Merely Making Entries In Books Is Not Sufficient To Discharge Initial Burden Of Proof Regarding Claim Of Cost Of Improvement Of Asset: Chandigarh ITAT
Pankaj Bajpai
3 May 2024 1:45 PM GMT
Finding that except for filing copies of so-called invoices of the contractor through whom the work was done, which were also deficient in several respects, no other evidence was filed by the assessee, the Chandigarh ITAT held that the assessee had failed to discharge the initial burden of proof rested on him to substantiate his claim of having incurred expenditure on improvement of...
Finding that except for filing copies of so-called invoices of the contractor through whom the work was done, which were also deficient in several respects, no other evidence was filed by the assessee, the Chandigarh ITAT held that the assessee had failed to discharge the initial burden of proof rested on him to substantiate his claim of having incurred expenditure on improvement of the property.
The Bench of Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member) observed that “merely making entries in the books of accounts and producing bills which are deficient in providing basic information regarding the transaction, is not sufficient for discharge of initial burden of proof on the assessee regarding its claim of cost of improvement”. (Para 8)
As per the brief facts of the case, the AO noted that the assessee while returning the income from capital gains of Rs.2,16,45,122/-, had claimed an amount of Rs.9 lacs towards cost of improvement of the property sold. The AO asked the assessee to substantiate its claim of the said expenditure with evidence. The assessee produced vouchers, which the AO stated were self-made. He further held that no evidence of improvement or tax deduction at source on the payment made was provided by the assessee. Accordingly, he disallowed the deduction claimed by the assessee of the cost of improvement while calculating the capital gains earned.
On appeal, the CIT(A) held that considering the fact that it was the assessee who had claimed an expenditure of Rs.9 lacs on the improvement of the building, the onus was on him to prove the same and also considering the fact that the bills did not bear any revenue stamp and gave no description of the work done and neither was it clear that they were bills or cash receipts, held that the assessee had failed to discharge the onus. He, therefore, upheld the disallowance/addition made by the AO.
The Bench found that there was no mention of the nature of work done for which the invoices were raised, the address on the same was also incomplete since letters issued by the department on the said address were returned back by the postal department with the comment “incomplete address”.
Also, the Bench stated that no evidence regarding source of cash payment and payment so claimed to be made to the contractor was filed by the assessee.
The CIT(A) has mentioned that it was not clear whether the bills raised served as receipts also and even if they did, they did not bear any Revenue stamp to evidence receipt of money by the contractor, added the Bench.
Further, the Bench noted that the inquiry by the department at the address of the contractor mentioned in the bills drew a blank since the postal authorities remarked that the address was incomplete and despite the assessee being specifically asked to give complete details/address of the contractor, no information was provided by the assessee.
The certificate furnished by the assessee, of the father of the contractor stating that he had been engaged in the activity of contract and had left for England in 2011, since not duly verified, serves no purpose, added the Bench.
The ITAT therefore dismissed the assessee's appeal.
Counsel for Appellant/ Assessee: Tej Mohan Singh
Counsel for Respondent/ Revenue: Amanpreet Kaur
Case Title: Shri Charanjit Singh verses ACIT
Case Number: ITA NO. 337/Chd/ 2019
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