Samta S. Jain Vs ACIT (ITAT Ahmedabad)
In Samta S. Jain Vs ACIT, the Ahmedabad ITAT considered an appeal against the order of the CIT(A), NFAC, for Assessment Year 2012-13 relating to disallowance of cost of improvement claimed while computing short-term capital gains from sale of land. The assessee had declared short-term capital gain from sale of land at Kheda after claiming cost of acquisition and cost of improvement. During reassessment proceedings, the Assessing Officer disallowed improvement expenses amounting to Rs. 98.63 lakh and added the same to income.
The assessee challenged the reopening proceedings as well as the disallowance on merits. The Tribunal observed that the notice under Section 148 was issued within the stipulated period and the assessee had responded by treating the original return as filed in response to the notice. Accordingly, the Tribunal dismissed the additional ground challenging reopening proceedings.
On merits, the assessee submitted that disallowance of Rs. 79.67 lakh was made only because VAT registrations of certain suppliers were later cancelled retrospectively. The assessee argued that all purchases were made during 2010-11 when the VAT numbers were active and payments were completed before cancellation dates. Ledger copies, invoices, bank statements, and copies from the commercial department regarding cancellation dates were furnished before the Assessing Officer. Payments were made through account payee cheques.
