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IN THE HIGH COURT OF KERALA AT ERNAKULAM
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR, THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
M/s.Sunny Jacob Jewellers Gold Hyper Market – Appellant
Versus
The Commissioner Of Income Tax - Respondent
I.T.A.NOS.60, 30, 33, 34, 36, 37, 38, 39, 40, 41, 42, 46, 52, 53 & 54/2019
Decided on : 19-06-2024
INCOME TAX - ASSESSMENT UNDER I.T. ACT - Sections 132, 153A, 143(3) - The court discussed the provisions of Sections 132 and 153A of the Income Tax Act, emphasizing that the Assessing Officer can only reassess income for completed assessments if incriminating material is found during a search. The court highlighted that the jurisdiction to reassess is limited to the assessment years for which such material is relevant, and if no incriminating evidence is found, the completed assessments cannot be reopened under Section 153A. This interpretation influenced the court's decision to set aside the Appellate Tribunal's orders.
Fact of the Case:
The appellants, various business units under M/s. Sunny Jacob group, were subjected to a search under Section 132 of the Income Tax Act, which led to the issuance of notices under Section 153A for multiple assessment years. The Assessing Officer used incriminating material from the search to reject the appellants' books of account and estimate their income for the years 2002-03 to 2008-09, despite the material only being relevant to the assessment year 2008-09.
Finding of the Court:
The court found that the Appellate Tribunal erred in allowing the reassessment of income for the years 2002-03 to 2007-08 based on material that was only relevant to the assessment year 2008-09. The court emphasized that without incriminating material for the earlier years, the assessments could not be reopened under Section 153A.
Issues: The key issues included whether the Appellate Tribunal was justified in estimating undisclosed income for the assessment years 2002-03 to 2007-08 without incriminating evidence, and whether the assessments for these years could be reopened under Section 153A.
Ratio Decidendi: The court held that the Assessing Officer's jurisdiction to reassess under Section 153A is contingent upon the existence of incriminating material related to the specific assessment years in question. If no such material is found, completed assessments cannot be reopened under this section.
Final Decision: The court set aside the orders of the Appellate Tribunal, ruling in favor of the appellants and against the Revenue, concluding that the assessments for the years 2002-03 to 2007-08 could not be reopened due to lack of incriminating material.
JUDGMENT :
Dr. A.K. Jayasankaran Nambiar, J.
As all these Income Tax Appeals involve a common issue, they are taken up together for consideration and disposed by this common judgment. For the sake of convenience, the details of the various appeals with reference to the assessment year concerned, as also co-relating it to the appeals that were filed before the Tribunal and the orders passed by the Appellate Tribunal, are provided in tabular form below:-
| Sl. No. | ITA No. | Appeal before the Income Tax Appellate Tribunal | Assessment Year | Date of ITAT Order |
| 1. | I.T.A.No.38/2019 | I.T.A.No.319/C/2016 | 2007 - 08 | 10th October, 2018 |
| 2. | I.T.A.No.39/2019 | I.T.A.No.314 to 319/C/2016 | 2004 - 05 | 10th October, 2018 |
| 3. | I.T.A.No.41/2019 | I.T.A.No.314 to 319/C/2016 | 2005 - 06 | 10th October, 2018 |
| 4. | I.T.A.No.40/2019 | I.T.A.No.314 to 319/C/2016 | 2003 - 04 | 10th October, 2018 |
| 5. | I.T.A.No.37/2019 | I.T.A.No.314 to 319/C/2016 | 2006 - 07 | 10th October, 2018 |
| 6. | I.T.A.No.34/2019 | I.T.A.No.314 to 319/C/2016 | 2002 - 03 | 10th October, 2018 |
| 7. | I.T.A.No.54/2019 | I.T.A.No.325/C/2016 & 478 to 481/C/2018 | 2006 - 07 | 26th November, 2018 |
| 8. | I.T.A.No.53/2019 | I.T.A.No.325/C/2016 & 478 to 481/C/2018 | 2004 - 05 | 26th November, 2018 |
| 9. | I.T.A.No.52/2019 | I.T.A.No.325/C/2016 & 478 to 481/C/2018 | 2005 - 06 | 26th November, 2018 |
| 10. | I.T.A.No.60/2019 | I.T.A.No.325/C/2016 & 478 to 481/C/2018 | 2007 - 08 | 26th November, 2018 |
| 11. | I.T.A.No.46/2019 | I.T.A.No.325/C/2016 & 478 to 481/C/2018 | 2003 - 04 | 26th November, 2018 |
| 12. | I.T.A.No.36/2019 | I.T.A.No.326/C/2016 | 2007 - 08 | 5th February, 2019 |
| 13. | I.T.A.No.33/2019 | I.T.A.No.477/C/2016 | 2006 - 07 | 5th February, 2019 |
| 14. | I.T.A.No.30/2019 | I.T.A.No.476/C/2016 | 2005 - 06 | 5th February, 2019 |
| 15. | I.T.A.No.42/2019 | I.T.A.No.322/C/2016 | 2006 - 07 | 10th October, 2018 |
2. The appellants before us are various business units that come under the umbrella of M/s. Sunny Jacob group and comprises of partnership firms, in which, Sri. Sunny Jacob and his wife Smt. Magi Sunny are partners. One of the firms is a proprietorship concern in which Smt. Magi Sunny is the sole proprietrix. All the business units under the group are engaged in the business of gold ornaments, and they are also assessees under the Income Tax Act [hereinafter referred to as the “I.T. Act”].
3. Pursuant to a search conducted under Section 132 of the I.T. Act, at the various business premises of the units coming under the umbrella of M/s. Sunny Jacob group, on 21.08.2007, notices were issued to the appellants/assessees herein under Section 153A of the I.T. Act. Under the said provision, an Assessing Officer is conferred with the jurisdiction to initiate fresh assessment proceedings in relation to an assessee, in relation of whom incriminating material has been unearthed in a search initiated under Section 132 of the I.T. Act or pursuant to the requisition of any books of account, documents or assets in terms of Section 132A of the I.T. Act. In the assessment proceedings that must follow, the Assessing Officer can, through a notice issued under Section 153A of the I.T. Act, require an assessee to furnish, within such period as may be specified in the notice, a return of income in respect of each assessment year falling within six assessment years, and the said returns, when filed, would be treated as though they were returns furnished under Section 139 of the I.T. Act for the respective assessment years. The Assessing Officer can thereafter proceed to assess or reassess the total income of six assessment years immediately preceding the
The court established that under Section 153A of the Income Tax Act, completed assessments can only be reopened if incriminating material related to those specific years is found during a search; oth....
Scope of assessment – No addition can be made in respect of completed assessments in absence of any incriminating material.
Unabated assessments under section 153A require incriminating material discovered during a search, or assessments must remain undisturbed without such material.
Reopening under section 147 invalid if based on material from third-party search; section 153C mandatory due to its non-obstante clause overriding general provisions.
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