Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court challenging a common order passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Years 2008-09 to 2011-12.

The ITAT had deleted additions made by the Assessing Officer on the ground that:

  • The additions were not based on any incriminating material found during search proceedings, and
  • The assessments for the relevant years were already concluded (non-abated assessments) at the time of search.

Issues Involved

  1. Whether additions can be made under Section 153A in absence of incriminating material found during search?
  2. Whether completed assessments can be disturbed without any new evidence discovered during search proceedings?
  3. Whether reliance on precedents like Kabul Chawla is valid despite pending SLP before the Supreme Court?

Petitioner’s Arguments (Revenue)

  • The ITAT erred in holding that no additions can be made without incriminating material under Section 153A.
  • It wrongly relied on the decision in CIT vs Kabul Chawla.
  • The Revenue contended that since an SLP against Kabul Chawla is pending before the Supreme Court, reliance on the same is improper.

Respondent’s Arguments (Assessee)

  • No incriminating documents or material were found during the search.
  • The assessments for the relevant years had already attained finality.
  • Hence, no additions could legally be made under Section 153A in absence of fresh material.

Court Findings / Order

  • Both CIT(A) and ITAT recorded concurrent findings of fact that no incriminating material was found during the search.
  • For concluded assessments, additions under Section 153A can only be made if incriminating material is discovered during search.
  • The issue is squarely covered by judicial precedents including:
    • CIT vs Kabul Chawla
    • PCIT vs Meeta Gutgutia
    • PCIT vs Bhadani Financiers Pvt. Ltd.
  • The Court reiterated the legal principle that:

Completed assessments cannot be interfered with under Section 153A without incriminating material.

  • Accordingly, the Court held:
    • No substantial question of law arises
    • Appeals filed by Revenue were dismissed

Important Clarifications

  • Even though the issue in Kabul Chawla is pending before the Supreme Court, there is no stay on its operation.
  • Therefore, it remains binding precedent.
  • The Court clarified that the present judgment shall be subject to the final outcome of the pending SLP before the Supreme Court.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH09112022ITA4362022_103851.pdf

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