ITO Vs G. Mahesh G Shetty (ITAT Bangalore)
CIT(A) Cannot Grant 50% Relief When Assessee Claimed Only 30%-Unreasoned Relief in Construction Cost Addition Set Aside: ITAT Bangalore
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal has held that appellate relief cannot be granted on an ad hoc basis without recording proper reasons. Where the assessee had sought an aggregate reduction of 30% in the estimated cost of construction—15% for personal supervision and 15% for adopting State PWD rates instead of CPWD rates—the CIT(A) was not justified in granting relief of 50% without explaining the basis for the additional relief.
The Tribunal accordingly set aside the order and restored the matter to the CIT(A) for passing a fresh, speaking and reasoned order.
Facts of the case
The dispute related to the investment made by the assessee in the construction of a property. The total cost of construction was taken by the Assessing Officer at ₹2,57,82,000.
According to the Assessing Officer, the assessee was able to explain the source of investment only to the extent of ₹1,69,98,383. The balance amount of ₹87,83,617 was treated as an investment for which the assessee had failed to explain the source.
The Assessing Officer consequently made an addition in respect of the unexplained portion of the investment.
