Vasagar Vs ITO (ITAT Chennai)
Income Tax Appellate Tribunal (ITAT), Chennai Bench, has granted a taxpayer a fresh opportunity to substantiate a claim of Rs. 18,20,472 towards the cost of improvement, which was disallowed by the Assessing Officer (AO) and subsequently upheld by the Commissioner of Income Tax (Appeals) [CIT(A)] on an ex-parte basis. The ITAT’s decision, pronounced on April 30, 2025, sets aside the orders of both the AO and the CIT(A) and remits the matter back to the AO for a fresh assessment.
The case pertains to the Assessment Year (AY) 2018-19, involving an appeal filed by the assessee, Vasagar, against the order of the CIT(A), NFAC, Delhi, dated December 26, 2024. The original assessment was framed by the AO under Section 147 read with Section 144B of the Income-tax Act, 1961, on March 25, 2023.
According to the details presented, the assessee had filed a return of income declaring a total income of Rs. 5,71,430. In this original return, the assessee reported a consideration of Rs. 23 lakhs from the sale of property and claimed a deduction of Rs. 18,20,472 towards the cost of improvement while computing Long Term Capital Gains.
The Assessing Officer, in an ex-parte assessment order passed under Section 147 of the Act, disallowed the entire claim for the cost of improvement. Consequently, the sum of Rs. 18,20,472 was added back to the long-term capital gain.
