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Facts
A search and seizure operation was conducted under section 132 of the Income Tax Act on the appellant, who is the Managing Trustee of a Trust running a Medical College. Incriminating materials were found, indicating the collection of capitation fees. Subsequently, a notice under section 153C was issued, and the appellant admitted additional income.
Held
The Assessing Officer (AO) accepted the additional income and completed the assessment. The CIT(A) allowed the appeal, relying on a Supreme Court decision that no addition can be made without incriminating material. However, the Tribunal noted that the appellant admitted additional income in response to the 153C notice, making the other limb of the Supreme Court decision applicable.
Key Issues
Whether additions can be made in the absence of incriminating material when the assessee has admitted additional income in response to a notice under section 153C.
Sections Cited
132, 153C, 143(3), 147, 148, 132A
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against the orders of the Commissioner of Income Tax (Appeals)-3, Kochi [CIT(A)] dated 20.06.2025 for Assessment Years (AY) 2012-13, 2013-14, 2015-16 to 2017-18.
Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.
Brief facts of the case are that the appellant is an individual. He is the Managing Trustee of M/s. Safe Development ALMS Trust running a Medical College at Chittur, Palakkad. A search and seizure operations u/s. 132 of the Income Tax Act, 1961 (the Act) were conducted in the residential premises of the appellant. During the course of search and seizure operations, certain incriminating materials were found indicating that the appellant was collecting capitation fees from students who are seeking admission to the educational institutions run by the Trust. The appellant was trying to exchange the old notes. During the course of search operations, certain demonetized currencies were found and seized. Subsequently, the AO had issued notice u/s. 153C of the Act calling upon the appellant to file the return of income. In response to the notice u/s. 153C, the appellant admitted additional income as detailed below: -
AY Date of Income Date of Date of Income filing Returned Notice u/s. filing return Returned original (In Rs.) 153C/142(1) in response (In Rs.) return of to notice income u/s. 153C 2011-12 - - 31.05.2018 17.11.2018 10836 2012-13 31.03.2017 28300000 31.05.2018 17.11.2018 28300000 2013-14 31.03.2017 19000000 31.05.2018 17.11.2018 19000000 2014-15 - - 31.05.2018 17.11.2018 1104 2015-16 31.03.2017 55133330 31.05.2018 17.11.2018 55133330
The AO accepted the additional income shown in the return of income in response to the notice u/s. 153C and completed the assessment vide order dated 28.12.2018 passed u/s. 143(3) r.w.s. 153C of the Act. However, the appellant had filed an appeal before the CIT(A), who vide the impugned order allowed the appeal following the decision of the Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 by holding that in the absence of incriminating material no addition can be made.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
We find that the present appeals filed by the appellant are infructuous as the CIT(A) had allowed the appeals filed by the appellant, and the appellant is not aggrieved by the order passed by the CIT(A).
In the result, appeals to 587/Coch/2025 stand dismissed.
AY- 2017-18 9. The CIT(A) had deleted the addition based on the decision of the Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 by holding that in to 587 & 630/Coch/2025 P.P. Unneenkutty the absence of incriminating material no addition can be made. However, it is a matter of record that the appellant, in response to notice u/s. 153C, admitted additional income, which means that the other limb of the decision of Abhisar Buildwell Pvt. Ltd. (supra) is applicable, wherein it is held that once an incriminating material is found or additional income is disclosed by the appellant in response to notice u/s. 153C, the AO is empowered to make any other addition. The relevant part of the judgement is extracted below: - “14. In view of the above and for the reasons stated above, it is concluded as under: that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; all pending assessments/reassessments shall stand abated; in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.”
Therefore, in our view the CIT(A) had failed to apply the correct decision of law laid down in Abhisar Buildwell Pvt. Ltd. to 587 & 630/Coch/2025 P.P. Unneenkutty (supra). Accordingly, the matter is restored to the file of the CIT(A) to decide the appeal on merits on the addition made by the AO. Appeal partly allowed for statistical purposes.
Order pronounced in the open court on 29th October, 2025.