ITAT Quashes Expense Disallowance: AO Must Verify Cost of Improvement with Notices, Not Guesswork

Harshadkumar Hargovandas Patel Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad remands capital gains additions – AO must refer FMV to DVO verify expenses instead of making additions on guesswork

Both appeals concerned capital gains on sale of land. The Tribunal found serious flaws in the approach of both AO & CIT(A) and remanded all issues back for fresh adjudication with proper verification.

Issue 1 – Long-Term Capital Gain (FMV as on 01.04.1981)

The assessee adopted FMV of ₹72.84 lakh (₹250/sq.m) based on a Registered Valuer’s rep

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