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2019 (3) TMI 568 - AT - Income TaxAssessment u/s 153A - Clubbing of income of minor son in the hands of the assessee as Short Term Capital Gain - whether case of non-abated assessment? - HELD THAT - It is an undisputed fact that no incriminating material was found during the course of search that would have resulted in any addition in income returned by the assessee. It is also an uncontroverted fact that assessment consequent to the return of income filed u/s.139 of the Act for the assessment year 2006- 07 was completed. Thus, on the date of search, no assessment was pending which could have abated. In other words, it is a case of non-abated assessment. It is a well settled law that no addition can be made in respect of assessments which have become final if no incriminating material is found during search. Addition of interest on Public Provident Fund (PPF) accounts - AO made addition on the ground that the assessee is having multiple PPF accounts and whereas, the assessee can claim benefit of deduction in respect of only one such PPF account - HELD THAT - The addition has been made by the Assessing Officer merely on change of opinion. The return of the assessee filed u/s.139 of the Act was subject to scrutiny assessment. The assessment order u/s.143(3) of the Act was passed on 29.12.2009 i.e. much prior to the date of search. Thus, it is a case of nonabated assessment. No incriminating material, whatsoever, was found during search and seizure action that could have resulted in addition during the impugned assessment year. Therefore, following the detailed reasons given while adjudicating appeal of Revenue assessment year 2006-07, the present appeal of the Revenue for assessment year 2007-08 is dismissed being devoid of any merit. Addition of investment in plot of land - undisclosed investment - HELD THAT - We find that the plot in question has been disclosed in the list of immovable properties as on 31.03.2001. Since the purchase of asset has already been reflected in the Balance Sheet for the financial year ending in which the asset was purchased, mere seizure of some documents pertaining to the said property would not make the documents incriminating. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the addition. Accordingly, the impugned order is upheld and the appeal of Revenue for the assessment year 2008-09 is dismissed being devoid of any merit. Change of head of income - assessee disclosed gain from trading in shares under the head capital gains but AO changed the head of income to Business Income - Held that - It is an undisputed fact that there was no pending assessment and no incriminating material was found during search. Thus, it is a case of non-abated assessment. The Assessing Officer cannot make addition by merely changing head of income in assessment proceeding u/s.153A of the Act, without there being any incriminating material in a case of closed assessment. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the addition. - Decided against revneue
Issues Involved
1. Treatment of income from sale of shares as 'business income' versus 'capital gains'. 2. Treatment of interest income from multiple Public Provident Fund (PPF) accounts. 3. Legality of additions made by the Assessing Officer in the absence of incriminating material during search and seizure. 4. Treatment of disclosed income in revised return as Long Term Capital Gain (LTCG). 5. Treatment of investment in plot of land as unexplained investment. Issue-wise Detailed Analysis 1. Treatment of Income from Sale of Shares Assessment Year 2006-07: - Revenue's Appeal: The Revenue challenged the Commissioner of Income Tax (Appeals) [CIT(A)]'s decision to treat the income from the sale of shares as 'business income' while considering the minor son's income as Short Term Capital Gain (STCG). The Tribunal found no incriminating material was discovered during the search, making it a case of non-abated assessment. Citing precedents like CIT Vs. Murli Agro Products Ltd., the Tribunal dismissed the Revenue's appeal. - Assessee's Appeal: The assessee contested the CIT(A)'s decision to treat STCG on the sale of shares as business income. The Tribunal ruled that no additions or changes in the head of income could be made without incriminating material in non-abated assessments. The appeal was allowed. Assessment Year 2007-08: - Revenue's Appeal: The Revenue's appeal on treating the income from PPF accounts was dismissed as it was a non-abated assessment with no incriminating material found. - Assessee's Appeal: The assessee contested the treatment of STCG and Long Term Capital Gain (LTCG) on the sale of shares as business income. The Tribunal allowed the appeal, reiterating that no changes could be made without incriminating material. Assessment Year 2008-09: - Revenue's Appeal: The Revenue challenged the CIT(A)'s decision to treat gains from trading in shares as LTCG instead of business income. The Tribunal dismissed the appeal, citing the absence of incriminating material and the non-abated nature of the assessment. Assessment Year 2009-10: - Revenue's Appeal: The Revenue's appeal was dismissed as the Tribunal found no incriminating material and ruled that the change in the head of income was not permissible in non-abated assessments. 2. Treatment of Interest Income from Multiple PPF Accounts Assessment Year 2006-07 and 2007-08: - The Revenue's contention that the assessee had multiple PPF accounts and the interest should be added was dismissed. The Tribunal noted that no incriminating material was found, and the assessment was non-abated. Assessment Year 2008-09: - The Tribunal dismissed the Revenue's appeal regarding the addition of interest from multiple PPF accounts, reiterating the absence of incriminating material and the non-abated nature of the assessment. 3. Legality of Additions in Absence of Incriminating Material All Assessment Years: - The Tribunal consistently ruled that no additions could be made in non-abated assessments without incriminating material. This was a key factor in dismissing the Revenue's appeals and allowing the assessee's appeals. 4. Treatment of Disclosed Income in Revised Return as LTCG Assessment Year 2006-07: - The Revenue's challenge to the CIT(A)'s treatment of disclosed income in the revised return as LTCG was dismissed. The Tribunal found no merit in the grounds raised by the Revenue. 5. Treatment of Investment in Plot of Land as Unexplained Investment Assessment Year 2008-09: - The Revenue's appeal against the deletion of addition for investment in a plot of land was dismissed. The Tribunal found that the land was purchased in 2001 and recorded in the books of account, with no evidence of unexplained investment during the relevant assessment year. Conclusion - Revenue's Appeals: All dismissed due to the absence of incriminating material and the non-abated nature of the assessments. - Assessee's Appeals: Allowed, with the Tribunal ruling that no additions or changes in the head of income could be made without incriminating material in non-abated assessments. Order Pronounced - The Tribunal pronounced the order on February 28, 2019, dismissing the Revenue's appeals and allowing the assessee's appeals.
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