The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that appellant failed to substantiate source of claim of investment in the said property for the purpose of Section 54F of the Income Tax Act and hence upheld the addition of Rs. 15,03,000/- made by the Assessing Officer (AO).
The assessee Mr. Shekhar Bharti is a salaried employee. The assessee had purchased a residential house in Financial Year(F.Y). 2002-03 on 16-08-2002, and claims that the said house was in a very poor condition and after getting the sale deed registered assessee got the house repaired & renovated, for this work assessee spent total amount of Rs. 1,69,000/- during the F.Y. 2002-03.
That assessee further got the said house constructed in F.Y. 2004-05 and spent Rs. 5,40,000/- for this work. The assessee claims that the source of the investment made in construction of the said house was from the past savings of the assessee & through his retirement benefits as assessee retired from Maruti Udyog Ltd. That thereafter assessee again made construction & got the house repaired & renovated in F.Y. 2006-07 and spent Rs. 14,33,950.00 during the F.Y. 2006-07 and for this assessee took loan of Rs. 12,00,000/- for the said purpose from Centurion Bank of Punjab.
The assessee sold his residential house in F.Y. 2011-12 for Rs. 1,19,00,000/-. Assessee filed his Income Tax Return for the F.Y. 2011-12 (i.e. A.Y. 2012-13) declaring total taxable income of Rs. 3,06,760/- and disclosed capital gains on sale of this house in his Income Tax Return & claimed exemption under Section 54 of the Income Tax Act, 1961.
The case was selected for scrutiny where the AO examined the availability of funds and being dissatisfied of the evidence filed had disallowed the addition of the construction costs and further disallowed the investment of the sale proceeds to recompute the disallowance.
The assessee challenged the disallowance of claim of exemption under Section 54F of the Income Tax before the Commissioner of Income Tax (Appeals) [CIT(A)], which upheld the addition made on account of undisclosed investment.
Further aggrieved the assessee filed an appeal before the Tribunal.
The Authorised Representative of the assessee submitted that the AO has denied the exemption claimed under Section 54F of the Income Tax Act where the amount of 59.81 lakhs and 25 lakhs were reinvested in the stipulated time period. It was submitted that the AO added Rs. 15,03,000 to the assessee’s income ignoring that the amount Rs.4,35,000/- was contributed by the assessee’s wife and Rs. 8,25,000/from his mother and rest was from the assessee’s past savings.
The Departmental Representative (DR) relied the orders of Tax authorities below.
The Bench comprising of N. K. Billaiya, Accountant Member and Anubhav Sharma, Judicial Member held that addition of Rs. 15,03,000/-, there are no evidences except self serving affidavits of family members. The CIT(A) has rightly observed that AO has logically related the investment and availability of funds with the appellant, while holding that appellant failed to substantiate source of claim of investment in the said property for the purpose of Section 54F of the Income Tax Act.
Hence the appeal of the assessee was dismissed on this ground.
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