Facts of the Case

The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal dated 15.10.2020 for Assessment Year 2007-08. Alongside, the Revenue sought condonation of an inordinate delay of 880 days in re-filing the appeal, attributing the delay to administrative backlog and the COVID-19 pandemic.

 

Issues Involved

  1. Whether the inordinate delay of 880 days in re-filing the appeal deserved to be condoned.
  2. Whether additions under Section 68 made in proceedings under Section 153A were sustainable in absence of incriminating material found during search.
  3. Whether any substantial question of law arose for consideration under Section 260A.

 

Petitioner’s (Revenue’s) Arguments

  • The delay in re-filing occurred due to a large volume of appeals filed during the COVID-19 period, which prevented timely prosecution.
  • The Assessing Officer had rightly made additions under Section 68 treating certain balances as unexplained in the assessment framed pursuant to search proceedings.

 

Respondent’s (Assessee’s) Arguments

  • The delay in re-filing was gross and unexplained, and no sufficient cause was shown to justify condonation.
  • The original assessment for AY 2007-08 had already been completed under Section 143(3).
  • No incriminating material was found during the search conducted on 16.01.2013, and therefore reassessment under Section 153A could not sustain additions.
  • The issue was squarely covered by CIT v. Kabul Chawla, subsequently affirmed by the Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd.

 

Court Order / Findings

  • The Court found that the delay of 880 days in re-filing the appeal was inordinate and that the reasons cited by the Revenue were insufficient.
  • The application seeking condonation of delay was dismissed.
  • On merits, the Court observed that the addition under Section 68 was deleted by the CIT(A) and ITAT on the ground that no incriminating material was found during search.
  • The Court noted that the issue stood conclusively covered by CIT v. Kabul Chawla, as approved by the Supreme Court in PCIT v. Abhisar Buildwell Pvt. Ltd.
  • No substantial question of law arose for consideration.

 

Important Clarification

The High Court reiterated that in respect of completed assessments, additions under Section 153A can be made only on the basis of incriminating material found during search, and mere re-appreciation of existing material is impermissible.

 

Final Outcome

The Revenue’s appeal was dismissed both on the ground of limitation and on merits. The Delhi High Court upheld the deletion of additions made under Section 68 in the absence of incriminating material and confirmed that no substantial question of law arose under Section 260A of the Income Tax Act, 1961.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770115105_THEPR.COMMISSIONEROFINCOMETAXCENTRAL1VsANILBHALLA.pdf 

 

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