Facts of the Case

The present appeals were filed by the Revenue before the Delhi High Court against the order of the Income Tax Appellate Tribunal (ITAT) dated 12.10.2022 concerning Assessment Years 2009-10, 2011-12, and 2013-14.

The Tribunal had held that no incriminating material was found during the search proceedings pertaining to the relevant assessment years. It was also an undisputed fact that the assessments for these years had already been completed prior to the search.

The Revenue filed the appeals with a delay of 89 days, which was condoned by the Court.

 Issues Involved

  1. Whether additions can be made under Section 153A in respect of completed assessments where no incriminating material is found during the search.
  2. Whether the Tribunal was correct in deleting additions made by the Assessing Officer in absence of incriminating evidence.

 Petitioner’s Arguments (Revenue)

  • The Revenue challenged the order of the ITAT and sought to justify the additions made in the assessment orders.
  • It was contended that the Tribunal erred in deleting additions despite the search proceedings conducted.
  • However, the Revenue fairly admitted that no incriminating material was found for the relevant assessment years.

 Respondent’s Arguments (Assessee)

  • The assessee did not appear before the Court; however, the case stood covered by settled law.
  • The Tribunal had rightly relied on judicial precedents to hold that no additions can be made in absence of incriminating material for completed assessments.

 Court Order / Findings

The Delhi High Court dismissed the appeals of the Revenue and held:

  • It was an admitted position that:
    • No incriminating material was found during the search.
    • The assessments for the relevant years were already completed.
  • The issue was squarely covered by the decision of the coordinate bench in
    CIT vs Kabul Chawla
  • The said judgment has been affirmed by the Supreme Court in
    PCIT vs Abhisar Buildwell
  • Accordingly, the Court held that no substantial question of law arises.
  • The appeals were dismissed/closed.

 Important Clarification

  • The Court reaffirmed that:
    • In respect of completed assessments, additions under Section 153A can be made only if incriminating material is found during search.
    • In absence of such material, reassessment or additions are not sustainable.

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60827072023ITA4032023_120346.pdf

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