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Facts
The assessee's appeal is against an order that directed the Assessing Officer to verify the cost of improvement. The assessee claimed this cost in a previous AY (2021-22) and it was included in the return prepared using tax software, though not reflected correctly in the downloaded ITBA portal version.
Held
The Tribunal held that the first appellate authority exceeded its powers under Section 251(1A) by remanding the issue. The Tribunal found that the cost of improvement was sufficiently detailed in the assessee's return and the adjustment by CPC was not justified.
Key Issues
Whether the first appellate authority had the power to remand the matter under Section 251(1A) when the cost of improvement was adequately disclosed by the assessee.
Sections Cited
143(1), 251(1A), 48
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
Year: 2023-24 Tiruchengode Sakthi Spinners Private Vs. The Income Tax Officer, Limited, 67/3B, Melkallupalayam B.O., Ward 1, Namakkal 637 403. Tiruchengode. [PAN:AAACT7666A] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri S. Sridhar, Advocate (Erode) ��थ� की ओर से/Respondent by : Ms. M. Subashri, Addl. CIT (Virtual) सुनवाई की तारीख/ Date of hearing : 02.12.2025 घोषणा की तारीख /Date of Pronouncement : 02.12.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 30.06.2025 passed by the Addl/JCIT(A)-1, Noida, for the assessment year 2023-24.
Besides challenging the order of the first appellate authority on merits, the assessee vide ground No. 5 challenged legal issue that the first appellate authority has exceeded the powers as contemplated in section 251(1A) of the Income Tax Act, 1961 [“Act” in short].
We note that against the intimation order under section 143(1) of the Act, the assessee preferred an appeal before the first appellate authority and the Addl/JCIT(A)-1, Noida remanded the matter to the file of the Jurisdictional Assessing Officer with a direction to take cognisance of the submissions made by the assessee and verify its claims with regard to the claim of cost of improvement.
The ld. AR Shri S. Sridhar, Advocate drew our attention to the provisions of section 251(1A) of the Act and submits that the Addl/JCIT(A) – 1, Noida has no power to remand the matter to the file of the Jurisdictional Assessing Officer and prayed to quash the appellate order passed by the Addl/JCIT(A)-1, Noida. On examination of the provisions of section 251 of the Act, we note that clause (a) to sub-section (1) of section 251 of the Act provides power of remand to the ld. CIT(A) vide Proviso brought into the Act w.e.f. 01.10.2024. However, sub-section (1A) to section 251 of the Act brought into the Act w.e.f. 01.04.2023, wherein, the Addl./JCIT(A) have given powers under clause (a), (b) & (c), but, however, no such Proviso provided to sub-section (1A) of section 251 of the Act.
Be that as it may, on perusal of the para 6.3 of the impugned order, it is noted that the Addl/JCIT(A) observed that the assessee omitted to have mentioned the cost of improvement in the relevant schedule and therefore, directed the Assessing Officer to verify the same and to allow the same, if it is allowable deduction. Before us, the ld. AR submits that the cost of improvement was not claimed in the year under consideration, but, however, it was incurred in earlier year and the same was mentioned in the return of income prepared in accordance with compute tax software, but, however, it was not reflecting in the return of income while downloading through ITBA portal. He drew our attention to return of income prepared in accordance with compute tax software at page Nos. 105 to 173, wherein, referring to page 137, he submits that the assessee clearly mentioned under the Col. Long term capital gains, ii(b) about total cost of improvement with indexation with reference to cost of improvement and year of improvement vide sub-paras (a), (b) & (c). The ld. AR argued that the order of the Addl./JCIT(A) in directing the Assessing Officer to verify the same is not maintainable with reference to quantum of deduction but is maintainable only with reference to verification of year of improvement.
The ld. DR referred page 57 of the paper book and submits that the assessee omitted to mention the cost of improvement, year of improvement and cost of improvement with indexation in the relevant columns, which clearly shows that the adjustment made by the CPC under section 143(1) of the Act is correct. She relied on the order of the Addl/JCIT(A).
Heard both the parties and perused the material available on record. It is noted that the assessee claimed index cost of improvement in respect of land development expense incurred in the immediately preceding year i.e., with reference to AY 2021-22, which is clear from page 46 of the paper book “A” and page 137 at paper book “B”. The assessee claimed deduction under section 48 of the Act with reference to cost of improvement, year of improvement and cost of improvement with indexation with reference to 2021-22 in the return filled through the return preparing software as evidenced in paper book “B” page 137. Therefore, as observed by the Addl/JCIT(A) with reference to adjustment made by the CPC regarding mismatches in the relevant column regarding cost of improvement in the Schedule SI does not arise at all, thus, the findings of the Addl./JCIT(A) is not justified in directing the Assessing Officer to verify the same vide para 6.3 & 6.4 of the impugned order. Thus, the order passed by the Addl/JCIT(A)-1, Noida is quashed in remanding the issue of denial of cost of improvement made under section 143(1) of the Act.
Consequently, the addition made by the CPC by denying the cost of improvement stands deleted.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 02nd December, 2025 at Chennai.