ANNAMMA RAJIVE,KOLLAM V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CENTRAL, KOLLAM

ITA 778/COCH/2023

AI Insights

The case involves Annamma Rajive, a partner in the firm Rajive & Co., who appealed against the order of the Commissioner of Income-tax (Appeals) which sustained the addition of Rs.4,20,815 pertaining to the cost of improvements of a capital asset claimed under short term capital gain (STCG). The original assessment was reopened under Section 153A following a search, but the assessee contended that no incriminating material was found to justify the additions made. The Tribunal referenced the Supreme Court's decision in Pr.CIT v. Abhisar Buildwell P.Ltd., emphasizing that completed assessments cannot be reopened without incriminating material.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31315 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Other Referred Cases: Pr.CIT v. Abhisar Buildwell P.Ltd. (2023) SSC Online 481
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Assessee Lawyers: SURENDRANATH RAO
• Keywords: Capital asset; Cost of acquisition; Block assessment
• Section: 132; 153A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member & Shri Prakash Chand Yadav, Judicial Member ITA No.778/Coch/2023 : Asst.Year 2013-2014 Annamma Rajive Chungath House Microwave Station Road Kadappakkad, Kollam – 691 008. PAN : ACOPR0082P. v. The Assistant Commissioner of Income-tax, Central Circle, Kollam. (Appellant) (Respondent) Appellant by :Sri.Surendranath Rao, CA Respondent by : Sri.Sanjit Kumar Das, CIT-DR Date of Hearing : 21.01.2025 Date of Pronouncement : 19.02.2025 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. 2. 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. ITA No.778/Coch/2023. Annamma Rajive. 2 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. 3. 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. 4. 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. 5. The learned Departmental Representative relied upon the orders of the authorities below. ITA No.778/Coch/2023. Annamma Rajive. 3 6. 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. ITA No.778/Coch/2023. Annamma Rajive. 4 7. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 19th day of February, 2025. Sd/- (Inturi Rama Rao) Sd/- (Prakash Chand Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 19th February, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "