Income Tax : Orders of Income Tax Authorities Making Additions to Income of Assessee Set Aside

Income Tax : Orders of Income Tax Authorities Making Additions to Income of Assessee Set Aside 

In a recent decision, Tax Department's Order vide which AO had made addition of Rs.49,03,185/- was challenged by assessee and the Order of AO has been set aside. The issue was related to LTCG. 

Directions were issued for recomputation of fair market value by taking into account the valuation report submitted by the assessee.

Arguments of Assessee

Assessee submitted that Ld. CIT(A) partially confirmed the addition of Rs.28,64,067/- made by the Ld. AO by restricting the index cost of construction. The assessee has incurred cost of construction way back in the financial year 1997-98.

However, the Ld. CIT(A) has assumed that expenditure of Rs.5,43,228/- by taking some rate of the year 2007-08 and then reversing back to 1997-98. Ld. CIT(A) did not took into consideration effect that assessee being a lady and not engaged in any business, she is not supposed to maintain any books of accounts. Further the assessee in support of her contention has submitted the Valuation Report which the CIT(A) has arbitrarily ignored. 

Findings 

It was observed that valuer has given every detail about the type of construction which he has physically verified on that basis he has carried out the valuation and stated the basis of valuation.  Further open area development with Superior quality Marble flooring, boundary wall gate, parapet and mumti etc. the cost of construction is Rs 3,25,000/-. Ld. CIT(A)’s contention that the valuation report cannot be accepted as credible evidence was held to be against the settled law. 

Case Reference : Prem Lata Gupta v. ACIT [2025] GCtR 1657 (ITAT, Delhi)