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Facts
The assessee, an individual partner in a jewellery firm, filed her return of income for AY 2013-14. Following a notice under Section 153A, the Assessing Officer made additions for short-term capital gain and agricultural income. The CIT(A) sustained the STCG addition related to the disallowance of cost of improvements, leading the assessee to appeal to the ITAT.
Held
The Tribunal, relying on the Supreme Court's judgment in Pr.CIT v. Abhisar Buildwell P.Ltd., held that no addition under Section 153A is warranted for completed assessments if no incriminating material is found during the search. Since the STCG was declared in the original return and no incriminating material was unearthed during the search, the Assessing Officer lacked jurisdiction to make the addition.
Key Issues
Whether an assessment made under Section 153A of the Income Tax Act for a completed assessment year is valid when no incriminating material is discovered during a search operation.
Sections Cited
139(1), 153A, 132, 132A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
Asst.Year 2013-2014 Annamma Rajive The Assistant Commissioner Chungath House of Income-tax, v. Microwave Station Road Central Circle, Kollam. Kadappakkad, Kollam – 691 008. PAN : ACOPR0082P. (Appellant) (Respondent) Appellant by :Sri.Surendranath Rao, CA Respondent by : Sri.Sanjit Kumar Das, CIT-DR Date of Pronouncement : 19.02.2025 Date of Hearing : 21.01.2025 O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the learned Commissioner of Income-tax (Appeals) dated 14thSeptember, 2023 having DIN and Order No. ITBA/APL/S/250/2023-24/1056062402(1) and it relates to the assessment year 2013-2014.
The brief facts of the case as coming out from the orders of the authorities below are like this. The assessee is an individual and is a partner in the firm Rajive & Co., Karunagapally, carrying on the business of jewelers. For the impugned assessment year, the assessee has filed her return of income on 29.09.2013 u/s.139(1) of the Act, declaring total income of Rs.6,00,790 and agricultural income of Rs.38,500.
. Annamma Rajive. Consequent to the notice u/s.153A, the assessee filed a fresh return of income on 28.12.2019, returning the same income as per original return. The Assessing Officer completed the assessment by making addition on short term capital gain on account of disallowance of cost of acquisition of capital asset at Rs.4,20,815 and agricultural income returned added as income from other sources at Rs.38,500, totaling to Rs.4,59,315.
Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the ld.CIT(A) and contended that in the absence of any incriminating material the Assessing Officer would not have made any addition u/s.153A of the Income-tax Act. Theld.CIT(A) partly allowed the appeal of the assessee. However, sustained the addition of Rs.4,20,815 pertaining to the cost of improvements of that asset on which assessee claimed STCG.
Aggrieved with the order of the ld.CIT(A), the assessee has come up in appeal before us and contended that in the absence of any incriminating material, no addition is warranted in the present case. The counsel for the assessee relied upon the judgment of the Hon’ble Supreme Court in the case of Pr.CIT v. Abhisar Buildwell P.Ltd. (2023) SSC Online 481.
The learned Departmental Representative relied upon the orders of the authorities below.
. Annamma Rajive.
We have heard the rival submissions and perused the material available on record. Admittedly in this case no incriminating material related to the addition of short term capital gain has been found during the course of search. We observe that the assessee has duly reflected this short term capital gain by filing original return u/s.139(1) on 29thSeptember, 2013. It is settled position of law that the assessment of completed years, which were not pending on the date of search cannot be reopened u/s.153A, without there being any incriminating material unearthed during the course of search. The relevant observations of the Hon’ble Supreme Court in the case of Abhisar (Supra), Para-21 are as under:-
If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate.
6.1 In view of the above, we are of the opinion that the Assessing Officer could not have assumed the jurisdiction u/s.153A de horse any incriminating material during the impugned year. Therefore, we quash the assessment order and allow the appeal of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 19th day of February, 2025.