Rs.3,63,681/- (being 30% of the total cost of construction) while computing the capital gain and that the Commissioner of Income Tax (Appeals) has erred in law in upholding the disallowance of the claim of cost of improvement amounting to Rs.3,03,762/- (being 30% of the total cost of construction) while computing the capital gain.

The assessee, Janardhan Gupta is an individual. In the assessment order, the Assessing Officer (AO) made addition on account of capital gain by disallowing cost of purchase and cost of improvement and ordered that “No other documentary evidence has been produced during the assessment proceedings for which assessee has stated that dacoity took place at the residence of assessee and relevant file relating to the above property have been stolen. In absence of any documentary evidences, the claim of cost of construction and cost of improvement cannot be allowed to the assessee.”

The CIT(A), granted part relief to the assessee.

The Bench consisting of Shamim Yahya, Accountant Member and Anubhav Sharma, Judicial Member observed that “We note that several notices have been sent to the assessee but they have returned unserved. None has appeared on behalf of the assessee. Hence, we proceed to adjudicate the issue by hearing the Departmental Representative and perusing the records. We find that as emanating from the facts narrated above, the revenue authorities have disallowed the assessee’s claim of cost of purchase and cost of improvement de hors any corroborative evidences.”

“In our considered opinion, there is no infirmity in the orders of the authorities below as onus is upon the assessee to cogently prove the cost of acquisition and cost of improvement. Since, the assessee has miserably failed in this case to produce necessary evidence; therefore, the authorities below are correct in making the disallowance.”

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