Disallowance of Construction Cost for Lack of Documentary Evidence: ITAT Restricts Addition to Rs. 10 Lakh and Deletes Cost of Improvement

The ITAT restricted the disallowance of construction costs to Rs 10 lakh and deleted the addition for cost of improvement, citing a lack of documentary evidence for the full disallowance. While acknowledging some shortfall in proof, the tribunal found the Assessing Officer's wholesale disallowance to be excessive. It ruled that only a reasonable portion, where evidence was clearly lacking, should be disallowed. This decision emphasizes a balanced approach in tax assessments, preventing arbitrary and disproportionate additions when minor documentation discrepancies exist. It ensures that disallowances are commensurate with the actual evidentiary gaps, providing partial relief to the assessee.