ITAT confirms Rs. 35.83 Lakh LTCG Addition, rejects Sauda Chitthi Claim for Enhanced Acquisition Cost due to Absence in Previous Financial Records [Read Order]

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the addition of Rs. 35.83 lakh Long-Term Capital Gain to total income, rejecting Sauda Chitthi's claim for enhanced acquisition cost, as it was absent in previous financial records.

Jitendra Nathubhai Katargamwala (assessee) filed his income tax return for the Assessment Year AY 2015-2016 on 31.10.2015. The assessee revised the return of income on 31.03.2017 of Rs. 13,86,890.

The Assessing Officer ( AO ) selected the revised return for scrutiny. The AO noted that the assessee sold his immovable property with his share of consideration of Rs. 81,91,782. The assessee paid Rs. 35,07,500 of his share of consideration for purchasing the property. However, the AO found that the assessee showed a long-term capital gain of Rs. 45,75,389 instead of Rs. 81,92,792, with a difference of Rs. 35,83,472, which was suppressed by the assessee. 

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The AO issued a show cause notice to the assessee. The assessee in his reply submitted that in search Sauda Chitthi was found and it was mentioned that Rs. 26,44,250 was paid for enhanced acquisition cost. AO rejected the reply and added Rs. 35,83,472 as Long-term capital gain.

Aggrieved by the order of AO, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) confirmed the action of AO. So, the assessee filed an appeal before ITAT.

The counsel for the assessee argued that the cost of acquisition was deducted for the co-owner of the property and submitted that the assessee should be granted relief for the enhanced cost of acquisition.

On the other hand, the counsel for revenue argued that the facts of the case of the co-owner was not clear and relied on the decisions of the lower authorities. The counsel also submitted that the evidence of Sauda Chitthi was not furnished before the lower authorities so it was not verified by the authorities.

The single member bench comprising Pawan Singh ( Judicial member ) ruled that the assessee failed to prove that the amount in Sauda Chitthi was offered to tax in previous years. Therefore, the tribunal confirmed the addition made by the AO. The appeal was dismissed.

To Read the full text of the Order CLICK HERE

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